The Department of Justice’s antitrust case against Google is increasingly focused on its advertising technology software, and whether it couples those tools with its dominant position in search to gain an unfair edge over rivals, according to nearly a dozen industry executives who have answered multiple questionnaires from the federal government.
While preliminary questions were general in nature, they have become more sophisticated and specific. “When they first started they didn’t know much," says one of the executives. "But as they dug into it, I must say they have come a long way and some of them are excellent,” says one publishing executive. “They are looking more broadly at the advantages Google has at ad tech monopolization.”
Among DOJ's questions: How much of a publisher's revenue and ad inventory goes to Google? What are the publishers' different revenue streams? How does advertising impact their newsrooms?
“What they are trying to do is round out the story with publishers and say, ‘How does this affect publisher survival’," says one publisher. For another publisher, the answer is already clear: "It’s just not a fair marketplace."
The sources—including large publishers and ad tech executives—spoke with Ad Age on condition of anonymity since they are not permitted to publicly discuss the Department of Justice inquiries. Many said they filled out dozens of questionnaires that were emailed to them as Word documents, while a few spoke directly with Department of Justice staff.
The Department of Justice did not respond to a request for comment.
The government is also asking questions about "Average Revenue Share," a relatively new payment system for publishers, and "Target CPM," both of which give the company greater price flexibility than rivals in purchasing ad space from publishers under certain circumstances.
Thicket of automation
The automated processes that drive the buying and selling of digital ads programmatically can be dizzying—which might explain the government's initial interest in understanding the basics.
Automation includes sell side platforms (SSP), used by publishers to sell ads; demand side platforms (DSP), used by marketers to buy ads; the advertising exchange, a marketplace where digital ads are bought and sold; and the ad server, used to manage ad inventory and programmatic campaigns.
Google owns each of these components, having acquired the parts over the years. In addition, Google is especially powerful because of the unique demand it brings from its search advertising business. With a nearly 92 percent market share in search, Google is able to bring massive volume to a programmatic marketplace that is unique to it.
In 2019, Google reported Search and “other” advertising revenues of $98 billion for the calendar year, up 15 percent year-over-year. It’s unclear exactly how much falls into the “other” category, but the bulk of the company’s earnings derive from its Search business.
Further, if publishers want access to the unique demand Google brings to the table, such as Adx, they must use Google tools. The Department of Justice is examining how that requirement, combined with how the company pays publishers, gives Google an unfair edge over competing platforms, including Magnite or Index Exchange, for example, according to publishers and ad tech executives interviewed by Ad Age.