Breaking up Google’s ad tech monopoly is, apparently, like going to Mars or trying to replace Michael Jordan — dubiously possible and a huge amount of work.
Those were some of the analogies witnesses testifying in Google’s defense told a federal judge this week as the company mounts its second attempt to stave off a break up. After successfully beating that fate in the Justice Department’s Search case, Google made its case to Virginia-based District Court Judge Leonie Brinkema to let it keep its ad tech business intact too. Along the way, Google witnesses argued it need not give up monopoly power to restore the competition it damaged, and the judge gave mixed signals about how she may rule.
The DOJ spent the prior week arguing that forcing a sale of Google’s AdX exchange and open sourcing part of its DoubleClick for Publishers (DFP) ad server is both technically feasible, and the only way to ensure Google doesn’t find new ways to wield its dominance at the expense of publisher customers. As Google lodged its defense, it marshalled in one executive and expert after another to explain the scale of the project, and warn that a break up may simply introduce new problems.
“It is a massive undertaking,” Google Ad Manager (GAM) Engineering Director Glenn Berntson testified. Even if a divestiture of AdX doesn’t include ripping out other pieces of Google’s proprietary infrastructure, he said, it’s only marginally better. “Going to the moon is simpler than going to Mars.” Other witnesses testified to the long list of ways Google says a break up is more difficult than it sounds: it’s technically complex, it’s unclear whether Google employees would actually go to work for an AdX buyer or just leave, and customers could be harmed in the process. “We’re trying to replace the Michael Jordan of databases,” Google’s technical expert Jason Nieh testified, pointing to just one of the many Google proprietary services the ad tech tools would need to swap if pried from the company. “There’s only one Michael Jordan, and he’s irreplaceable.”
“We’re trying to replace the Michael Jordan of databases”
Brinkema already ruled that Google illegally monopolized two markets for ad tools publishers rely on to bring in revenue, and illegally tied them together to benefit its own business. Throughout Google’s defense, it was at times easy to lose track of this. Google’s economic expert Andres Lerner showed a slide similar to one Google used to argue its case in the earlier liabilities trial, meant to defend the efficiencies of AdX and DFP’s close-knit nature, despite the fact that Brinkema already ruled the tie was illegal and kept publishers locked in. Google witnesses also testified about stagnating growth in open web display advertising — the market in which Google’s conduct suppressed competition for a decade.
What Google is (and isn’t) willing to give up
Targeted changes to Google’s behavior are the most effective and least risky way to restore competition, Google argued throughout its case, including through external witnesses like the CEO of WikiHow Google ad tech executive Tim Craycroft even riffed on concessions Google hadn’t originally offered, saying the company would be “very open to making a formal commitment” not to integrate its buying tools to directly bid into DFP. But he also wouldn’t commit on the stand to lowering AdX’s 20 percent take rate, which the court ruled was higher than would exist in a competitive market.
“I see a tension there”
Google won’t even concede to banning some business practices it says it’s not currently using. Google doesn’t use data from its other businesses like YouTube or Search to power its ad tech business, it says, but it wants the option open should it become an important way to compete. In fact, Google shouldn’t even have to give up its monopoly power, as long as it stops using it unfairly, according to Lerner. Later, though, he said that remedies should generally unfetter the market from anticompetitive conduct. “Which is inconsistent with the concept that some monopoly power can continue,” Brinkema responded. “I see a tension there.”
Lerner also rejected the idea that a remedy should prevent Google from creating a new anticompetitive path similar, but not identical, to its illegal DFP-AdX tie, leveraging its buy-side advertiser demand to achieve dominance on the publisher side. That’s because Brinkema didn’t find the advertiser tool to be anticompetitive in and of itself, he said, and the way Google created it wasn’t inherently illegal, either.
To make its argument against this claim, the DOJ used a printout that showed several roads leading back to the word “Monopoly” in a big red box with Google’s logo at the top, and tried to show the potential ways Google could recreate its monopoly power by going around Google’s proposed remedies. “All we need now are the tokens, the little houses,” Brinkema quipped.
What does the judge think?
A couple days earlier, Brinkema raised what she called the “two elephants in the room” about whether a break up is truly necessary. One is that by the end of these proceedings, Brinkema is expected to issue a court order over which Google could be held in contempt of court if it refuses to follow. The second is that Google already faces a barrage of lawsuits, and will likely face even more. Will any of this chasten the company?
Surely even Google would likely comply with a court order restraining its behavior in the ad tech markets it monopolized, testified Rajeev Goel, CEO of rival ad exchange PubMatic. But the problem is making sure that order includes an exhaustive list of all the ways Google might figure out how to advantage itself in new or unknown ways now or in the future. When PubMatic raised a technical issue to Google it was experiencing, Goel said he couldn’t know if the length of time it took to fix was due to a roadblock, or to Google’s incentives to delay a solution to keep more money for itself. (A Google executive later testified about the work and regular updates it provided to PubMatic on the fix.)
Brinkema’s questions and comments in the last week of trial sent mixed signals about how she’s thinking about the appropriate remedies, though it was hard to tell how much they gave insight to her current thinking. On the one hand, after a DOJ attorney said AT&T’s break up helped accelerate the development of cell phones, Brinkema said,“yeah, but we lost Bell Labs. That’s what people comment on.” On the other hand, she later seemed to pick up on the DOJ’s witnesses hammering on the importance of structural remedies to prevent a regrowth of Google’s monopoly. “Talking about conduct really isn’t important,” she said, when what matters is preventing Google from gaining dominance again.
