An ad tech antitrust trial against Google has begun in federal court in Alexandria, Virginia, USA. The US Department of Justice accuses the company of monopolizing the online advertising market, claiming that it controls all stages of the sale and purchase of advertising space. Google, which relies heavily on advertising for its revenue, has vehemently denied the accusations, saying the government is seeking to unduly interfere with a successful business, ignoring the value of the company’s multibillion-dollar investments in innovative technology.
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Julia Tarver Wood, for the prosecution, emphasized in her opening statement: “Control is the defining characteristic of a monopolist.” Google has too much control over every step of how publishers sell ad space online and how advertisers buy it, creating a system that benefits Google at the expense of almost everyone else.
Google strongly disagrees with these accusations, considering them unfounded and contrary to market realities. According to the tech giant, the government seeks to establish control over successful businesses, forcing them to enter into deals with competitors on more favorable terms, without paying attention to the value of investment in technology and the effectiveness of integrated tools.
The trial began with a detailed examination of the tools that publishers use to monetize display advertising. These ads typically appear at the top or side of the page on websites and blogs. They are selected through ultra-fast auctions that take place within milliseconds as the page loads. During the auction, the ad exchange helps match publishers and advertisers based on factors such as topic, target audience and price, without active human intervention. This high-tech process, known as programmatic advertising, is used by many companies and generates billions of dollars in revenue annually.
Google’s tools play a key role in this complex process, with some of them accounting for about 90% of the market, according to the US government – a figure that the prosecution considers a clear sign of a monopoly. Google has an advertising service for publishers called Google Ad Manager, which helps publishers sell advertising space. The company also operates the advertising exchange AdX, which facilitates transactions between publishers and advertisers, processing millions of requests per second. In addition, Google owns an advertising network for advertisers, which complements the company’s three core products in different segments of the advertising market. This vertical integration, according to the prosecution, allows Google to control all aspects of the advertising process, which potentially leads to infringement of competition. “One monopoly is bad enough, but a trifecta of monopolies is what we have here,” said Wood, a lawyer in the US Justice Department’s antitrust division.
The trial’s first day featured testimony from four key industry figures whose testimony confirmed that programmatic advertising cannot be easily replaced by other forms of advertising, such as direct deals with advertisers or social media advertising. They also highlighted the difficulty of switching from Google tools to alternative solutions, even when there are compelling economic reasons to do so, which the prosecution argues demonstrates Google’s monopoly power.
Thus, Tim Wolfe, senior vice president of revenue at Gannett, and James Avery, founder and CEO of Kevel, made it clear in their testimony that publishers for the most part are not ready to abandon Google Ad Manager . The reason, they say, is that Google provides it bundled with access to AdX, and losing that bundled offer would mean giving up significant revenue—even if competitors offer much lower commissions on ad sales.
Advertising services company Kevel initially targeted traditional publishers, but Avery says competing with Google has proven impossibly difficult. He recalled publishers asking how his company would replace the revenue they were getting from AdX, a challenge Kevel couldn’t handle. After two unsuccessful attempts to work with Google to connect its advertising service Kevel to AdX, Avery said their efforts were rejected. As a result, Kevel was forced to refocus on sponsored ads for retail.
Andrew Casale, president and CEO of Index Exchange, speaking from the perspective of an advertising exchange, testified that changing advertising services is a serious technical challenge, so publishers rarely take this step. Speaking about the ad exchange market, Casale noted that competition with Google AdX is extremely difficult, and the reduction in commissions had only a nominal impact on the ability to attract more customers.
Google’s lawyers tried to question the arguments and credibility of witnesses on cross-examination, pointing out how players like Avery could benefit if a court forced Google to provide access to its tools. They emphasized that Google’s success is based on innovation and efficiency, not anti-competitive behavior. Google plans to call its own witnesses to counter the Justice Department’s arguments in later stages of the trial, which is expected to include advertising technology experts and economists who could challenge the government’s definition of the market.