Wednesday, Sept. 18, 2024
Week two of the US v. Google trial kicked off with a bang this week, as YouTube CEO Neal Mohan was grilled about Google’s practice of buying up competitors and “parking” them to neuter would-be rivals.
TLDR: Digital advertising is the business model of the internet. Evidence suggests Google knowingly exploits its market dominance to entrench its monopoly, disregarding the harmful effects on publishers and competitors. The Department of Justice claims that Google controls at least 87% of the ad tech market, all told.
Recap: During week one of the trial, DOJ lawyers presented a strong case against Google, highlighting the company’s anti-competitive practices in the U.S. online display advertising market. For detailed analysis of the arguments and evidence so far, see week-one roundups from Arielle Garcia of Check My Ads, Karina Montoya of the Center for Journalism & Liberty, and AELP’s Tom Blakely & Lee Hepner.
📩 Throughout the remainder of the trial, we’ll be delivering quick roundups summarizing the state of play, latest revelations & future implications – and, of course, the hottest takes. Share any and all feedback/flags with [email protected].
Market Competition & Consumer Protection
While antitrust advocates have been decrying Google’s blatant monopoly power over the digital marketplace, what does that really mean? The DOJ argues that over the last 20 years, Google has asserted dominance over the multi-billion-dollar industry through:
- Abuse of dominance: Google leveraged its control over the search market to dominate ad exchanges and ad servers. This involved tying its ad exchange (AdX) to its ad server (DFP), effectively locking publishers into using Google’s services.
- Monopoly pricing: Google charged ad fees double the market norm (20%), exploiting its unique access to demand from advertisers. Internal documents showed Google was aware of overcharging but chose not to lower fees due to a lack of competitive pressure.
- Blocking competitors: When publishers tried to regain control through header bidding, a competitive threat to Google’s monopoly, Google took steps to undermine it, further consolidating control.
Fact check: Google claims it took steps to support a competitive market. NOT TRUE. In fact, Google’s monopoly in the advertising industry has contributed to inflated consumer prices across the board – raising prices on everyday goods and services we buy online.
Takeaway: At the end of the day, jacked-up ad costs get passed on to consumers – that’s why we need to have competitive markets. (Deep dive: This DOJ slide maps out Google’s overlapping trifecta of monopolies.)
Read this: US Says Google Saw Ad Startup as a ‘Threat’ — And Bought It (Leah Nylen & Davey Alba, Bloomberg)
Share this: https://x.com/jason_kint/status/1835874877682676137
Future of Journalism
Right now, reports of print journalism’s death are indisputable in two-thirds of American counties. Like it or not, local journalism and legacy media alike now depend on online advertising revenue to survive. But when news enterprises enter today’s complex online market to buy ads and monetize their flagship online properties, they find Google waiting down the end of almost every corridor, ready to extract more rent, and twist the knife a little deeper in the decadeslong attack on the fundamental business model that supports traditional local news.
Fact check: Google claims that publishers have plenty of other options. NOT TRUE. In fact, when publishers found a way to take back control and reduce their dependency via header bidding, “Google made it their mission to thwart it.”
Takeaway: Local journalism has been victimized by Google for well over a decade. This trial could prove it once and for all – and set the stage for a fundamental reset on the relationship between publishers and Google.
Read this: News Corp held “hostage” by Google, witness says (Ashley Belanger, ArsTechnica)
Share this: https://x.com/pressgirlk/status/1834623155052093573
Google’s Illegal Behavior
Throughout the trial so far, DOJ has provided ample hard evidence of:
- Internal admissions of wrongdoing: Testimonies and emails from Google executives reveal an acknowledgment of extracting “irrationally high rents” from the market, something they describe as not “long-term defensible.”
- Destruction of evidence: Pretrial hearings revealed proof that Google set up a system to automatically delete evidence of illegal behavior – what Judge Leonie Brinkema called “a clear abuse of privilege.” She described the internal memo from Google Chief Legal Officer Kent Walker instructing employees to turn off their chat history to eliminate evidence as containing “incredible smoking guns.”
- Predatory testimony: Google witnesses have already been called out for evasive non-answers and caught trying to keep emails out of discovery, continuing the company’s pattern of contempt for the public and our lawyers.
Fact check: Google claims it never abused control of the market. NOT TRUE. In fact, throughout the trial, witnesses have depicted a clear and documented pattern of publisher intimidation.
Takeaway: It’s not just regulators calling for bold action – it’s Google’s competitors and peers. Last week, the CEO of major ad tech platform The Trade Desk called for Google’s breakup, saying of the company’s sprawling influence throughout the market: “They have been the prosecuting attorney, the defense attorney, and the judge and the jury. The remedy is to say you have to quit at least one of those jobs: You can’t be all three.” This statement directly from a publicly traded competitor shows just how mainstream the fundamental case for a breakup has become.
Read this: Beyond Remedies: Why the U.S. v. Google Decision Underscores the Need for a Digital Regulator (Elise Philipps, Public Knowledge)
Share this: https://x.com/ArielleSGarcia/status/1835878015210815961
Go-to resources
- US v Google Ads
- Big Tech on Trial (Matt Stoller/Tom Blakely/Lee Hepner/American Economic Liberties Project)
- Trial Updates (Arielle Garcia/Check My Ads/DCN)
- Google Ad Tech Monopoly Trial Coverage (Karina Montoya/Center for Journalism & Liberty)