Google Ad Tech Trial, Part 2: What to Watch

If you’re like me, your intrepid Marketecture reporter, you’ve been anxiously staring at the waning days of the summer calendar waiting for the real action to start. Not the NFL season, though both Monopoly Report author Alan Chapell and myself have the unfortunate affinity for the New York Jets, but the real Super Bowl. I’m talking, of course, about the remedies portion of the Google “ad tech” antitrust trial in Virginia. The case starts today, Sept. 22, and you know I’ll be there – it’s my Roman Empire.

Housekeeping first. I will be writing a daily update from the trial over at The Monopoly Report newsletter. I did this last year, and people found it pretty entertaining. Some might call it a “must read,” though I’ll leave that for others to say. Click below for a 1-click subscribe:

I know. It’s been a while. Let’s quickly remind ourselves how Season 1 ended, with quite a few cliffhangers, as well as a cross-over from the search trial.

Last fall, the DOJ presented their case that Google maintained a monopoly in publisher ad serving (duh!), in the ad exchange, and on the buy-side ad network (i.e., AdWords). The allegation revolved around the tying of these products, using the demand from AdWords to lock publishers into the dual monopoly of AdX plus GAM/DFP. To boil it down, the key allegation was that as a publisher you couldn’t get money from AdWords without also using AdX, and you couldn’t really use AdX unless you also used GAM/DFP. Notably, the case restricted its market definition to “open web display advertising,” so it did not include video, mobile, social, or native advertising.

This past spring, Judge Brinkema found mostly for the DOJ, finding that Google did, in fact, operate a monopoly in ad serving and the exchange. The judge declined to find as much for the ad network. Brinkema also declined to find the acquisitions of DoubleClick and AdMeld as inherently anticompetitive, since at the times they were completed the market was not as consolidated. 

Reading: Judge Brinkema’s findings

Two additional things happened in the off season. First, and most monumentally, Judge Mehta issued a remedies ruling for the other Google antitrust case that almost entirely landed in Google’s favor. While you might think this is unrelated, you might be wrong. In the pre-trial hearings for the ad tech case, Judge Brinkema specifically said the parties should “give careful attention to the Search case" and its "potential impact on these remedies." What did she mean by this? I don’t know, but it doesn’t seem good for those rooting for a more substantial remedy.

Second, Google is getting hit left, right, and center by follow-on civil suits on the same facts as the antitrust case. Why does this matter? Primarily it affects the company’s willingness to settle with the DOJ. It might be less willing to settle, and thereby accept the court’s findings, if it would open the company up to billions in civil liabilities. I’m speculating here, so interested in other opinions.

Oh wait, there’s a third thing. The EU! Google was just fined $3.4 billion (with a “B”) by the EU on the same grounds. This is likely more money than the profit Google has made from owning AdX and DFP for the entire time it has existed. In addition, the EU gave Google 60 days to respond with its own remedies, for which the EU has separately said it only thinks a spin-out will be sufficient! Reading between the lines, the EU is delaying a spin-out order to sync up with the Virginia decisions.

Whew. And you thought Severance was complicated.

So at the end of last season, Google was found to be a monopolist, and now we find out what the remedies will be. The DOJ’s goal (and the goal of antitrust law in general) is to stop the anti-competitive behavior and to create an environment in which competition can thrive. 

Here’s a summary of what the DOJ is asking for, roughly in the order they would like these to be implemented:

Wow, that’s a lot. 

Meanwhile, Google’s proposal avoids divestiture and instead focuses on removing its historic advantages:

Reading: 

We know the basic outlines of the case. The DOJ is going to ask for the various remedies listed above, and Google is going to argue:

In my (non-legal) opinion, the most interesting arguments are going to be when Google pokes holes in the DOJ’s specific remedies. Coming back to the search remedies, a lot of Judge Mehta’s reasoning for why he did not make structural changes, like spinning on Chrome, revolved around the potentially unpredictable and negative consequences of doing so. The same arguments will be made here. 

Just off the top of my head, I could make some of these arguments:

Like I said, there will be a daily update at the Monopoly Report. Smash that subscribe button:

Also, if you’re interested in this general subject, consider buying my book, Yield.