Google and the DOJ spar in court on the last day of the ad tech trial

Alexandria, Virginia — For those in the ad tech world, there’s a lot to digest this Thanksgiving.

Fresh off the Department of Justice’s proposal for Google to sell its Chrome browser for “unlawful monopolization” of search last week, the tech giant found itself back in federal court Monday for closing arguments surrounding its other antitrust trial, to determine if it has a monopoly of the ad tech market.

In the packed courthouse, Google’s defense and the DOJ each had 90 minutes to wrap up their cases to Judge Leonie Brinkema, summarizing weeks of testimony from September and October and more than thousands of pages of legal documents. The time allotted was three times as long as the 30 minutes they were allowed for their opening statements.

It was the last chance to hear compressed versions of the arguments before Judge Brinkema issues her final ruling by the end of the year. Although this is an industry prone to long-windedness, the judge kept the proceedings succinct, with a hint of humor along the way.

Aaron Teitelbaum, senior litigation counsel for the DOJ antitrust division, argued that Google engineered the ad tech auction; publishers have had no choice but to use Google’s tools AdX and DFP (DoubleClick for Publishers) because they feed into each other; and no substitutes are available. Overall, Google, the DOJ claims, has become a monopoly whose conduct is anticompetitive and not lawful.

During the closing arguments, special focus was placed on Google’s ad tools and its alleged ability to manipulate the ad auctions.

“Google rigged the rules of the road,” Teitelbaum said. He asked why publishers would continue to run ads through Google’s AdX “rather than voting with their feet?” They have no other option, he affirmed. News Corp previously testified that it would lose $9 million in revenue in 2017 if it turned off Google ads.

Teitelbaum highlighted several publishers that felt “locked into” Google’s ad tools as well as Google employee email conversations that highlighted how “Google freely pulls levers in tools to strengthen other tools,” such as using AdX to strengthen DFP and First Look and Last Look to “give it the last bite of the apple” in the bid exchange, allegedly giving Google an auction advantage over its rivals.

He cited former Facebook VP Brian Boland’s testimony that it would be “unfeasible to build the market-comparable set of features for what Google had established.” He also quoted Brian O’Kelley, CEO and founder of Scope3, who stated that DFP “wasn’t the best ad server” but that Google “destroyed all competition,” leading many to go out of business or be “sold for scrap.”

“[Google] does things it knows its customers are not going to like,” said Teitelbaum. “It shows it has monopoly power.”

In Google’s closing arguments, Karen Dunn, Google’s lead defense attorney, argued all DOJ claims were out of order, and that prosecutors are bending U.S. antitrust law. Dunn walked through Google’s path to AdX, saying “Google’s conduct is a story of innovation in response to competition.”

Dunn argued Google is far from a monopoly, using her time to point out competitors in the space, noting that Microsoft’s advertising ecosystem looks the same as Google’s, and how Amazon, Meta and TikTok are continuing to take market share from Google.

Dunn positioned Google’s ad exchange as a two-sided transaction between advertisers and publishers, a market concept that Dunn pointed out was upheld in the 2018 Ohio v. American Express case. Dunn also argued how one system has resulted in lower prices for advertisers while Google’s win rate has gone down. Upset publishers (like News Corp and The Daily Mail), Dunn said, are really demanding to “integrate into rival ad servers as closely as Google’s own software is integrated.”

Dunn pointed to Nitish Korula, research scientist at Google, who testified that a fix to AdX would take a “substantial amount of work.”

“They’re asking Google to build a new product and it’s a valid business decision not to do that,” stated Dunn. Meanwhile, she said publishers can use AdSense, which can be used either with any ad server or no ad server at all. Dunn did mention Google’s 2014 AWBid, which allowed publishers to integrate with other ad exchanges, but was discontinued because it found that 70% of clicks were spam.

Both sides once again pointed to conflicting data to position whether Google does or does not hold a monopoly over the ad market.

Teitelbaum cited data that showed AdX’s share of the ad exchange marketplace is at 56%, overwhelming competitors by nine times, with the next competitor at 6% of market share. Google rebutted with data it argued showed how U.S. market share was never more than 43% declining to 34% in 2022. Worldwide, Google market share has decreased to 40% today from 49% in 2019, said Dunn.

Dunn used one Emarketer data graph that showed Google’s market share against all exchanges that purchase ads across connected TV, social media and apps to demonstrate Google is a small portion of the pie. Judge Brinkema asked whether there was any data that looked at how Google fares compared to exchanges that offer ads across the open web rather than just walled gardens, to which the Google defense said there is none.

Judge Brinkema, known for her straightforward, by-the-book approach (no laptops or phones were allowed in the courthouse) still injected bits of humor into her questioning and reactions, garnering laughs from court attendees. When Google’s side asked for more time at one point, she gave the amount that was left for closing arguments — five minutes. When Google asked to interject one last piece of information at the end, she said, “I think there’s plenty in the thousands of papers already received.”

The U.S. District Court for the Eastern District of Virginia held the courtroom in her thrall, targeting pointed questions at both sides. She asked the DOJ why the plaintiff did not showcase any testimony from advertisers, to which Teitelbaum replied that the main users of Google tools are the ad agencies that advertisers work with. She also asked Google how publishers’ feedback of being locked into its ad products isn’t proof of unique demand, which could cast Google as anticompetitive.

At some points, Brinkema didn’t forgo her opinion. She told Google’s defense that they were in “dangerous territory” for claiming that the DOJ selectively highlighted Google employee testimony when Google did not preserve evidence that could give more context.

At the end, Brinkema called it the “best case she had heard in years” for both sides being “well supported” and cooperative.

Humor notwithstanding, the judge has promised to deliver her opinion as quickly as next month. If the DOJ wins, Brinkema might consider prosecutors’ request to make Google at least sell off Google Ad Manager, which includes the company’s publisher ad server and its ad exchange, according to Reuters.

It would be the DOJ’s second win against Google if Google loses; however, Google is widely expected to appeal and if that’s the case, it could ultimately mean an escalation to the U.S. Supreme Court. Google CEO Sundar Pichai has said to expect long delays, pointing to Google’s successful appeal of the $1.7 billion fine set by the European Commission in 2019 over AdSense’s alleged anticompetitive practices.