Google's mission statement seems designed to evoke warm and fuzzy feelings about how its products help everyone. “Our mission is to organize the world's information and make it universally accessible and useful,” Google's corporate website states. The company used to have an even sweeter motto: “Don't be evil.”
But the decisions Google made in expanding its massive advertising technology business were cold-blooded and carefully crafted to benefit itself first and foremost, the Justice Department argued during the first two weeks of its antitrust trial.
The Justice Department wrapped up its main arguments in federal court in Virginia on Friday, and now it's Google's turn to call witnesses, including U.S. agencies that use the company's products. The company's job is to explain why the government is wrong to say it has an illegal monopoly and why its decisions reflect sound business judgments that Google should not be forced to change.
In more than nine days of testimony, the Justice Department told U.S. District Judge Leonie Brinkema that Google rigged the adtech industry so that everything revolved around the company. The government alleges that Google's dominance across the entire adtech stack ensured that rivals couldn't compete and publishers couldn't jump ship. As legal counsel Julia Tarver Wood put it, “The rules are set so that all roads lead back to Google.”
A “slow and cumbersome” tool dominates the online advertising world
The government's main argument is that Google monopolizes three markets: publisher tools (primarily publisher ad servers, where advertising space is sold), a subset of advertiser tools (where advertisers list their ads), and the ad exchanges, where auctions take place. While Google claims to have built a large customer base by offering good products, the Justice Department argues that it has simply bought up competitors – such as publisher tool DoubleClick – and linked their products together to lock in customers.
The result, the government said, is that Google's customers pay higher prices for clunkier tools because the company lacks real incentives to improve, leaving customers without adequate alternatives to fall back on.
The government invited witnesses from across the industry to bolster its case, including executives from publishers like Gannett and News Corp, advertising agencies and executives from other ad tech companies, including some that had tried (and largely failed) to launch competing products. They also invited former and current Google employees, including YouTube CEO Neal Mohan, who joined Google when the company acquired DoubleClick in 2008. The Justice Department put Mohan on the defensive when it came to another acquisition, Admeld, which Google allegedly bought to eliminate an up-and-coming competitor.
Google's publisher ad server (mostly referred to in the case as DoubleClick for Publishers, or DFP) holds a nearly 90 percent market share of publisher ad servers, the government alleges. Publishers and competitors who testified could generally recall only one or two publishers that used a different system. That includes Disney, which created its own alternative to serving tailored ads — an endeavor that few smaller media companies could afford, witnesses said.
Google's DFP is “pretty much a foregone conclusion” for most media companies, said James Avery, co-founder and CEO of Kevel. That's not necessarily because DFP itself is better; Stephanie Layser, a former programmatic advertising executive at News Corp, called it “slow and cumbersome.” It's because Google ties DFP to its massive AdX exchange, the government's witnesses said. Rejecting DFP would mean losing access to data like real-time bidding from Google's vast advertiser base, vital to an industry that moves in milliseconds. When Kevel tried to launch a DFP competitor, it failed to lure anyone away from Google, Avery said – publishers were too “deathly afraid” of losing that access.
Google has identified threats – and neutralized them
The Justice Department argues that once Google had the dominant position, it developed strategic and anti-competitive plans to cement that dominance. This included buying up young competitors and introducing new features to neutralize efforts to reduce its control. One of the Justice Department's key examples is a system called header bidding, which publishers began adopting in about 2014.
Before header bidding, publishers sold ad space using a “waterfall” process, offering the space to one ad exchange at a time, typically favoring the one that had previously bid the highest prices. But Google set it up so that its AdX got “first look” access through DFP by requiring the platform to submit a real-time bid before other exchanges had a chance to participate in an auction. That meant AdX could buy up any inventory it wanted, as long as it met the publisher's reserve price, and then pass the less desirable space on to other exchanges, according to the Justice Department.
Header bidding was essentially a mini-auction that ran before the ad space was given to an exchange. Publishers would insert codes on their websites to solicit price quotes from multiple exchanges at once, giving those exchanges more equality in the hope that this competition would result in a higher price.
But Google moved quickly to restore AdX's power. It created a competitor to header bidding called “Open Bidding,” which allowed Google to capture an additional share of the revenue. And by introducing header bidding, Google's AdX ultimately gained a “last look” advantage when publishers chose to feed the winning header bid into their publisher ad server – which was most often Google's DFP. AdX advertisers then had the option of bidding just one cent more than the winning header bid to secure the most attractive ad slot.
Google's lawyers said the company was simply trying to create a better online experience, which raised concerns that header bidding encouraged fraud and slowed page load times. But internal company documents showed that executives recognized the appeal of header bidding to publishers and feared it could undermine Google's control. The alleged result was that other, potentially innovative, new exchanges couldn't compete on a level playing field, and publishers ceded more and more control to Google because they felt boxed in.
A witness accused Google of “taking us hostage”
The Justice Department claims this wasn't the only time Google saw a threat and regained control. Publishers began setting a higher minimum price on AdX than on other exchanges, hoping to diversify where their ads could be sold. Google was aware that publishers were trying to reduce their dependence on AdX, according to internal documents. Google responded in 2019 with Unified Pricing Rules (UPR), which mandated one price across all exchanges – thus neutralizing the attempt.
According to Layser, publishers felt that UPR was “taking control out of our hands” and making it look like Google was “holding us hostage.” And Google executives expected the backlash. “We fear this could lead to pushback from publishers, who may view the move as taking away features they are very attached to and consider critical to their business,” one executive wrote. But UPR went ahead anyway, and witnesses told the court that publishers had no choice but to stay on the platform.
This was largely possible, the Justice Department claims, because Google owned products on all sides of the market. It could use its dominance in DFP to set policies for AdX that publishers couldn't opt out of. And when another product seemed threatening, Google could use the tried-and-true tech giant strategy of simply buying it. Google argues this improved the entire system because it ran more efficiently – but the Justice Department claims the company only nipped competition in the bud.
The government also raises an issue that has come up in other Google cases: the company's penchant for liberally marking business documents as confidential and avoiding a paper trail by keeping conversations off the record. The Justice Department wants to penalize Google for destroying evidence, and is asking Brinkema to interpret any allegedly missing documents as damaging. Google denies intentionally concealing its business, saying it has “produced millions of documents, including chat messages and documents not covered by attorney-client privilege.” However, several witnesses at Google could not plausibly explain why their letters should be marked “privileged and confidential” — allowing the Justice Department to argue that they pointed to Google's potential monopoly position.
What happens next?
Google is currently laying out its side of the story. The company is calling witnesses, including federal government advertisers, to explain the value of its products. Counsel expects to wrap up its case by Wednesday or Thursday, followed by a rebuttal from the Justice Department. Closing arguments will be scheduled for a later date — followed by a decision from Brinkema.
Google's main argument is that simply having a large, successful business isn't illegal. The company argues that by combining its services and buying competitors, it has been able to offer better products. And it makes a point that it hopes will be the death knell for the Justice Department's case: According to the Supreme Court, companies can't be forced to do business with competitors.
But this case follows two significant antitrust defeats for Google: one in a U.S. Department of Justice case over its search engine and another in a private lawsuit over Android's Play Store. Google is on the defensive — still awaiting decisions on how to break up these monopolies.
Internal documents suggest that executives were well aware of Google's overwhelming power in the advertising industry. In a 2016 email, former executive Jonathan Bellack compared Google's ad tech stack to the New York Stock Exchange owning Citibank or Goldman Sachs, and mused whether there was “a deeper problem with us owning the platform, the exchange and a huge network.”
Bellack said during his testimony that he was simply trying to figure out why publishers were so interested in shutting Google out of their business, and wondered if the “structure of Google’s business [was] unacceptable for them.” Several of them have testified in court that it Was – and now it is up to a judge to decide who is right.