The DOJ’s Ad Tech Trial Against Google Isn’t Really About Ad Tech

It’s really part of a long effort to change antitrust law and create a “duty to deal” with competitors.

There is another big trial coming up between the Department of Justice against Google starting September 9th. The Department of Justice’s witness list has been described as a “who’s who” list in the advertising industry and hot docs are already beginning to make waves.

But despite heightened attention to this case in the advertising and publisher world, it’s important to understand what the case is really about legally speaking: overturning long-held precedent about whether even powerful companies can be forced to aid their competitors.

This case has already been truncated considerably since it was originally filed last year in the Eastern District of Virginia’s “rocket docket,” with damages claims being tossed as recently as a few weeks ago and the universe of challenged acts shrinking from nine to five.

I’ll be attending the trial every day and tweeting updates during breaks (you can follow along here). But before it starts here’s what you need to know:

The Case is About A Shrinking Part of Google’s Business

Unlike last fall’s Google search distribution trial, this trial is focused on a shrinking part of Google’s business: ad tech.

What is ad tech exactly? In this case, it refers to the tools and software used to manage, deliver, and analyze digital advertising campaigns on websites besides Google’s own properties — like online news sites and blogs.

This isn’t about ads on Google’s own properties — it’s about the ads they place across the web, namely news and content sites.

Compared to thriving advertising revenue on Google properties like YouTube, this aspect of Google’s business is shrinking. Google’s “network” revenue — the part of Google’s business including its ad tech services — has seen declining revenue over the last seven quarters, while the rest of Google’s advertising business has grown:

That’s why longtime advertising analyst Eric Seufert called Google’s ad tech network business as vestigial, saying it is:

“an artifact from an earlier era of the internet in which consumer engagement was primarily captured in the open, desktop web. That’s no longer the case: eMarketer estimates that US consumers spend 88% of mobile internet engagement time in apps. The Google Network business is in decline because the open web is in decline, with many of the world’s largest web publishers shifting to subscription models and building their own advertising technology platforms.”

This underscores a frequent aspect of antitrust enforcement: fighting the battle of yesterday. The inquisition into Google ad tech began with the Texas Attorney General’s investigation in 2017, with their own suit being filed in 2020 and slated to go to trial next year. That case inspired the Department of Justice to bring its own ad tech case.

But it seems a bit strange to be arguing over a part of Google’s business that is continuously dwindling in importance.

DOJ’s Gerrymandered Market Definition Makes Google’s Ad Tech Business Seem More Important than It Is

That’s probably why the Department of Justice needed to gerrymander its market definition to make something shrinking look bigger than it is. ​​

The Department of Justice’s proposed market in this case focuses on graphical web ads (as opposed to search ads, video ads, and mobile app ads) and the open web (rather than websites such as Facebook that use their own tools to sell directly to advertisers).

The proposed market definition the Department of Justice puts forward is limited to “open web display advertising,” which is a concept that is not only unused and unknown in the ad tech world but also strategically leaves out competition from Amazon, Meta, mobile app ads, and video ads.

Google illustrated the absurdity of the Department of Justice’s line drawing, noting how an ad placed on the desktop site of the Washington Post falls into the market but an identical ad placed in an identical manner on the Washington Post’s app does not.

Google contends that it not only competes fiercely, but its footing is far from that of a monopolist and that it only had “just 25% of the U.S. market for digital display advertising spend at the time the suit was filed.”

Normally in a market with monopolistic power, there tends to be barriers to entry that makes it impossible for new entrants. But the number of ad exchanges has increased significantly, from less than 10 in 2010 to over 100 today. Google argues that if the market were to accurately capture the state of play in ad tech it would include competitors such as Meta, Amazon, TikTok, and Microsoft.

This Case is About Creating a “Duty to Deal”

You’re going to hear a lot about ad tech “interoperability” over the course of the trial. The Department of Justice’s witness list predominantly features ad tech competitors on the “sell-side” of the ad tech stack, as opposed to witnesses who represent the “buy-side” in ad tech, which would include advertisers and small businesses that use ad tech to place ads.

Many of those witnesses from ad tech rivals will argue that Google has an obligation to interoperate with other ad tech players.

What this ignores is that Google has offered integrated ad tech services to help both advertisers reach customers efficiently and publishers monetize their content most effectively. Google made ad tech simpler to better serve its advertisers and publisher customers. And while it’s understandable that Google’s ad tech rivals want to mandate that Google interoperate, advertisers and publishers care primarily about achieving their targeting and monetization goals.

It’s also not the case that the law requires Google to interoperate with rivals. Even leading companies are under no legal obligation to design or implement new systems simply to make access to rivals possible. Antitrust law does not force a company to share its technology or integrate with others or unfairly penalize successful businesses and reduce the incentive for companies to compete based on the quality of their technology.

Even in recent losses for Big Tech, courts have made it a point to reject imposing a duty to deal on companies. In the Google search decision, Google prevailed on claims that would have forced Google to provide Microsoft with feature parity on its search ad management tool, SA360. Judge Amit Mehta affirmed the principles espoused in Trinko and rejected forcing a duty to deal upon Google, stating that:

A Section 2 claim that “suppose[s] that a dominant firm must lend its facilities to its potential competitors”“runs into problems” under Trinko. Therefore, “a firm with no antitrust duty to deal with its rivals at all is under no obligation to provide those rivals with a ‘sufficient’ level of service.

All of the remaining acts that the Department of Justice is challenging are lawful refusals to deal that Google argues are further supported by legitimate business reasons that “account for the interests of ad space sellers, ad space buyers, and/or end users.”

This Case is the Latest in the DOJ’s Campaign to Overturn Trinko

The law is well established that Google has no obligation to help its rivals.

In Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, often referred to simply as Trinko, the Supreme Court addressed whether a monopolist telecommunications company had a duty to assist its competitors under antitrust law.

The “duty to deal” argument was central to this case. The Court emphasized that the Sherman Act does not require monopolists to share their resources or cooperate with competitors. The Court was wary of expanding antitrust liability in a way that would require companies to engage in “forced sharing” of their infrastructure, as this could deter innovation and investment.

But the Department of Justice continues to premise many of its claims in recent enforcement actions against tech companies on imposing a duty to deal, with Google noting that “DOJ antitrust officials have made frequent speeches calling for the overturn of this controlling Supreme Court precedent, but that precedent binds this Court.”

In its recently filed case against Apple, the Department of Justice is looking to unravel Apple’s signature “walled-garden.” Similarly in its ad tech case against Google, the Department of Justice is attempting to force Google to open up its integrated ad stack and provide interoperability to competitors.

The Department of Justice’s Jonathan Kanter has openly criticized Trinko for setting too high of a bar for antitrust enforcement, particularly regarding refusal-to-deal claims. He has posited that the decision is an “out of date” tool that hinders the Department of Justice’s ability to tackle digital markets.

So it’s not surprising that the Department of Justice evades tackling the Trinko question in this case, but Google outlines its import and application:

The Court recognized that compelling firms to share their competitive advantages would lessen the incentive of an alleged “monopolist, the rival, or both to invest in those economically beneficial facilities.”

Application: Why would ad tech firms invest in developing and improving technology which must be shared or will have to be shared?

Enforced sharing also requires antitrust courts to act as central planners, identifying the proper price, quantity, and other terms of dealing — a role for which they are ill-suited.

Application: The Court will be asked to become a czar of technology access between competitors.

Compelling negotiation between competitors may facilitate the supreme evil of antitrust: collusion.

Application: Imagine the Department of Justice’s reaction if Google announced technology sharing negotiations with its major rivals?

The Department of Justice’s upcoming trial against Google is less about ad tech and more about altering antitrust laws to force companies to provide competitors with access to their technology. Although focused on Google’s ad tech business — a declining part of its operations — the Department of Justice is challenging long-standing legal precedent that prevents powerful companies from being obligated to assist their rivals.

The trial’s core issue is whether Google should be forced to make its ad tech systems interoperable with competitors, a move Google argues would undermine innovation and competition. The case is part of a broader effort to overturn the Trinko decision, which currently protects companies from being compelled to share their resources with competitors.

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