Google reveals ad tech revenue in antitrust case court documents

The Google antitrust trial has yielded some new insights into the company’s inner operations, and most recently the tech giant disclosed its first look at the financials of the ad tech side of its business. In court documents, Google shared revenue from key parts of its ad tech platform, ones that are central to the trial, including its publisher ad platform Google Ad Manager and its demand-side platform Display and Video 360. The documents were part of the vast repository of exhibits that have been coming out ahead of Google’s antitrust trial, set to start Sept. 9 in U.S. District Court for the Eastern District of Virginia. Also read: Google’s ad tech business may be too big to sell The case is focused on Google’s ad tech products, used by advertisers and publishers to participate in real-time ad auctions online, an industry in which Google holds large sway. More: A primer on the upcoming Google antitrust case The U.S. Department of Justice asked for the financial metrics from Google’s ad tech portfolio, data the company has never before produced. Now, the documents reveal details about the size of those businesses, and how they stack up to rivals such as The Trade Desk. What stood out to Brian Wieser, ad industry expert and independent analyst who runs the Madison and Wall newsletter, was that Google’s DV360 DSP generated less revenue than The Trade Desk, a publicly traded company with ad tech focused on the buy side. “It’s interesting how DV360, and the way they’re allocating revenue, is a lot smaller than I thought,” Wieser said in an interview with Ad Age. Check out the latest Ad Age events and award programs DSP to DSP In the docs, Google included a caveat that it has not broken out the financial data about “ad tech products” in the past, and that could affect its accounting accuracy. The numbers Google provided showed that Google Ad Manager, the ad server and ad exchange service used by publishers online, booked $7.4 billion in revenue in 2020, generating $1.5 billion in net revenue for Google. Meanwhile, DV360 booked $2.2 billion in revenue in 2020, and $438 million in net revenue for Google. Google Ads, the successor to AdWords, booked $2.6 billion in revenue in 2020, with net revenue of $2.2 billion. “In total, these businesses generated $15 billion in booked revenue and $2.9 billion in net revenue with $255 million in operating income,” Wieser wrote in his newsletter. “For a reference point, during 2020, The Trade Desk had $4.2 billion in gross revenue with $836 million in net revenue and $150 million in operating income.” Google’s closest competitor, at least on the DSP, advertiser-focused side of ad tech, is The Trade Desk. Until now, there was no way to compare the two financially. Also read: Google agency perks revealed in court docs In the court documents, Google attorneys objected to the need to make some of the accounting disclosures, and they argued that terms such as “booked revenue” were left vague and undefined by DOJ attorneys. Google attorneys said the company would do its best to interpret the figures and present what it could about its ad tech products. Wieser said the “booked revenue” that Google ultimately reported was likely the total revenue that marketers spent through ad tech products, such as DV360, and the net revenue was Google’s portion. Meanwhile, Google’s “take rate,” the share of revenue it keeps from its ad tech offerings, was lower than The Trade Desk’s, Wieser said. Google’s take rate was 15% on DV360, whereas The Trade Desk’s take rate was 20%, Wieser said. Google executives had discussed the take rates in other recently disclosed court filings, Wieser said in the newsletter, adding that there are other ways of calculating the rate that would place Google's take closer to 20%. However, the fact that Google execs made an apples-to-apples comparison between DV360 and The Trade Desk was notable, Wieser said. That gives some sense as to how Google views its DSP business, Wieser said. “When they note the 15% compared to 20%, that means they’re looking at it on a ‘DV360 versus The Trade Desk’ basis,” Wieser said, “not on ‘a total ad tech portfolio versus The Trade Desk’ [basis].” “That tells you that’s how they’re looking at it,” Wieser said, on a DSP to DSP level. Google was not immediately available to comment for this story. The DOJ is trying to prove that Google operates as a monopoly on the publishing side of ad tech, where Google Ad Manager serves 90% of online publishers, according to the court filings. Advertisers and ad tech players are watching this case closely to see how the programmatic ad markets could shift depending on the outcome of the trial. Google is likely to argue that the ad tech markets are robust, and that its practices have not hindered the emergence of competitors such as The Trade Desk. But Google’s turn in the antitrust spotlight has already had lasting ramifications on the company simply by forcing it to operate under stricter oversight protocols. Searching for remedies Earlier this month, Google lost a different antitrust case, revolving around the search side of its business. The ruling against Google has opened the door to legal action from rivals that claim its search dominance hurt their businesses. For instance, this week Yelp emerged with a fresh lawsuit against Google, claiming that its search practices unfairly tilted consumers toward its local search services, and deprioritized Yelp’s offering. Also this week, a Google competitor in the DSP space, Viant CEO Tim Vanderhook, who is a former CEO of MySpace, said that Google’s practices were responsible for the downfall of MySpace. “Everyone thinks Facebook killed MySpace, but the real assassin was Google,” Vanderhook posted to LinkedIn, adding that Google was “using its monopoly to dismantle us piece by piece.” The upcoming ad tech antitrust case will be decided by Judge Leonie Brinkema. One of the remedies of the trial, if Google loses or settles, could be to break up parts of Google’s ad tech stack, and spin off its ad serving business or DSP. The new documents give a look at the size of those businesses. In 2020, Google’s companywide revenue, including ads, services, cloud and other bets, was $183 billion. Google ad tech products booked revenue of $15 billion that year, according to the court filings. Google could easily spin out parts of its ad tech into their own companies, according to advertising experts. One of the results, of course, could be that Google would be freed up to compete even more aggressively, freed from antitrust concerns. “Google will probably find that it’s advantageous to separate those businesses, if that’s the situation,” Wieser said. “But the irony is that those who are asking for it would then face a Google who’s unencumbered by regulatory constraint.” ~ ~ ~CLARIFICATION: Google’s take rate calculation from Display and Video 360 came from a separate court filing from the one that disclosed the key financial metrics. This story was updated to clarify the source of that information.

Google reveals ad tech revenue in antitrust case court documents

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