Google’s 2019 Ad Tech Maneuver: A Masterstroke or Monopoly? Unpacking the Antitrust Trial
By Jody Godoy
ALEXANDRIA, Virginia (Multibagger) - In 2019, Google (NASDAQ: GOOGL) implemented strategic changes that significantly impacted the digital advertising landscape. Internal documents revealed during Google’s ongoing antitrust trial depict a calculated move to prevent publishers from diverting ad sales to competitors, which has become a focal point in the U.S. Department of Justice's (DOJ) case against the tech giant.
The Core Issue: Restricting Publisher Flexibility
Google's decision to eliminate a feature that allowed publishers to set higher minimum bids on Google's AdX compared to other exchanges is central to this case. The DOJ and a coalition of states argue that this move demonstrates Google's intent to unfairly dominate the market for online advertising technology.
Internal Emails Expose Concerns
The DOJ presented emails showing Google's internal concerns about losing revenue as publishers leveraged their ability to prefer other ad exchanges, often choosing those with lower fees over Google. Executives acknowledged that publishers were willing to sacrifice some revenue to diminish their reliance on Google.
In a 2017 email thread, Google executives noted, "It helps them to keep Google at bay and put pressure on us (similar to any industry)."
Mitigating Backlash: Google's Strategy
As Google prepared to roll out the 2019 changes, which would remove the contentious feature, employees discussed strategies to mitigate potential backlash. Nitish Korula, a research scientist at Google at the time, warned that rolling out the change alone "would be viewed as pure loss of functionality that we're doing for our own (perceived 'nefarious/self-serving' reasons)."
To soften the blow, Google paired the change with other publisher-friendly updates, including the elimination of its "last look" auction advantage, which gave Google a competitive edge by allowing it to outbid other exchanges at the last moment.
Mixed Reactions from Publishers
Despite Google's efforts to frame the changes as system improvements, including an estimated 2.7% median increase in ad auction revenue for its top 500 publishers, major players like the New York Times, News Corp (NASDAQ: NWSA), and The Weather Company expressed strong opposition. Recordings from an April 2019 meeting played in court highlighted the frustration of publishing executives.
"You have made it next to impossible for any of us to figure out how to increase our yield with partners outside of Google," stated Jana Meron, then an advertising executive at Business Insider.
The Potential Outcome and Implications
The trial, expected to span several weeks, could have significant implications for Google's ad tech dominance. If U.S. District Judge Leonie Brinkema rules that Google violated antitrust laws, the DOJ may push for the divestiture of Google Ad Manager, which encompasses the company’s publisher ad server and ad exchange.
Simplified Analysis: What This Means for You
In simple terms, this trial addresses whether Google unfairly limits competition in the online advertising market. If you own a business that relies on online ads, this could affect where and how you place ads, potentially leading to more options and possibly lower costs if Google is forced to scale back its control. For consumers, it might mean a more diverse and competitive online space, potentially leading to better services and innovations from different ad tech companies.
Understanding how these corporate maneuvers impact the broader market helps everyone—from individual investors to large publishers—make more informed decisions about their advertising strategies and financial investments.