On Friday, Google concluded its defense in the Department of Justice’s lawsuit over its promoting technology. Even though Nobel Prize-winning economist Paul Milgrom provided supporting testimony, it’s still easy to see gaps in Google’s arguments.
Here are those that stand out to me:
1. “Duty to deal” argument
- Google’s stance: Google argues that it shouldn’t be required to share its ad tech tools or platforms with competitors, as there is no such thing as a legal obligation for an organization to achieve this under U.S. antitrust laws.
- Potential gap: The DOJ might argue that while there is no such thing as a explicit “duty to deal” under current law, Google’s dominance in the digital ad space effectively forces advertisers and publishers to depend on its tools. This could open the door to claims that Google’s practices limit competition by creating barriers for smaller players, even when there is no such thing as a formal requirement to share resources.
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2. Narrow market definition
- Google’s stance: Google claims the DOJ’s market definition is just too narrow, specializing in “open web display promoting” moderately than a broader range of ad formats and markets.
- Potential gap: While Google highlights competition from other digital ad platforms (like Amazon, Facebook and Microsoft), the DOJ could argue that Google holds overwhelming power in the particular subset of open web display ads. If the DOJ can define the market more narrowly and reveal Google’s dominance, it could strengthen its antitrust argument. Whether Judge Brinkemma will allow this transformation in definition could be critical to this potential advantage.
3. Defunct practices
- Google’s stance: Google asserts that many challenged practices –– apart from Uniform Pricing Rules (UPR) – are not any longer in use, weakening the DOJ’s claims.
- Potential gap: The DOJ may counter that even when these practices are defunct, they may have had long-lasting effects on market structure and competition. Practices like Dynamic revenue, reserve prize optimization and more would have a long-term impact. These past practices might need entrenched Google’s dominance and limited competitors’ abilities to grow, resulting in reduced competition today.
4. Self-serving justifications for integration
- Google’s stance: Google argues that its integrated tools profit each advertisers and publishers by providing a safer, cheaper and more practical platform.
- Potential gap: The DOJ may argue that this integration is self-serving and exclusionary. The integration of Google’s ad tech stack may prevent third-party firms from offering competitive services and lock users into Google’s ecosystem, making it harder for other firms to compete.
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5. Control over the ad ecosystem
- Google’s stance: Google insists that publishers and advertisers have control over how ads are bought and sold, with multiple options to combine and match ad tech tools.
- Potential gap: The DOJ could argue that despite this theoretical control, Google’s overwhelming market presence effectively limits meaningful alternatives. Publishers and advertisers could also be forced to make use of Google’s tools to remain competitive, making a de facto monopoly in certain features of the ad tech market.
(*7*)6. Competitive landscape
- Google’s stance: Google cites competition from other tech giants like Facebook, Amazon and Microsoft as evidence that the ad tech space is fiercely competitive.
- Potential gap: The DOJ may argue that the competition Google points to exists in adjoining markets, corresponding to social media promoting or ecommerce ads. Within the particular marketplace for open web display ads, Google should hold a monopolistic position, and competition in other areas doesn’t fully mitigate its control over this segment.
7. Impact on consumers
- Google’s stance: Google frames its practices as consumer-friendly, emphasizing lower fees and improved ad performance.
- Potential gap: The DOJ could give attention to the broader implications of reduced competition, corresponding to the potential for higher prices for advertisers in the long run, fewer selections for publishers and an overall reduction in innovation. The DOJ may argue that even when short-term costs are lower, the market dominance could harm consumers and businesses in the longer term.
Google’s fate
While Google is fixed on these defenses and seems fully convinced that it isn’t a monopoly, the DOJ should successfully argue that Google’s practices –– especially in narrow markets like open web display ads –– have anti-competitive effects.
The case hinges on how well the DOJ can reveal that Google’s past and current actions create barriers to entry, limit competition and ultimately harm consumers or the market.
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