Lauren Feiner
Appearances
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
We saw several documents from him and colleagues that kind of underscored Google's understanding that publishers were not So happy with the kind of fees that were charged for selling ad space through their technology. So yeah, we've heard from a whole range of different people across the industry, both inside and outside of Google.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
And it seems like the government is trying to paint this picture that Google employees understood the kinds of pushback that they were getting, particularly from the publisher side and trying to show the kind of impact that Google's alleged monopoly power had on particularly the publishing industry.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
There's a couple of acquisitions that are mentioned in this case, but I think really the most important one is Google's acquisition of DoubleClick, which kind of brought over the publisher ad server and helped Google build out its ad exchange.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
And those are the two pieces of technology that the government is saying Google has illegally tied together to basically lock in customers and make it really difficult to switch to another ad. ad tech tool and just compound its dominance in the market.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
The FTC did review this acquisition, but they ultimately decided to let it go through. And when that happens, I think to the general public, they might see that an agency lets an acquisition go through. It means they kind of put their stamp of approval on it. That's not entirely how it works.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
If the FTC or the DOJ antitrust division lets an acquisition go through, it basically just means that they're choosing not to challenge it right now, but they always have the right to challenge it in the future. Of course, that could be more complicated for many reasons. And there's also the problem of, you know, it's difficult to unscramble the eggs. That's a common phrase in antitrust.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Once everything is mixed together,
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
In opening arguments, the government basically laid out three different ways that Google behaved that it said was, quote, straight out of the classic monopolist playbook. Really what it comes down to is control. That's really the government's main narrative in its opening arguments of this case. So they said first they control the competition by buying competitors like DoubleClick.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Then they control customers by locking them in through these tying arrangements or other kinds of programs that they put in place. And then they control the rules so that, quote, all roads lead back to Google. This is how the government's attorney laid it out on the first day of arguments in this case.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
UPR stands for Unified Pricing Rules. Basically, Google put unified pricing rules in place in About 2019, it requires publishers to set the same minimum bid that it would accept from ad exchanges across all the ad exchanges that it's looking at. Basically, the ad exchange will deliver a bid on advertising space and there's Google's AdEx, there's other ad exchanges out there.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
And what publishers had been doing was basically saying, okay, we'll accept, let's say, a dollar bid from all of these other ad exchanges. But for Google, our minimum bid that we'll accept from Google's AdEx is $1.05. And that means if another ad exchange, let's say Pubmatic, had a bid of a dollar, it would accept that.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
But if it had a bid of a dollar from Google's AdEx, then that wouldn't be accepted. The reason that publishers did this, or one big reason that publishers did this, was because they wanted to diversify their revenue. They didn't want all of their revenue coming from Google, because any business might think about, if you're getting all of your revenue from one customer,
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
It's a risky position to be in because what if that customer goes away? What if something happens that cuts you off from that source of revenue? So publishers were doing this to lower their risk in this way. Google understood this, but also felt like this was something that was negative for publishers. its own standing. And so it came up with unified pricing rules.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
In documents we saw in court, Google executives understood that publishers would not be happy with this change, and they did roll it out with some other changes that they felt publishers would be satisfied with. The government framed this as softening the blow to publishers in changing these rules.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
I wouldn't say it was necessarily to keep them from going to competing ad exchanges because publishers will work with several ad exchanges at the same time because they receive bids from these different ad exchanges. But I think they recognized that the publishers were trying to reduce their reliance on Google and they worried about the long-term impact of that kind of activity.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
behavior on their business. And they wanted to even the playing field in their eyes of how Google's AddX was treated compared to other ad exchanges. But I think the reason we've heard from publishers of why it was so difficult to walk away from Google's AddX and why many felt like it was not a real possibility to walk away from AddX was that
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
It delivers what in the industry they call unique demand from Google's advertising network. When they say unique demand, they basically mean having this really full access to this huge base of advertisers that come through Google's ad network. The ad network demand is only available in real time with real time prices through Google's ad exchange, AdEx.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
And while there are kind of ways to try to get at Google's ad network base, it's not really possible to access it in the same full way as it is through Google's AdEx. And that's where some of the concerns come in around tying and leveraging the different parts of the market against one another. Basically, publishers have told the court it was really hard to negotiate with Google.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
And, you know, while you might be able to get a better deal with, you know, some other companies, Google really wouldn't really wiggle much. And I think the government is trying to say that's because they didn't have to because they had a dominant position here. They didn't feel the kind of pricing pressure that other companies did.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Well, search is obviously the part of Google's business that I think the general consumer knows best. The advertising technology business is really important for Google. It's a big way that they make money. It's a big way that people in the publishing and advertising space interact with Google. I think it is really significant if they lose this case at the same time.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
I talked to an antitrust professor prior to this trial beginning who said none of this will really be the end of Google, so to speak. But I think it could really change who the big players in this market could be.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Obviously, judges are humans, and I'm sure Judge Brinkema is fully aware of what happened in the search case. But these are different cases. They're different business, different set of facts. So I'm pretty sure that Judge Brinkema is going to look at this. case pretty independently. And the remedies in the search case, that's a whole other proceeding that's going to happen.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Google's also going to appeal that ruling. And it's going to take a long time for all of this to be sorted out as this trial is ongoing, too. So I don't know how soon we will get the search remedies answer in general as well.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
That's a really great question. I guess I don't entirely know why Google is the one that's gone first or been such a big focus this time around. But I think part of it might be, you know, they have such a sprawling business. And it was an area that the government was able to home in on with many, many, many documents that they were able to get a hold of in their investigation and discovery. And
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Maybe that's where they felt like they had the strongest case earliest on, and that's what they went after. So I think a lot of times what it comes down to is just what is the strongest case that they feel like they can bring? And, you know, it happened to be Google in these first two instances. All of those companies have lawsuits filed against them from the federal enforcers.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Those are making their way through court. Generally, antitrust cases are pretty slow moving. Like I said, this ad tech case is relatively quick, and that's still like a year and a half or so from filing to trial. So, you know, when that's quick, it gives you a sense of the timeline for these other matters. The rest of them are moving along, but...
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
We're just going to have to wait for the trial date.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
I think it's still pretty early to say because right now the judge is looking at whether Google violated these laws to begin with.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
But I think in this case, compared to the search case, the lines where the government might seek to break apart Google's business seem a little bit clearer just because it's looking at these three different markets, the ad tech space, the ad exchange, and the buying side. I think there's kind of ways to cleave those at each point. So it's just...
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Not to say that that's necessarily what should happen or what the government will ultimately go for, but I think it's easier to see in this case where different segments of the business might be attempted to pull apart.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
We heard from former News Corp executive Stephanie Lacer. I think News Corp has been a company that's been pretty outspoken about how it feels about its relationship with companies, especially Google, in terms of it being a gatekeeper in how information is distributed. That's a company that I would definitely keep a close eye on in terms of how they react to any outcome in this case.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Thanks for having me.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Thanks for having me.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
This trial is about Google's advertising technology business, and that's a business where Google has a role in several different parts of the market. Basically, you have the publisher side, you have the advertiser side, and you have the technology that sits in the middle and facilitates the buying and selling of ad inventory.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
The government's basically saying that Google has maintained an illegal monopoly in a couple of these different parts of the advertising technology stack and also illegally tied together two of its tools to entrench that power. In this lawsuit, there's still the Department of Justice. They're really leading the questioning of the witnesses so far in this case.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
You also have, I think, somewhere over a dozen witnesses state attorneys general that have signed on to the DOJ's case. The government is making four key arguments in this case. They're saying that Google first monopolized the market for the publisher ad server, which is the publisher side tool used to sell ad space on the internet.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
They've also monopolized the market for ad exchanges, which is the technology that sits in the middle and facilitates buying and selling. And then for the ad network, which is basically the large advertiser base that Google has that provides buying demand to its platform.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
And the fourth argument is that Google has illegally tied together its publisher ad server and its ad exchange, leveraging the dominance of both of those to extend its monopoly power.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Google has said that the government really gets this wrong. They're not understanding the space, that they have plenty of competition here, that advertising tech is an industry that's alive and well, and that it just happens to exist. have these tools that have certain efficiencies with each other that ultimately benefit the industry.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
We haven't really gotten to hear their case in full yet because right now the government is going through its witnesses. And after that, we'll get to hear more of Google's side of the story. But we did get to hear a little bit of this in opening arguments.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
In the Google search case, that was a case about essentially Google's contracts with browser makers and phone makers that would make Google search the default on their platforms. Ultimately, the judge in that case ruled that Google did illegally monopolize the search market and that while it's true that consumers could change the defaults on these browsers or phones, that it was the
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
clear to the judge that Google intended to illegally monopolize this market and box out competitors from being able to really gain a foothold in this space. So that's a case that's currently in the remedies phase. So they're figuring out What's the government going to ask for in order to solve this harm that the judge found in this case? The arguments in these cases, they're pretty different.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
They're different industries in a sense, although, of course, the popularity of Google really arises from its search product. But I don't know if it necessarily tells us the full story of how the judge might approach this case because it is a different industry. It's a different set of facts.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
I would say it's more akin to two separate avenues, just because the first case, the search case, was filed under the Trump administration. The second case was filed under the Biden administration. The Biden administration did continue to carry out the search trial when that administration took over. So I don't think there's necessarily a dispute in how necessarily they think about these markets.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
But They are different cases. They kind of stemmed from different administrations. But that said, you know, there is something that's a little bit odd about talking about the advertising technology business in isolation just because a lot of the demand that, especially in Google's advertising network, comes from the popularity of search.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
And, you know, I think search is really what Google's popularity in general has always stemmed from. But I do think it's significant that we see in 2024 a federal judge saying the antitrust laws can be applied to a tech platform to say that this company illegally monopolized the market, because we haven't seen that in a really long time.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
This case is in Alexandria of the Eastern District of Virginia. The Eastern District of Virginia actually has kind of a funny nickname in legal circles. It's known as the Rocket Docket because it's known for moving cases relatively quickly. And I think that is pretty much what we've seen here. It is being overseen by Judge Leonie Brinkema. My understanding is she's a highly respected judge.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
I think she's been very, very matter of fact, very straight to the point. She doesn't want to hear a lot of repetition of arguments or repetition of concepts that she's heard from witnesses. I think the questions I've heard her ask so far seem to indicate that she understands this market. She's getting a grasp of the technical elements of this case, and she wants to keep it moving.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
I think we've seen that a lot in the arguments so far. It started last Monday. So far, it's been basically a week of trial, and it's been every single day. of the work week. It could go up to six weeks. It seems like that's not going to happen. I'd say it's probably going to go, I would guess, at least another couple weeks, but I wouldn't imagine they're going to take the full six weeks.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
It sounded like the DOJ might wrap up its case in chief this week, at which point Google will begin bringing in witnesses.
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
There's been several groups of different types of witnesses so far. We've heard from publishers. We've heard from people on the buying side who represent agencies that buy ads for clients. We've heard from one expert so far, and we've also heard from former Google executives who've worked in parts of the ad tech business. On the publisher side, one that really stood out to me was
Decoder with Nilay Patel
Why Google is back in court for another monopoly showdown
Stephanie Lacer, who was a former News Corp executive, who spoke pretty passionately about the issues that she had with Google's publisher side tools and feeling locked into their whole technology ecosystem, despite issues that she had with it. We've heard from former Google executives like a former Southside executive, Chris LaSalla.