US v. Google redux: all the news from the ad tech trial

Starting Monday, the US government will get another crack at convincing a federal judge to break up Google, after a different judge decided to keep it intact despite finding it to be a monopolist.

Lawyers for Google and the Justice Department will return to a federal courthouse in Alexandria, VA for a roughly two-week trial about how to restore competition to the advertising technology markets that Google illegally monopolized. It comes just weeks after DC District Court Judge Amit Mehta — who issued a historic ruling deeming Google a monopoly in online search — delivered his prescription for restoring competition to the online search market. Mehta’s ruling stopped far short of the government’s major asks to remedy Google’s harm, including denying a requested sale of Google’s Chrome browser, and letting the company keep paying for prime distribution on spots on browsers and phones.

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The US Department of Justice filed a plan in court to make Google divest its advertising marketplace and ad management platform, part of a proposal to address the company’s “decade-long campaign of exclusionary conduct,” which a judge has declared violates antitrust law.

On Monday, the DOJ and Google both filed requests for remedying the tech giant’s legally declared ad-tech monopoly. The DOJ plan proposes having Google sell two major pieces of its business: its Ad Exchange (AdX) and its ad management platform DoubleClick for Publishers (DFP), which is now called Google Ad Manager. Google, which plans to appeal the original verdict, asks the court to require targeted changes in certain business practices while leaving the company intact.

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After half a decade fighting to keep its empire together, Google’s defenses are wearing thin.

The company is facing a two-front war that could fundamentally reshape its business, and, the US Department of Justice argues, open new opportunities for its competitors. Last year a federal judge deemed Google an unlawful monopolist in the online search market, and this past week, a different judge declared it had monopolized the ad tech market, too. On Monday, it will face a new stage in that first battle: a three-week trial in Washington, DC to determine the appropriate remedies to restore competition to online search.

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The US Department of Justice has won its antitrust case against Google, which accused the company of operating a monopoly in the advertising technology industry. The ruling, which marks Google’s most recent antitrust loss following its Search case, says the tech giant’s anticompetitive practices in two key markets “substantially harmed” publishers and users on the web.

“Plaintiffs have proven that Google has willfully engaged in a series of anticompetitive acts to acquire and maintain monopoly power in the publisher ad server and ad exchange markets for open-web display advertising,” US District Judge Leonie Brinkema writes. “For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets.”

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Google and the Department of Justice met one final time in an Alexandria, Virginia courtroom to debate the future of Google’s online ad tech juggernaut.

Over about three hours of closing arguments, attorneys for each side delivered their last arguments before US District Court judge Leonie Brinkema, who is expected to rule on it by the end of 2024. If she declares Google’s ad tech system a monopoly, the case will progress to a second trial for remedies — a process currently playing out in a separate DC District Court case over Google search.

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Today, Google will have a final chance to prove to a federal judge that its advertising business isn’t a monopoly. The US Department of Justice spent several weeks earlier this year arguing that Google maintains too much control over web advertising and uses that power to lock in customers, leaving little room for competition. The trial wraps up this week. If it loses, Google could have to make sweeping changes to the core of its business.

Even if the tech behemoth emerges from this trial unscathed, a spreading legal fire still jeopardizes everything it has created. For many years, Google’s sprawling empire has faced little legal scrutiny, allowing the company to freely build up its search engine, browser, operating systems, and line of hardware products that all intersect to bolster one another. It’s the overlap of Google’s massive businesses that has attracted attention from government agencies and tech industry rivals, who are set on taking apart Google’s stronghold piece by piece.

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Three advocacy groups are trying to amp up the pressure on Google for allegedly destroying company records. The American Economic Liberties Project, Check My Ads, and the Tech Oversight Project are urging the State Bar of California to investigate Kent Walker, Google’s President of Global Affairs and a member of the Bar. They claim Walker “coached” the company “to engage in widespread and illegal destruction of records relevant to multiple ongoing federal trials.”

In a letter shared exclusively with The Verge, the groups point to a 2008 memo Walker sent to employees while he served as general counsel. The so-called Walker Memo was highlighted in the Department of Justice’s recent antitrust trial, one of multiple cases where Google has been accused of obscuring potentially incriminating documents. The memo referenced “several significant legal and regulatory matters” Google faced at the time as the rationale for a new policy limiting employee chat message retention. The DOJ claimed it marked a turning point for company secrecy — as Google changed the default setting on chats from “history on” to “history off.”

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Google is making a big change to company leadership. In a memo to staff posted on Thursday, Google CEO Sundar Pichai announced that Prabhakar Raghavan, the senior vice president in charge of search, ads, and other important segments, will now take on the role of chief technologist.

“Prabhakar has decided it’s time to make a big leap in his own career,” Pichai writes. “After 12 years leading teams across Google, he’ll return to his computer science roots and take on the role of Chief Technologist, Google. In this role, he’ll partner closely with me and Google leads to provide technical direction and leadership and grow our culture of tech excellence.”

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The Department of Justice just wrapped up three weeks of trial where it argued whether Google has created illegal monopolies in the ad tech market. During much of it, Google kept asking a more fundamental question: what is that market?

The company has a variety of defenses to the DOJ’s accusations, ranging from Supreme Court precedent to security concerns. One of its biggest, however, is that the agency simply doesn’t understand online advertising. Google alleges that it’s slicing up the market in a way that doesn’t make sense and that it downplays or ignores Google’s biggest advertising competition: social media.

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Google took a page out of a familiar playbook in court this week, defending itself from claims of anticompetitive conduct by raising security concerns. While the government argues it locked up the ad tech market to make more money, Google’s witnesses say that a more closed ecosystem is often safer for users — echoing a defense both it and Apple have made of their mobile app stores.

Google’s attorneys have spent the last few days mounting its defense against the Department of Justice. The company argues that conduct the Department of Justice paints as anticompetitive — like locking customers into its services and exerting control over the rules of the industry through its dominance — actually has justifiable business purposes. The point was emphasized by two Google executive witnesses: Per Bjorke, director of product management for ad traffic quality, and Alejandro Borgia, director of product management for ad safety. Combined, the teams work to ensure Google’s ads are bought and sold by trustworthy parties and that they’re seen by real people, not bots.

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Google’s mission statement seems made to evoke warm and fuzzy feelings about how its products help everyone. “Our mission is to organize the world’s information and make it universally accessible and useful,” Google says on its corporate site. The company used to have an even more saccharine motto: “Don’t be evil.”

But the decisions Google made in growing its massive advertising technology business were cold-blooded and carefully crafted to primarily benefit itself, the Department of Justice argued during the first two weeks of its antitrust trial.

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Today on Decoder, we’re talking about the big Google antitrust trial that’s currently taking place in a federal courthouse. No, not the one you’re thinking of — it’s the second Google antitrust case in just as many months. The company lost a landmark case in August in which a court ruled that it had an illegal monopoly in search.

This time around, the Department of Justice is claiming Google has another illegal monopoly in the online advertising market.

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Google employees liberally labeled their emails as “privileged and confidential” and spoke “off the record” over chat messages, even after being told to preserve their communications for investigators, lawyers for the Justice Department have told a Virginia court over the past couple of weeks.

That strategy could backfire if the judge in Google’s second antitrust trial believes the company intentionally destroyed evidence that would have looked bad for it. The judge could go as far as giving an adverse inference about Google’s missing documents, which would mean assuming they would have been bad for Google’s case.

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The word of the day in US v. Google was “parking.” As in: did Google buy some of its most ascendant and dangerous competitors in the online advertising business, all the while planning on parking them off in some far-flung corner of the company so that no one could possibly upset Google’s dominance? That is a central question of the government’s entire case against Google, and it came up over and over on Monday morning.

To kick off the second week of the landmark antitrust trial over Google’s control of online advertising, the Department of Justice called Neal Mohan, the CEO of YouTube and a longtime Google advertising executive. Mohan came to Google in 2008 through Google’s acquisition of DoubleClick, which formed the basis of Google’s now-unstoppable advertising engine. Mohan also helped advocate for the acquisition of Admeld, another company at the center of the suit. He argued throughout his testimony that Google was never attempting to buy up and neuter its competitors; it was simply trying to compete.

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For years, Google took the same 20 percent commission for ad transactions that ran through its platform, even though it was higher than what any other industry player charged. Executives privately worried the fee was difficult to defend. Now, the Justice Department argues it’s a key sign of Google’s monopoly over online ads.

Google’s so-called take rate took center stage on the last day of week one in the Justice Department’s second antitrust trial against Google. Citing internal Google documents and the testimony of former Google sell-side ads executive Chris LaSala, the DOJ sought to demonstrate that Google never experienced any real pricing pressure due to its unshakable dominance in the market, despite knowing its fee was higher than competitors’ and being aware of customer complaints about its tools. The trial continues this week, with YouTube CEO and former Google ads executive Neal Mohan testifying on Monday.

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Google changed the rules of its publisher ad product in a way it knew online websites selling ad space would protest in order to gain back more control in the ad tech market, the Department of Justice alleged on the trial’s fourth day in its antitrust case against the company.

Through the testimony of a former Google executive, internal company emails, and a recording of a contentious 2019 meeting with Google’s publisher customers, the DOJ painted a picture of a company that ignored its customers’ preferences to strengthen its own business position, knowing they had few real alternatives. Google’s attorneys countered that executives listened to customer feedback and made some adjustments, even though it kept the core of the change in place.

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Google’s tool that lets publishers sell ad space on their websites is ubiquitous, but that’s largely a testament to how hard it is for customers to get out of it, one former publishing executive testified in federal court on Tuesday.

“I felt like they were holding us hostage,” said Stephanie Layser, a former programmatic advertising executive at News Corp (which owns brands like The Wall Street Journal and the New York Post) who now works at AWS. Layser was testifying as a government witness in the Justice Department’s second antitrust case against Google, which is accusing the company of monopolizing the markets for ad tech tools and illegally tying together two of its products.

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Google and the US Justice Department each believe the other wants too much of one thing: control.

“Control is the defining characteristic of a monopolist,” DOJ counsel Julia Tarver Wood said during opening statements in the federal government’s second antitrust trial against the search giant, which kicked off on Monday in Alexandria, Virginia. To the government, Google exerts too much control over every step of the way publishers sell advertising space online and how advertisers buy it, resulting in a system that benefits Google at the expense of nearly everyone else.

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