Google’s antitrust case mostly focuses on the internet giant’s strategy over the years to strengthen its grip on the publishing side of ad tech, but this summer’s court filings have also revealed intricacies of deals with advertisers—and even raised the dreaded “rebate” word. There also are hundreds of pages of documents that show Google’s positioning in the late 2010s, reflecting ad tech industry dynamics that Google was trying to manage so it could remain competitive against rivals such as Facebook and keep pace with innovations in programmatic advertising.

Google’s antitrust trial, spearheaded by the U.S. Department of Justice, is expected to start on Sept. 9, and there already have been reams of Google papers released that tell an unprecedented story about the company’s inner workings. One exhibit, disclosed last week, had a detailed look at the incentive program for ad agencies to induce more spending through upfront deals. The 2018 Google memo outlined the “display and video incentive program,” designed to “drive committed non-search growth while deepening our long-term partnerships with agencies and advertisers.” The memo talks about a “rebate” program through an “agency capability fund,” which encouraged agencies to ramp up yearly spend on YouTube and participate in ad platform training.

Ad Age’s primer on Google’s ad tech trial of the century

The incentive program is either proof of Google’s strong-arm tactics to drive advertisers into its ecosystem, or it’s a common industry practice deployed by all participants, in media and ad tech, to lure advertisers with special perks and rates.

Google’s critics are pouncing on the court papers, though. “They’ll lose loyalty [among advertisers] over these things coming out, and it’ll probably weigh on their decision to settle or not settle,” said Adam Heimlich, CEO of Chalice Custom Algorithms, an advertising software service. Heimlich, an outspoken Google critic, testified against the company at a U.S. Senate hearing on ad tech competition in 2020.

Another filing from earlier this month includes hundreds of pages of strategy papers from the last decade. They show Google executives discussing an increasingly competitive ad tech landscape, and how the company planned to make the most of its ad tech assets to evolve with the market. The question is whether Google used monopolistic practices to respond to growing competition in everything from display and video ads to ad tech services on the buy and sell sides of programmatic advertising. That will be for Judge Leonie Brinkema in the U.S. District Court for the Eastern District of Virginia to decide since there is no jury in the case.

Google declined to comment ahead of trial for this story. The company is setting up a case in which it argues how its business tactics were in line with many competitors, and that those competitors also prove there is a vibrant ad tech market. Google has plenty of defenders, too, who recognize that potentially embarrassing internal communications often reflect common industry dealings. 

Some trial watchers think Google could settle the case before the trial starts. Regardless, there already have been court disclosures that shine a light on the complex world of ad tech and Google’s sprawling business model.

How advertisers fit into the Google documents

Ad industry watchers were not surprised by the details of Google’s deals with ad agencies in the memo about the upfront incentive program, but their inclusion in the case was a bonus.

“It wasn’t clear the extent to which the DOJ was going to dig into buy-side dynamics to support their arguments,” said Arielle Garcia, director of intelligence at ad watchdog group Check My Ads, in a message to Ad Age. “And to me, the fact that Google incentivizes agencies to drive product adoption in turn directing money wherever Google would like it to go is very important.”

Other industry insiders have said that the terms outlined in Google’s 2018 memo about the incentives were similar to how other ad tech platforms structure deals, and that TV networks have also doled out perks for decades in upfront deals.

Still, the Google memo offers a rare, detailed look at these types of programs. It also showed how Google tied together various parts of its business and ad tech, and its other properties, to encourage advertisers to spend across its platform.

Perhaps, the most awkward part for Google and ad agencies: The memo details the incentives, cash payments and rebates. Rebates have long been a source of controversy in ad land, and they even have been the focus of federal investigations. But it’s not evident that Google’s incentive program was out of bounds or against industry norms.

“I don’t care,” said one media buying executive from a major brand, speaking on condition of anonymity, “as long as agencies appropriately allocate the value, or use it to build capabilities and tools [for us].”

Google’s memo also revealed the size of its upfront deals through the incentive program, financial data that is usually tightly sealed from the public. In 2018, Google’s program generated $15.2 billion in commitments, fueled by about $445 million in incentives, according to the document.

Google’s ad tech strategy outlined

Earlier this month, dozens of Google strategy papers from 2017 were released, shining a light on the state of play in internet advertising markets at the time. The documents showed how Google responded to innovations from competitors, such as Facebook, now Meta, which was developing Facebook Audience Network, an ad targeting network for third-party apps. There were also newer programmatic formats that Google lagged in adopting into its ad tech, such as audio ads, out-of-home digital displays, retail media and connected TV. These are still areas where innovation is happening today in ad tech, and Google will likely argue that the independent demand-side platforms that have found niches in these areas are a sign of robust competition.

Also read: Retail media networks survive Google cookie reversal

One strategy paper, “O&O (Growing our O&O footprint for Display),” dives into how Google wanted to increase its supply of owned-and-operated ad inventory, and how it wanted to “enable third-party inventory to behave more like O&O,” the memo said.

Owned-and-operated ad inventory is “preferable (and complementary) to an ad network,” Google’s team said at the time. Google keeps 100% of the revenue on owned-and-operated ad inventory. On YouTube, Google keeps 55%, the memo said, but it only keeps 32% through Google Display Network and 20% through AdX, the ad exchange that funnels ads to publishers through Google Ad Manager.

Google’s owned-and-operated properties created “a demand network by ensuring Google remains a must-buy for advertisers,” the memo said. “This advertiser loyalty creates a base for building the network, because once they’re spending on Google anyway, there is value in the scale gained by simply extending the same buy to other sites.”

These types of packaging tactics will likely be a key part of this case, hinging on how Google linked its services and products.

Google deals with a changing internet

The documents also show how Google grappled with new dynamics in the industry, as publishers diversified their revenue away from simple ads. “A worrisome trend is emerging where free content supported by standardized ad products is becoming a challenging business model,” Google executives said in a 2017 paper titled, “Becoming the Ad Platform of Choice for Publishers.”

The paper discussed how publishers, such as The New York Times, were developing ad formats that were more specialized for their sites, and “not amenable to standardized backfill,” the type that Google’s platform served.

Google executives talked about how publishers were relying on more ad exchanges to fill ad loads and they were adopting header bidding, an auction with more demand outside of Google's platform, as a sign of their changing business models in ad tech.

Also, apps such as Spotify were embracing new formats, including audio ads, and commerce companies were offering services to buy on behalf of advertisers.

“Google can still play an important role here because there is nobody else today in as good a position to offer a complete publisher platform across all revenue sources,” the paper said.

In the paper, a point was raised suggesting that Google could get out of the publisher ad-serving business, and “become just an ad network again: not recommended.” Google’s team was against that option because of the benefits of owning the entire platform.

Also read: Spotify rebrands its ad tech business

Another strategy paper about “programmatic direct,” which pertains to direct, automated deals between publishers and advertisers, noted: “The direct reservations market is big ($25 billion) today.” The benefits of programmatic direct for advertisers are that they get to reserve premium ad inventory at predictable rates, and publishers get a guaranteed commitment.

Google’s team also discussed the advantages of owning an ad platform on the buy and sell sides of the equation. “Our open auction revenues are at risk if we are reduced to a bidder (lose the tag on the page) in someone else’s auction,” the paper said, “or a platform that doesn’t offer a complete set of publisher monetization tools.”

The upcoming trial will determine whether any of the memos and papers showed Google’s strategy was anticompetitive, according to ad tech insiders. “Some of their actions in response to the market becoming more competitive are what are now at trial,” said one ad tech CEO, who spoke on condition of anonymity, “because they may have, they may have, attempted to shore up the foundation of the business in a way that isn’t cool.”