Google Antitrust Trial: How News Corp's $9 Million Dilemma Exposes Big Tech's Grip on Digital Advertising
By Jody Godoy
ALEXANDRIA, Virginia (Multibagger) - In a pivotal revelation during Google's antitrust trial, a former executive from News Corp (NASDAQ: NWS) disclosed the substantial financial impact of potentially moving away from Google's (NASDAQ: GOOGL) advertising tools. In 2017, News Corp considered the switch, but the Wall Street Journal publisher estimated a staggering $9 million loss in ad revenue.
Stephanie Layser, who served in advertising technology at News Corp from 2017 to 2022, testified that Google's ad tools often benefited the tech giant more than the publishers. However, despite the frustration, the publishing industry remained largely dependent on Google's ad server and ad exchange. Layser likened this dependency to being held "hostage."
During the second day of the anticipated multi-week trial, the U.S. Department of Justice aims to demonstrate that Google monopolized the markets for publisher ad servers, advertiser ad networks, and the ad exchanges that connect the two.
The Financial Stakes: Google's Grip on Digital Ads
Documents presented at the trial revealed that in 2016, News Corp generated $83.3 million from ads sold through ad tech tools instantaneously. Over half of these transactions were processed via Google's ad exchange, contributing $18.4 million from Google ads advertisers alone. The publisher estimated that switching to a different product would result in a $9 million loss, highlighting Google's significant influence.
By the end of Layser's tenure, an overwhelming 70-80% of News Corp's ad transactions were processed through Google's ad exchange.
Google's Defense: Industry Evolution
Google counters the allegations, arguing that the case relies on an outdated industry perspective. The tech giant asserts that large publishers typically utilize an average of six different platforms to sell ads, with over 80 services available in the market.
The Legal Battle: Implications for Big Tech
Prosecutors are striving to prove that Google leveraged its dominant position to prevent publishers and advertisers from using alternative tools, thus undercutting competitive bids. Should U.S. District Judge Leonie Brinkema rule against Google, the prosecutors are advocating for the divestiture of Google Ad Manager, a platform encompassing the company's publisher ad server and ad exchange.
Breaking It Down: What This Means for You
In simple terms, this trial is about whether Google used its power to dominate the digital advertising market unfairly. News Corp, a major publisher, found itself deeply reliant on Google's tools, fearing significant revenue losses if they switched to other products.
For everyday consumers and small businesses, this case could lead to major changes in how online ads are bought and sold. If Google is forced to sell off parts of its ad business, it could mean more competition and potentially lower costs for advertisers, which might trickle down to cheaper prices for products and services.
Understanding this case helps you see the big picture of digital advertising and its impact on the economy. As Google faces scrutiny, the outcome could reshape the landscape of online advertising, making it more competitive and fair for everyone.