The phrase “caution is key” has already become a totem of sorts for the new age of US antitrust regulation.
It was used by the Supreme Court in its ruling in NCAA v. Alston, an antitrust suit that essentially uncorked sponsorships and other revenue-earning opportunities for college athletes – now known as NIL deals (for “name, age, likeness”). Judge Mehta, who ruled in Google’s search antitrust trial earlier this year, repeated the tag as part of his rationale for not requiring a divestiture in that case.
It may very well appear in the decision in the DOJ v. Google publisher ad tech antitrust suit, too. Both sides filed new post-remedy trial briefs on Monday, with the DOJ and Google each citing the phrase in support of their conflicting viewpoints on a potential divestiture of Google’s sell-side ad exchange.
The two sides have updated their respective filings from September, albeit slightly. The DOJ and Google have added material presented during the remedies trial stage and, most importantly, sharpened their cases based on the clarifying lens of Judge Leonie Brinkema’s questions during the remedies trial.
The Google pitch
Google’s argument boils down to two things: administering a divestiture of Google’s former AdX publisher ad exchange will be a difficult, time-consuming affair, and is only necessitated by the DOJ’s contention that Google cannot be trusted to act within the spirit of the law or in compliance with a legal decree.
“The distrust of Google by a few large publishers and competitors is not a lever to bypass well-settled antitrust principles,” write Google’s legal counsel in its updated filing.
Google is proposing to develop Prebid integrations and allow publishers to place Prebid between DFP and AdX in the supply chain.
However, Google’s remedy proposal requires it to integrate with Prebid only for open web display ads. That means for any campaigns including video, CTV, in-app-inventory or any other non-banner format, Google can bypass Prebid. Also, Google’s definition of the open web display ad market wouldn’t include impressions with deal ID info or that have been packaged by a programmatic curation product.
The company also promises not to “introduce additional latency, reduce the frequency with which it responds to bid requests, or reduce the information transmitted by AdX” for publishers regardless of their ad server of choice.
Google will “enjoin” its first look, last look and unified pricing rules. Although, again, that self-imposed requirement would apply only to open web display inventory transacted via its publisher ad exchange. Those highly advantageous and nontransparent auction practices continue for all other media formats.
DOJ’s proposal to open source the ad server “Final Auction Logic” – the algorithmic rationale for why any ad impression was awarded to whichever advertiser – was met by a counterproposal by Google. The company would set up a channel through which publishers could request such auction data directly.
Google is also leaning on the fact that the government is requiring changes not just for Google, but for many tens of thousands of publishers who don’t have ad operations execs. The DOJ, per Google’s claim, “would force disruptions, migrations, extra costs, and unintended consequences” on these small publishers.
During the remedy trial phase, Judge Brinkema expressed concern that publishers who currently use AdX for free might be required to pay for the same product. If an antitrust solution requires publishers to do even a little bit of troubleshooting or JavaScript work, that too could be a real consideration against for the DOJ.
The DOJ has an offer to soften those problems. It would establish an escrow fund to collect a share of net profit from Google’s ad exchange and ad server businesses starting from this year. The fund would “directly mitigate” the financial costs for publishers in switching new tech vendors.
Google’s proposal “commits to providing reasonable support to rival ad servers and Prebid servers in order to ensure publishers are able to retain data while switching ad servers.”
The word “reasonable” can be interpreted many ways. But the court could just trust Google on that one.
After all, as Google’s lawyers write in its new brief, the “only real rationale for seeking divestiture is a lack of trust that Google will comply with this Court’s order.”
The DOJ’s take
The DOJ doesn’t downplay the many-years-long timeline for overseeing a shift of Google’s AdX code to a new infrastructure, and a sales process for the business itself.
“Take heart,” seems the DOJ’s rallying cry to Judge Brinkema in its updated filing, based on the the Table of Contents.
There’s Section I: “Restoring Competition in the Relevant Markets Is a Daunting Challenge, and Plaintiffs’ Structural Remedies Are Needed to Meet That Challenge.”
“Without Structural Relief, Competition Will Not Be Restored, Google’s Monopolies Will Not Be Terminated, and Google Will Continue to Enjoy the Fruits of Its Monopolization,” is the Section II headline. A personal favorite, from Section II subhead C: “Only Structural Relief Will Keep This Court from Becoming a Central Planner of the Ad Tech Industry.”
The DOJ also argues that for independent companies to emerge in the “decimated markets” of publisher ad exchanges and ad servers, advertisers and publishers need assurances that Google won’t self-preference its own pipeline of demand and supply-side ad tech in other ways. “Only by structurally altering the natural economic incentives by which Google operates its ad tech businesses will market participants gain the assurance they need to take concrete economic action,” the DOJ writes in its updated proposal.
And a divestiture of Google’s sell-side ad tech isn’t impossible. Google revealed during the remedy trial phase that it had previously considered a spin-out of these specific publisher ad exchange and ad server products, which were reckoned at two years to shift from Google to outside infrastructure.
The DOJ’s proposal, as it put it, “will jumpstart competition naturally, by allowing market forces – not a cumbersome behavioral-only decree – to do the hard work.”
The DOJ also needs to leave some extra gas in the tank, too, because its antitrust action with Google isn’t necessarily over with the divestiture of the AdX exchange.
“If these measures are not sufficient to restore competition,” the DOJ wrote in its filing, “the contingent divestiture of DFP is available to complete the work.”
