The Department of Justice (DOJ) is intensifying its scrutiny of Google’s ad tech dominance in a major antitrust trial, asserting that the company’s ad tech empire, including Google Ad Manager, is integral to its alleged monopoly. The trial, which began on September 9, 2024, in Alexandria, Virginia, marks Google's second major antitrust battle in under a year, with the DOJ accusing the tech giant of monopolizing online advertising and suppressing competition.
Central to the DOJ’s case is Google Ad Manager, a platform that facilitates ad transactions between publishers and advertisers. Launched after Google's $3 billion acquisition of DoubleClick and AdX in 2008, Google Ad Manager links Google’s publisher ad servers with its ad exchanges. The DOJ argues that this integration forces most publishers to pay higher fees because they are effectively locked into Google’s ecosystem.
According to DOJ attorney Julia Tarver Wood, Google Ad Manager serves 90% of publishers using ad tech tools, granting Google substantial monopoly power. The DOJ alleges that Google has manipulated ad auction rules to boost profits while stifling competition in various markets, including publisher ad servers, advertiser ad networks, and ad exchanges.
Google, however, disputes these claims, contending that the DOJ’s market definitions are too restrictive. The tech giant points to the Federal Trade Commission’s (FTC) 2007 approval of the DoubleClick acquisition, which concluded that the merger was unlikely to harm competition. The DOJ contends, however, that the acquisition solidified Google's dominant position and paved the way for exclusionary practices in ad tech.
The DOJ has proposed remedies that could include spinning off Google Ad Manager or potentially requiring Google to divest its entire ad tech business. Analysts, however, question the feasibility of such remedies. Estimates suggest that Google’s ad tech business, if spun off as a standalone entity, could be valued up to $95 billion. Ad tech consultant Terence Kawaja has noted that such a large divestiture might be unmanageable, indicating that Google might have to distribute the business to shareholders instead.
In the courtroom, several witnesses have been brought in to bolster the DOJ’s case. Stephanie Layser, a former vice president of ad tech at News Corp, testified that the company faced significant financial risks if it attempted to leave Google’s ad platform, describing the situation as being "held hostage" due to high switching costs and Google's inflexible terms. She claimed that despite efforts to negotiate better terms, News Corp remained dependent on Google’s ad exchange, with as much as 80% of its revenue coming through Google AdX by the time she left the company in 2022.
Google's defense has criticized Layser's testimony, suggesting that she sought unreasonable changes and that News Corp was able to prioritize other services without losing revenue. Nevertheless, Lee Hepner from the American Economic Liberties Project, observing the trial, argues that Layser’s testimony highlights the financial strain on publishers and the inflexibility of Google's ad exchange rules.
Additionally, Andrew Casale, president and CEO of the rival ad exchange Index Exchange, testified about the challenges of competing in a Google-dominated market. Despite reducing fees to zero, Casale reported only minimal gains in ad placements, underscoring the difficulty of achieving scale against Google’s substantial market presence.
The trial continues to unfold, with the outcome potentially reshaping the landscape of online advertising and determining the future of Google's sprawling ad tech business.
