The word of the day in US vs. Google was “parking.” That is, did Google buy some of its most up-and-coming and dangerous competitors in the online advertising business while planning to park them in a remote corner of the company so that no one could threaten Google's dominance? That's a central question in the government's entire case against Google, and it came up again and again Monday morning.
To kick off the second week of the landmark antitrust trial over Google's control of online advertising, the Justice Department called Neal Mohan, the CEO of YouTube and a longtime advertising executive at Google. Mohan joined Google in 2008 when Google acquired DoubleClick, which formed the basis of Google's now unstoppable advertising machine. Mohan was also a proponent of the acquisition of Admeld, another company at the center of the case. He argued throughout his testimony that Google never sought to buy up and eliminate its competitors; it simply sought to compete.
The Justice Department questioned Mohan about one of the core points of its lawsuit: that Google had built an impenetrable advertising empire by owning all three major parts of the adtech stack, including the system that publishers use to offer ad inventory on their sites, the system that advertisers use to buy and place ads on the internet, and the exchange in between where all the buying and selling actually takes place. That empire, the lawyers claim, doesn't allow for real competition and ultimately makes things worse for everyone involved, except Google. And whenever a potential challenger emerged, Google simply bought it and put it aside—or maybe even put it on ice.
The concept of “parking” came up during Mohan's more than two-hour testimony, when Justice Department lawyer Aaron Teitelbaum showed him an email exchange about whether Google should buy Admeld. Admeld used a technology called yield management and cornered the online advertising market by allowing publishers to evaluate demand from multiple ad exchanges at once.
In these emails, another Google manager wrote: “One way to ensure that we do not fall further behind in the market is to acquire the [company] with the most traction and park it somewhere.” Acquiring the company in this way “would allow us to solve the problems from a position of strength.” From the government's perspective, this seemed clear evidence that Google was trying to remove a threat from the market.
“One way to ensure that we do not fall further behind in the market is to take over the [company] with the best traction and park it somewhere.”
In court, Mohan argued that this was not what was meant by “parking” at all. While he acknowledged that Google was interested in Admeld because it was further along in development, he said Google had no intention of shelving or discontinuing the product. “That was absolutely not the case,” he said.
Parking, he explained, refers to Google acquiring a company and then letting it continue to operate more or less as before while it begins to rebuild and integrate into Google's technology stack. This process takes time – often years – and Mohan said that keeping the products running actually shows their importance to Google as products, rather than as defeated enemies.
Mohan argued again and again, occasionally seeming frustrated at having to repeat himself, that Google was simply doing what it had to do to compete. He told Teitelbaum the goal had always been to “build the best ad stack for publishers and the best tools for advertisers.”
Mohan said the advertising business has always been a highly competitive market, and companies like Facebook, Microsoft and Yahoo are even trying to develop similarly comprehensive strategies. Controlling all three parts of the process is crucial to ensure that only good ads are placed on only good websites, that everything happens quickly and that no malicious actors can cause trouble.
When Jeannie Rhee, one of Google's lawyers, cross-examined Mohan, she had him repeat the parking point in a number of ways. She pointed to an annual update email Mohan wrote to his team in 2008, after the DoubleClick acquisition, in which he compared the integration to “changing the engines of a plane while you're still flying it.” Rhee also had Mohan run through some of the DoubleClick team's most impressive post-acquisition accomplishments, apparently to show that the product was still being actively developed.
Mohan said integrating startups into Google was like “changing the engines of an airplane and keeping it flying.”
Mohan's testimony offered a pretty clear version of the arguments made by both sides in this important case. In the government's eyes, Google has an unassailable advantage in the ad business based on illegally linking different products and buying up any company that even looks like a competitor. But Google says deep integration is the only way to build great ad products, and its acquisitions have always been about building better products in a competitive environment.
The government has repeatedly presented evidence that it is nearly impossible to leave Google's platforms. Switching platforms is difficult for some reason, and the prospect of leaving advertiser demand and access to platforms like Search and YouTube behind makes this move untenable. Publishers have also argued that Google's advertising products are not impressive at all. They say they feel trapped. And from the government's perspective, Google is happy to spend hundreds of millions of dollars on startups to keep it that way.
In 2011, Google acquired Admeld, reportedly for over $400 million. (The Justice Department, by the way, argues that this figure is far higher than Google's actual valuation of the company—reportedly a sign that Google is willing to overspend in the name of threat prevention.) The Justice Department briefly investigated the deal at the time, but ultimately allowed it to go through. Today, the company's technology is part of Google's dominant ad exchange, commonly known as AdX. All that's left of Admeld itself is a Google support page that tells publishers why AdX is so great.
Is this the good way to park or the bad and possibly illegal way? That is up to Judge Leonie Brinkema to decide. She didn't have much to say during her testimony on Monday, but everyone in the courtroom realized that she is the only one who counts.