DOJ claims Google has “trifecta of monopolies” on Day 1 of ad tech trial

On Monday, the US Department of Justice's next monopoly trial against Google started in Virginia—this time challenging the tech giant's ad tech dominance.

The trial comes after Google lost two major cases that proved Google had a monopoly in both general search and the Android app store. During her opening statement, DOJ lawyer Julia Tarver Wood told US District Judge Leonie Brinkema—who will be ruling on the case after Google cut a check to avoid a jury trial—that "it’s worth saying the quiet part out loud," AP News reported.

"One monopoly is bad enough," Wood said. "But a trifecta of monopolies is what we have here."

In its complaint, the DOJ argued that Google broke competition in the ad tech space "by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising."

The result of such "insidious" allegedly anti-competitive behavior is that today Google pockets at least 30 cents "of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools ... and sometimes far more," the DOJ alleged.

Meanwhile, as Google profits off both advertisers and publishers, "website creators earn less, and advertisers pay more" than "they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools," the DOJ alleged.

On Monday, Wood told Brinkema that Google intentionally put itself in this position to "manipulate the rules of ad auctions to its own benefit," The Washington Post reported.

“Publishers were understandably furious,” Wood said. “The evidence will show that they could do nothing.”

Wood confirmed that the DOJ planned to call several publishers as witnesses in the coming weeks to explain the harms caused. Expected to take the stand will be "executives from companies including USA Today, [Wall Street] Journal parent company News Corp., and the Daily Mail," the Post reported.

The ad tech trial, which is expected to last four to six weeks, may be the most consequential of the monopoly trials Google has recently faced, experts have said.

That's because during the DOJ's trial proving Google's monopoly in search, it remained unclear what remedies the DOJ sought. Some ways to destroy Google's search monopoly could be "unlikely to create meaningful competition" or hurt Google's bottom line, experts told Ars, but a more drastic order to spin out its Chrome browser or Android operating system could really impact Google's revenue. It won't be until December that the DOJ will even provide a rough outline of proposed remedies in that case, Reuters reported, with the judge not expected to rule until next August.

But the DOJ has been very clear about the remedies needed in the ad tech case, "asking Brinkema to order a divestment of Google’s Ad Manager suite of services, which is responsible for many of the rectangular ads that populate the tops and sides of webpages across the Internet," the Post reported.

Because the most "obvious" remedy would be to require Google to sell off parts of its ad business, experts told AP News that the ad tech trial "could potentially be more harmful to Google" than the search trial. Perhaps at the furthest extreme, antitrust expert Shubha Ghosh told Ars that "if this case goes against Google as the last one did, it could set the stage for splitting it into separate search and advertising companies."

In the DOJ's complaint, prosecutors argued that it "is critical to restore competition in these markets by enjoining Google’s anticompetitive practices, unwinding Google’s anticompetitive acquisitions, and imposing a remedy sufficient both to deny Google the fruits of its illegal conduct and to prevent further harm to competition in the future."

Ghosh said that undoing Google's acquisitions could lead to Google no longer representing both advertisers' and sellers' interests in each ad auction—instead requiring Google to either pick a side or perhaps involve a broker.

Although the Post reported that Google has argued that "customers prefer the convenience of a one-stop shop," the DOJ hopes to prove that Google's alleged monopoly has shuttered newspapers across the US and threatens to do more harm if left unchecked.

Google warns DOJ win could harm small businesses

On Sunday, Google posted a blog warning that any attempt to break up its ad business could rattle customers who choose to use Google's ad tech because it "is simple, affordable, and effective."

Further, the tech giant claimed that "Google’s ad tech fees are actually lower than reported industry averages—hardly a sign of monopoly abuse" and that the DOJ risks "raising fees for advertisers and lowing returns for publishers" by messing with its ad business.

"By picking winners and losers in a highly competitive industry, the DOJ risks making it more expensive for small businesses to grow and for websites and apps to make money," Google's blog said. "Let’s not break what’s working."

On Monday, Google's lead attorney, Karen Dunn, told Brinkema that Google "started out as one of only a handful of companies" in the ad tech industry but today faces ample competition, including from companies with names "that everyone recognizes like Microsoft and Amazon and Meta and Disney," as well as "names that are less recognizable but are still multibillion dollars companies like Criteo and the Trade Desk."

If the court ordered a breakup of Google's ad business, Microsoft, Amazon, Meta, and TikTok would be the only "winners," Dunn argued, because they "have already spent years investing in advanced technologies, including AI which is already changing every single thing we're going to talk about in this trial and they are all ascendible while Google's share is falling.”

"With the cost of ads going down and the number of ads sold going up, the market is working," Google's blog said. "The DOJ’s case risks inefficiencies and higher prices—the last thing that America’s economy or our small businesses need right now."

Ghosh told Ars that Google's warning seemed like a "standard rhetorical ploy," saying we would need to understand exactly what remedies are being sought before judging whether small businesses could be harmed.

DOJ called Gannett exec as witness

Google has accused the DOJ of having a "narrow view of the ad tech market" that's outdated and "doesn’t reflect reality." By focusing their case on "display ads and banner ads that load on webpages accessed through a desktop computer," Google argued that the government "fails to take into account consumers’ migration to mobile apps and the boom in ads placed on social media sites over the last 15 years," AP News reported.

But the Post noted that some publishers suffer from Google's ad tech dominance and that a DOJ win could be a "boon" to publishers who don't always reap the rewards of higher advertising prices on their premium content. The DOJ argued in court filings that publishers have been forced to "put more ads on their websites, to put more content behind costly paywalls, or to cease business altogether," AP News reported.

In their complaint, the DOJ alleged that after Google realized that publishers rarely switch ad platforms because of high costs and risks involved, Google "forged an exclusive link" between Google Ads, Google's publisher ad server, and Google Ads' advertiser demand.

"If publishers wanted access to exclusive Google Ads’ advertising demand, they had to use Google’s publisher ad server" and ad exchange, "rather than equivalent tools offered by Google’s rivals," the DOJ alleged. "In effect, Google positioned itself to function simultaneously as buyer, seller, and auctioneer of digital display advertising."