Google’s ad tech impact on publishers front and center during opening day of DOJ’s antitrust trial

By Marty Swant and Ronan Shields  •  September 10, 2024  •

Ivy Liu

The outcome of the proceedings could potentially result in the break up of Google’s empire as officials from the Department of Justice appeal for divestiture of Google’s sell-side ad tech tools. 

At issue is the government’s investigation into whether Google’s business practices and corporate culture have been skirting the rules of fair competition, namely whether it leveraged its dominant position in the display ad market. In its opening statement on Monday, the Justice Department sought to lay the groundwork in its attempt to show Google controlled the competition, controlled customers and controlled the rules. 

In her opening statement for the DOJ, attorney Julia Tarver Wood said Google “didn’t invent fire in these markets” but instead “acquired its way to success.” She added: “This industry may be modern, but this defendant’s schemes are as old as monopolies themselves.” And like all monopolies, there’s always a price to be paid. In this case, it was publishers who footed the bill.

“It’s worth saying the quiet part out loud: One monopoly is bad enough, but a trifecta of monopolies is what we have here,” Tarver Wood said.

As for Google, the company sought to paint the DOJ’s case as an outdated argument built on inaccurate markets. Making the opening statement for the defendant was attorney Karen Dunn, who said the DOJ was “gerrymandering” in the way it carved out the various markets. She also suggested there’s plenty of existent competition even as AI is “already changing everything” for the adtech industry.

“Break open the defense’s argument and you’ll find a Blackberry, an iPod and a Blockbuster card,” Dunn said.

The DOJ’s legal team’s opening efforts centered on demonstrating publishers’ reliance on Google — i.e., the defendant’s (alleged) undue industry-wide influence — and attempting to solicit answers from witnesses representing ad tech, agency and publisher sources that could quantify its control. What they shared throughout the course of the day painted a stark picture of publishers trapped in a financial vice, where their reliance on Google’s ad tech not only diminished their independence but also led to significant financial losses as Google tightened its grip.

From the witness stand, Tim Wolfe, Gannett’s svp of revenue operations, the first witness to appear under questioning, revealed how its USA Today Network paid out approximately $15 million per year in revenue share for programmatic ad revenues. Of that, Google accounts for “north of $10 million.” Overall, Google accounted for more than half of its programmatic ad revenues; at its height, this number was in the region of 60%, but presently, it is closer to 50%, said Wolfe. That’s a significant chunk of change for publishers to forgo, even if they had the option to walk away.

Enter header bidding — the much-feted ad tech hack designed to help publishers break free from Google’s grip on programmatic advertising. When Gannett adopted header bidding as its primary sales method, Gannett saw CPMs jump by 15% to 20%. Wolfe also noted that Google’s take rate for open bidding was around 20% — a revelation that drew a brief murmur from the courtroom.

The fact that the industry had to turn to header bidding underscores just how desperate publishers were to escape Google’s dominance — or how tightly they were bound to it. In fact, Wolfe said as much when he compared trying to switch from Google’s ad server (popularly known as ‘DoubleClick for Publishers’) to being “akin to changing the tires on a race car mid-race.”

The implication being that such a move would involve losing a lot of money via way of advertiser demand via Google’s ad exchange AdX — a key assertion in the DOJ’s allegations of tethering, or “tying” its ad tech products together.

Other key takeaways

• Also on the witness stand was Quad Media’s Joshua Lowcock, former digital chief at UM, who explained the various intricacies of the various ad markets in question from the witness box. However, Google used its cross-examination to poke holes in his testimony, suggesting that Lowcock’s statement contradicted his earlier testimony in the previous antitrust trial concerning Google’s search empire.
• The DOJ outlined other witnesses it plans to bring in the coming days including Goodway Group CEO Jay Friedman, OMD’s Luke Lambert, former Facebook exec Brian Roland and The Trade Desk chief revenue officer Jed Dederick. (Another Monday witness was Index Exchange President and CEO Andrew Casale.)
• Google said it plans to bring several witnesses from government agencies including from the U.S. Postal Service, U.S. Army, U.S. Navy, U.S. Census Bureau and the U.S. Dept. of Veteran Affairs.

Farther afield, the charges pile up 

Of course, it’s worth noting that before proceedings kicked off in the Eastern Virginia courtroom, events thousands of miles across the Atlantic foreshadowed the Sep. 9 trial opening, as the U.K.’s Competition Market Authority ruled Google had abused its dominant positions by operating both its publisher ad server and buying tools to restrict competition.

Furthermore, it’s worth noting that Google is preparing to appeal last month’s ruling that its search empire has contravened competition rules in a separate antitrust trial. This context has many believing the online ad industry is set for a monumental shake-up in the coming weeks.

Three quotes from the witness stand: James Avery, CEO of Kevel

• “The fun thing about ad serving is it’s pretty complicated and very complex.”
• “Yellow Pages said, ‘How do we get AdX demand?’ We said there wasn’t a way and that was the end of that conversation.”
• “An important part of marketing is putting out ideas of what we wish people would do.”

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