How big is too big? And when does a company become so big that the government is forced to step in and make it smaller? Politicians have been struggling with those questions for at least a hundred years. But as the latest generation of tech companies has taken shape, the questions are becoming more and more relevant to internet giants like Google and Facebook. There’s a new movement in Washington to break up those companies, whether through a Justice Department lawsuit or an old-school appeal to the Sherman Antitrust Act. It’s a struggle Microsoft fended off in the ‘90s, and it has only grown more urgent in the years since. As Amazon has taken a stranglehold of online retail, Jeff Bezos’ company has started to attract antitrust attention as well, with figures like Sen. Elizabeth Warren and Lina Khan taking aim at Amazon’s cutthroat competitive strategies. If it succeeds, it would be one of the most ambitious government projects in a generation — but success is still a long way off.
That’s the takeaway from Bjedov, who said that Google executive Craycroft’s distinction of a “business divestiture” from a full technical divestiture doesn’t sound meaningful. She said the purely instructional reference code he mentioned is exactly what she’d look for to do a migration.
That’s what DOJ expert witness Goranka Bjedov determined. Bjedov worked as a capacity engineer at Facebook and worked on their migrations of Instagram and WhatsApp post-acquisition. She estimated the job would take 80 competent engineers.
Racic, whose Prebid aims to give publishers choice, said that even if Google’s AdX sunsets in a year, publishers could easily switch to other sources. Google’s attorney suggested Prebid stands to gain if it gets to operate the open sourced auction logic, and its members include Google rivals.
Michael Racic, president of Prebid, an organization that runs an open source ad tech solution, says that Google’s proposals would still benefit itself over publishers. The judge seems interested in Racic’s perspective on how open source ad tech tools can work, and whether the final auction logic in DFP can be open sourced.
Craycroft made this suggestion after testifying that potential buyers for AdX from Big Tech or existing ad exchanges could create new competition concerns. Brinkema picked up on this idea, asking, “why is that not a very simple and elegant solution?” Craycroft said it could be, but AdX offers some additional benefits.
Craycroft testified that the government’s remedies proposals are “naive” and “incoherent.” Despite its claims that breaking up Google’s ad tech business would give publishers more freedom, he testified, the DOJ’s proposals would burden them with a new tech tool to manage.
Google advertising executive Tim Craycroft testified that the company had done several internal analyses about potentially divesting part of AdX or even shutting it down altogether. The DOJ is trying to show that Google’s own analyses indicate it would be feasible to spin out the product.
During cross examination, Google attorney Jeannie Rhee walked through a long list of proprietary Google tools and asked Weissman if he found replacements for them outside of Google. Rhee is trying to complicate the picture of how simple Weissman says it would be to move AdX and DFP to another provider, suggesting there are many unknown variables.
That’s how Brinkema characterized a concern that moving the code for Google’s ad tech tools to a new environment could change how well they work. Court began today with the continuation of expert witness Jon Weissman, who says migrating AdX and DFP is technically feasible, and that any new code needed doesn’t need to be identical to Google’s, just equivalent in function.
Distributed systems expert Jonathan Weissman testified that separating AdX and DFP from Google’s infrastructure would not require a huge undertaking like a full rewrite of code. We expect to hear more from Weissman and others about the feasibility of a breakup tomorrow.
Investment banker Paul Crisci evaluated whether AdX and DFP would be attractive assets for potential buyers if Google is forced to sell them. Crisci testified that at least in an initial assessment, plenty of companies in ad tech and adjacent markets would likely be interested in buying them.
During testimony from the DOJ’s expert economic witness Robin Lee, Judge Brinkema asked how necessary a forced sale of Google’s ad tech products would be if we assumed Google would faithfully follow all the restrictions on its behavior. Lee said if that were the case, behavioral restrictions could be sufficient but only if they could capture all problematic behavior upfront, and if deviations could be quickly detected.
I’m back at court for the third day of the government’s case-in-chief. The judge made clear she wants to hear from more technical witnesses who can tell her about how the different proposals would work.
Brinkema was getting tired of hearing from industry witnesses by the end of Tuesday, and told the parties she’s looking to home in on the technical feasibility of a break up and other remedies. The government said it would aim to cut to its technical witnesses when court resumes Wednesday.
That’s how several witnesses described the impact of the technology on Google’s dominance. While AI might be creating new opportunity in online ads, it hasn’t fundamentally changed the way display advertising works, and Google’s unshakeable hold on it, they testified.
The Trade Desk Chief Revenue Officer Jed Dederick said after years of stagnation in the display ad market Google dominated, he’s finally optimistic it can see innovation with the right remedies. Google is painting the decline in display ads as a sign of its increasing irrelevance, but Dederick says a break up could incentivize more investment in it.
Government witnesses had different takes on whether a potential acquirer should be allowed buy both of Google’s sell-side tools, if forced to divest, or just one. Kevel’s Avery thinks it would work best to sell them together, but Omnicom’s Lambert fears that would just recreate the same problem that exists with Google.
Government witnesses across the ad ecosystem have testified that transparency is at the top of their wishlist for remedies to achieve. That means knowing why some bids on ads win over others. They say that publishers and advertisers alike have little insight into this today, since that decision ultimately happens in the “black box” of Google’s ad server.
Several witnesses for the DOJ have advocated that the government go even farther than it’s proposed by forcing Google to sell its publisher ad server from the outset, in addition to its ad exchange. “You can’t take half the antibiotics and hope the disease goes away,” Jay Friedman from the Goodway Group testified.
Luke Lambert, who works for a subsidiary of Omnicom Media Group, testified that even a one day outage of Google’s AdX exchange would cause “extreme” pain for his team because they would need to scramble to find new ways to spend ad budgets. Google’s attorney is suggesting that could be the case if AdX has to be divested to a new buyer.
James Avery, who runs an ad server company for retailers called Kevel, testified he’d like to buy Google’s ad server and exchange, ideally together. Index Exchange CEO Andrew Casale is also interested. Google’s cross examination has tried to cast this interest as a way that the industry could reconsolidate under new ownership.
The government will continue its case-in-chief today, where it’s arguing for a break up of Google to restore competition to the markets for publisher ad tools. Yesterday, we heard from a publisher witness and a rival ad exchange CEO. Catch up on our coverage here.
Without a break up of its ad tech monopoly, the DOJ argues, Google will find another way to cheat.
Andrew Casale, CEO of ad exchange company Index Exchange, testifies that Google’s proposed solutions leave too much room for it to maintain dominance. Casale also says Index would consider buying AdX if Google were forced to sell it.
The government’s first publisher witness, Advance Local VP of advertising technology Grant Whitmore, wants Google to sell both AdX and its publisher ad server, DFP. The DOJ is currently asking for a DFP sale only if other remedies don’t do enough. Whitmore says Google has demonstrated it can adapt to changes and maintain its dominance.
Google attorney Karen Dunn argues that the government is seeking to go well beyond what’s needed to restore competition to the ad tech markets, and might even hurt the customers it’s seeking to help.
In the government’s opening statement, Julia Tarver Wood warns Judge Leonie Brinkema against leaving open new paths for Google to distort competition in its favor. That’s why the DOJ is asking the judge to force Google to sell its AdX exchange entirely.
In a statement outside the courthouse, Antitrust Division chief Gail Slater notes how the court known as the “rocket docket” has a statute of the tortoise and the hare outside. Speed is important in tech antitrust cases because of how quickly the markets change.
Google and the Justice Department have returned to a federal courthouse in Virginia for a two-week trial to determine how to restore competition to the advertising technology market that Google monopolized. I’ll share updates to our trial coverage stream during breaks.
A federal appeals court granted the Trump administration an emergency stay blocking Federal Trade Commissioner Rebecca Kelly Slaughter from returning to work. The lower court had called President Donald Trump’s decision to fire her “unlawful,” and reinstated her. Slaughter says the public will remain in the dark on FTC decisions in her absence. “Right now, the FTC isn’t doing the job it should be to protect consumers and competition, and Americans deserve to know why.”
