USA v. Google LLC Court Filing, retrieved on January 24, 2023 is part of . You can jump to any part in this filing . This is part 19 of 44. HackerNoon’s Legal PDF Series here IV. GOOGLE’S SCHEME TO DOMINATE THE AD TECH STACK C. Google Buys and Kills a Burgeoning Competitor and Then Tightens the Screws Google Extinguishes AdMeld’s Potential Threat 146. In 2011, Google acquired a competitor, AdMeld. In doing so, Google removed from the market what it viewed as a “critical threat” to its ad exchange and publisher ad server businesses. AdMeld’s yield management technology could receive bids in real time from multiple ad exchanges and other demand sources. This could allow other ad exchanges to compete in the same way Google’s publisher ad server allowed Google’s ad exchange to compete through dynamic allocation, utilizing in part a real-time bidding standard. Publishers quickly moved to adopt the yield management technology because it allowed them to multihome more effectively among ad exchanges and ad networks. It also gave publishers the ability to connect with the advertisers who especially valued their inventory. In contrast, Google’s publisher ad server did not permit connections to any advertising demand source other than the buyers on the AdX ad exchange, which of course included Google Ads’ advertiser base. Quite simply, AdMeld threatened to destroy the advantage Google had created for itself in its exclusionary publisher ad server by allowing website creators to offer their digital advertising inventory to multiple ad exchanges in order to find the best available match. 147. Externally, AdMeld described itself as “the largest, independent practitioner of RTB [Real Time Bidding] behind Google,” “connect[ing] to more than 200 ad networks, & 35 Demands Side Platforms (DSP) and process[ing] more than 11 billion bids daily” with links to 20 leading data providers. Relying on its “core functionality” of real-time bidding, AdMeld proposed becoming its customers’ “central ad decision hub,” the key role Google reserved for its own publisher ad server product. 148. In a 2010 strategy discussion, Google executives noted that “Yield Managers are a threat we need to take very seriously” with “AdMeld [being] the largest concern” and one of three “Key competitors.” Specifically, if AdMeld continued to attract publishers to its technology, Google worried about the possibility of having to “pass real-time AdX pricing into a non-DFP ad server.” If Google were forced to do so, it would eliminate DFP’s exclusive access to AdX, which Google believed would be—and which ultimately was—the key to DFP’s growth and enduring dominance. 149. AdMeld typically charged only a 7% revenue share compared to Google’s 20% revenue share on AdX. So rather than compete with AdMeld, what did Google do? It bought and buried it. In a presentation outlining the “Strategic Rationale” for the deal, Google executives explained that the acquisition would “reduce [the] risk of disintermediation,” i.e., the possibility publishers and advertisers would transact through rivals. Disintermediation at any level of the ad tech stack was a serious threat to Google’s entire strategy of being the sole entity with end-to-end control over digital advertising transactions. 150. In other documents evaluating whether to buy a yield manager like AdMeld, Google candidly acknowledged that the underlying “technology is irrelevant to us.” Google already had in place the only yield management tool it wanted publishers to use: dynamic allocation’s real-time bidding integration with Google’s ad exchange. Google also recognized that its customer base already largely overlapped, “so we aren’t buying customers.” Only one real question remained open for Google: “How does the competitive landscape change if we buy one?” 151. The Antitrust Division investigated the AdMeld deal before it closed. Like the FTC considering the DoubleClick acquisition, the Antitrust Division declined to challenge the deal based on assumptions about the ad tech market that, with the benefit of hindsight, were incorrect—in no small part due to Google’s subsequent anticompetitive conduct. At the time, the Antitrust Division cited multi-homing among display advertising platforms as a factor that “lessens the risk that the market will tip to a single dominant platform.” But Google’s increasing scale and dominance across the ad tech stack, coupled with its subsequent exclusionary conduct, destroyed the ability of advertisers and publishers to effectively multi-home among alternative ad exchanges. As a result, the market tipped and AdX became the dominant ad exchange. 152. Shortly after the AdMeld deal closed, Google combined the yield management functionality of AdMeld into DFP and migrated all AdMeld customers to AdX. Critically, it then shut down AdMeld’s nascent real-time bidding technology, quashing a competitive threat that otherwise might have challenged Google’s market position and forced Google to move toward a more open system that allowed publishers to utilize AdMeld’s innovative technology to facilitate real-time competition among non-Google ad exchanges and advertisers. 153. By acquiring AdMeld, Google eliminated the existing competition between AdMeld and Google’s sell-side products, foreclosed any potential competition, and helped eliminate the leading yield management technology that Google knew might displace its dominant market positions. Continue Reading . Here About HackerNoon Legal PDF Series: We bring you the most important technical and insightful public domain court case filings. This court case 1:23-cv-00108 retrieved on September 8, 2023, from is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction. justice.gov

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