ALEXANDRIA, Va. (AP) — Federal regulators who say Google holds an illegal monopoly over the technology that matches online advertisers to publishers are greatly underestimating Google’s rivals an expert witness hired by Google testified Thursday.
The Select Committee on Antitrust Enforcement of the U.S. Department of Justice and a number of states have accused the tech giant of unlawfully maintaining a monopoly in the digital advertising market. This accusation hinges on the allegation that Google used anticompetitive practices to achieve and maintain its dominant market position, particularly in the digital ad space. Part of this projection includes a price increase on ads. The government asserts that the price increase amounts to harming customers by taking a big chunk of the revenue.
Economist, expert witness, Mark Israel who prepared an expert report on Google’s behalf, said the government’s claims that Google holds a monopoly over advertising technology are incorrectly focused on a narrow market the government defines as “open web display advertising,” in short, the ad banners that appear on the top and inside content at intervals when a consumer browses the web on a desktop computer. He said the regulators fail to consider other means of digital media that offer advertising opportunities such as Facebook, TikTok, Amazon and APPs.
He continued to say Google held a lower share considered by Federal regulators for all online display advertising, not just the narrow segment defined by the government’s case. Google gets just 10% of the U.S. market share as of 2022, he said. That’s down from roughly 15% a decade ago.
Israel cited marketing data showing display ad spending on desktop and laptop devices has decreased from 71% in 2013 to 17% in 2022.
The government’s case “seems to miss where the competition is today,” Israel said.
The company’s lawyers argued that Google’s products brought more transparency to buying and selling ads and made publishers more money.
Israel’s testimony comes as Google wraps up its defense in the third week of an antitrust trial that began earlier this month in Alexandria, Virginia. U.S. District Judge Leonie Brinkema has said she expects the government will put on a short rebuttal case Friday. Then the trial will go on hiatus, with both sides submitting proposed findings of fact in November and returning to court to make closing arguments in December. She said she expects to make a ruling by the end of the year.
The prosecution asserts that Google has constructed and upheld an unlawful monopoly that constricts options and raises expenses for virtual ads and their purveyors. The justice department claims that, thanks to the market it slants in its favor, Google gets to keep 36 percent of the revenues that flow through its ad tech stack.
According to the government, Google oversees advertising technology at each step of the process. This includes:
- The technology used by publishers to sell their ad space, and
- The technology used by advertisers to purchase ad space; and the
- Ad exchanges in the middle that conduct auctions in a matter of milliseconds to match advertisers to publishers.
The government's case holds that Google unlawfully connects those two markets, compelling publishers to use Google's technology if they wish to avail themselves of Google's bounteous supply of advertisers.
The government has asserted that Google commands a far more substantial market presence than the company concedes. With market definitions that are much narrower than those used by Israel, the government has claimed that Google controls 91% of the publisher ad server market and 87% of the ad network market.
According to Google, the lawsuit also does not consider the investments, totaling in the billions, that the company has made to ensure its products work together and generate better value for publishers and advertisers. In the workings of these products, Google sees a fundamental difference between its operations and those of the companies in the antitrust crosshairs.
Data cited by Israel indicate that publishers collaborating with Google extract more revenue from every unit of ad space they provide, while advertisers seem to be paying less for each click that is generated by their ads.
Israel said that only happens because Google’s technology is constantly enhancing the ads' quality by aligning advertisers with consumers based on the latter's interests and purchase history.
Israel also challenged the assertion that Google receives 36 cents on the dollar for the ad sales it facilitates. It said data shows that percentage has actually dropped to 31% or 32% in recent years. The government also pointed out that competitors have even higher take rates, with an industry average of 42 cents on the dollar.
Testimony from a former leader of Google Ads engineering, Nitish Korula, suggests that the company was not creating industry-leading tools for the sake of industry dominance. Instead, it was responding to a rapidly changing competitor landscape and accommodating the demands of publishers.
Mr. Korula stated that facilitating matches between publishers and advertisers is a big part of what Google does.
On Wednesday, the company’s attorneys showed deposition video of Todd Parsons, who is Criteo’s chief product officer, testifying about the popularity of display advertising on social media and other platforms. Criteo is a Google advertising rival. Parsons said that display advertising was doing better than ever, which included smart TVs in the mix of new ad opportunities.
The Virginia trial is separate from another case the government has brought against Google, alleging that its all-pervasive search engine constitutes an illegal monopoly. In that case, a judge in the District of Columbia ruled in favor of the government and said the search engine was a monopoly, but no decision has been made yet on any potential remedies.
The government is set to propose remedies next month. They could run the gamut; it's possible some could even recommend Google be broken up, sell parts of its business, and could include restricting Google from paying tech companies to present Google as the default search engine for devices such as cellphones.
Expert witnesses in the Google antitrust case include:
• Paul Milgrom
A Nobel Prize-winning Stanford economics professor who testified that Google's actions between 2013 and 2019 were not anticompetitive
• Judith Chevalier
A Yale economics professor who testified that Google's pricing was justified
• Ravi Ramamoorthi
A UC San Diego computer science professor who testified that Google's conduct advantaged its own products and disadvantaged others
• Robin Lee
A Harvard economics professor who testified that Google has a monopoly over the ad server market
• R. Ravi
A Carnegie Mellon University professor who testified that Google's 2019 Unified Pricing changes harmed publishers
By Eddie Price, Witness Directory
https://en.wikipedia.org/wiki/Computer_science
https://witnessdirectory.com/categorysearch.php?country=USA
