Google rivals, publishers and even advertisers have long suspected something fishy was going on in online ad markets, and now they have more basis for those concerns, after the U.S. Department of Justice presented its antitrust case outlining Google’s oversized influence in the world of internet advertising.

“Everybody has known that Google was not running a transparent and fair auction platform business for a number of years and this lawsuit puts in shocking detail the level of nefariousness that was going on,” one ad tech executive told Ad Age, speaking on condition of anonymity because they work for a rival ad exchange.

For Google’s detractors, the lawsuit, filed last week by the DOJ and attorneys general from eight states, feels like, “told you so.” It alleged that the ad giant manipulated ad auctions as the largest provider of technology to digital publishers and advertisers. The DOJ picked apart every move Google has made since it bought DoubleClick in 2007, which the Federal Trade Commission approved at the time. The new antitrust lawsuit alleged Google implemented obscure bidding rules to favor its own ad exchange and interests, not to benefit publishers or advertisers. The DOJ recycled allegations from a couple of years ago, originating in a suit out of Texas, claiming that Google collaborated with Facebook to neutralize the social network as a competitor in ad tech innovation. And the DOJ even made a new claim that Google tried but failed to recruit Amazon to its anticompetitive cause.

While it could take years for the case to play out there already are consequences for publishers, advertisers and big tech companies, shaping the future of internet advertising.

For its part, Google has refuted the DOJ’s characterization of its business. Dan Taylor, a VP of global ads at Google, told Ad Age that the suit seems “anachronistic” and behind the times. “We’ve never had more competitors and more players in the space,” Taylor said in a recent interview. “So, it just sort of felt a little out of touch with where things are today.”

Taylor pointed to the rise of Amazon as the third-largest internet ad player in the U.S., providing services to advertisers and publishers. Meanwhile, Apple is growing an ad business that could generate $30 billion within a few years, Taylor said.

Google’s header bidding headache

Google has faced accusations before about attempts to thwart header bidding, and the DOJ resurfaced that complaint. Header bidding allows publishers to run more robust ad auctions by accepting bids from ad exchanges outside Google’s tools. The DOJ said Google tried to dissuade large rivals Facebook and Amazon from developing header bidding technology for publishers. Instead of competition, Google wanted to bring them into its fold. Facebook at one point was poised to join the header bidding brigade, but instead decided to cooperate with Google’s program called Open Bidding. Open Bidding gave publishers a new way to run auctions that approximated the benefits of header bidding while keeping the action within Google’s ad server.

“Google has promoted Open Bidding as an answer to the industry’s call for wider participation by rival ad exchanges and increased competition,” the DOJ alleged. “In fact, Open Bidding was a Trojan Horse that Google used to further cement its own monopoly power.”

Google was able to nudge publishers to adopt Open Bidding, and that prodded rival exchanges to join, according to ad tech leaders, who were involved in the growth of the program and spoke on condition of anonymity.

“We avoided Open Bidding for a couple of years,” said one CEO of an ad tech company. “But it got to the point where enough publishers participated in it, and they were asking us to participate in it. So even if it’s rigged, we were still leaving some amount of money on the table.”

Google’s Project Poirot

The DOJ claimed Google executives plotted to “dry out” header bidding, because if more publishers deployed it, then more advertisers would gravitate toward those auctions. Google has a strong hold on publishers through Google Ad Manager services and a lock on advertising demand through Google Ads and Display and Video 360.

At one point, Google even considered preventing advertisers from using its buying tools to bid on inventory made available in header bidding, the DOJ claimed. Instead of shutting down access to header bidding-based inventory on rival exchanges, Google launched what it called Project Poirot. The program was a ploy to manipulate bids coming from Display and Video 360 advertisers, which represents demand from large brands and ad agencies, so that Google AdX would win most of the ad auctions, beating rival exchanges, according to the DOJ.

“Google would shift transactions away from ad exchanges using header bidding and to Google’s AdX by artificially manipulating the bids sent to rival ad exchanges so that Google’s AdX could win those transactions more often (even if that meant harming Google’s own advertisers),” the lawsuit states.

Google’s Taylor told Ad Age that the DOJ is “completely wrong” about how Google bidding and auction dynamics work. “What Project Poirot was about was a bid optimization tool that’s optional for advertisers to use,” Taylor said. “It helped drive better advertiser outcomes and make sure advertisers aren’t overpaying.”

“We’re not tilting the scales toward Google Ad Manager or applying a rate-lowering feature on third-party exchanges and leaving Google Ad Manager alone. That’s just where they’ve got it wrong.”

Why Amazon went its own way

Amazon made a surprise appearance in the lawsuit, as Google approached the company for a business deal on Open Bidding, too. Google hoped to lock in Amazon’s advertising demand, as it had with Facebook. “Google sought to head off Amazon’s investment in header bidding technology with a similar offer, albeit without the same success,” the lawsuit said.

Google has declared some vindication over its partnership deals, however. Since 2020, Texas Attorney General Ken Paxton has led an antitrust suit against Google, too, and that case greatly focused on alleged “collusion” between Google and Facebook, citing the Open Bidding arrangement. Last year, Google claimed a victory when a U.S. district court rejected parts of Paxton’s claims, especially regarding the Facebook deal and Open Bidding. The court did not strike the whole case, however, and it is still ongoing.

“Of course, we approached Amazon as a large demand source for advertising inventory and wanted to offer them our services and be able to make them a business partner in that way,” Taylor said. “And they chose to go a different direction and do some direct integrations on the publisher side.”

Amazon has emerged as a prominent rival to Google and Meta, formerly Facebook, in internet advertising.

How ad tech rivals were affected

Rival publisher ad servers were squeezed by Google’s Project Poirot and another variety of the program, dubbed Poirot 2.0, the DOJ claimed. The rival exchanges, including OpenX, PubMatic, Xandr and Rubicon (now Magnite) were losing more ad auctions to Google. “For Google’s ad exchange, on the other hand, Poirot increased revenue, publisher payouts, and win rates, through a sleight of hand forcing a shift in advertiser spend,” the DOJ said.

Google’s tactics put publishers and advertisers in difficult positions, according to a public policy expert at a prominent ad tech firm, who spoke on condition of anonymity. “Certain competitors have just given up—they folded—in this impossible anticompetitive environment.”

The antitrust case mostly addresses how Google used its dominance on the publisher side to push out rival exchanges, but the case references points where Google used its power on the demand side, as well. Google has enticed advertisers to adopt its ad buying tools by making some of its ad inventory, such as YouTube, exclusively available through Display and Video 360.

“Their whole contractual process, as well, is very much take it or leave it,” said the ad tech policy executive. “So, if you’re going to have any access to Google products there is no other way around it. There are no negotiations, and they can only do that because they dominate the market.”

What is the likely outcome?

Google is fighting the case, but the DOJ is calling on Google to divest from Google Ad Manager and AdX, the ad exchange. Short of that, Google already said it continues to innovate on its products and is giving more flexibility to publishers and advertisers.

“To address the concerns in the suit, it would be to do the things that we already do,” Taylor said, “which is enable our buying tools to buy on multiple sources of inventory, enable our publishers to take multiple sources of demand, be transparent with our rates and our fees. And, so, these are all things that we actively have built into our products.”