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 24 of 44. HackerNoon’s Legal PDF Series here IV. GOOGLE’S SCHEME TO DOMINATE THE AD TECH STACK D. Google Responds to the Threat of Header Bidding by Further Excluding Rivals and Reinforcing Its Dominance 2. Google Blunts Header Bidding By “Drying Out” the Competition a) Google Develops So-Called Open Bidding, Its Own Google-Friendly Version of Header Bidding To Preserve Its Control Over the Sale of Publisher Inventory 176. Employees working on Google’s publisher-facing platforms responded to the threat of header bidding by developing a limited way for rival ad exchanges to finally compete in real time within Google’s platforms, but on terms dictated by Google. Although Google could not return to a fully closed system of real-time bidding—one Google previously reserved for its own ad exchange via dynamic allocation—it could create a system over which it retained control to dictate the terms on which competition occurred. The mechanism, internally referred to as “Jedi,” came with a number of limitations designed to dampen competition and insulate Google’s ad exchange from vigorous competition. To that end, as explained by Google’s lead product manager for DFP and AdX, Google intentionally designed this new form of integration to be just “slightly better” than early versions of header bidding. 177. Google called this mechanism “Exchange Bidding,” later renamed (for simplicity, referred to herein as “Open Bidding”). Google started testing Open Bidding in 2016 and formally launched the program in April 2018. Externally, Google portrayed Open Bidding as an improvement to header bidding that created a real-time bidding auction with multiple ad exchanges, similar to header bidding, but on Google’s servers to reduce latency. It represented the first time that Google’s ad exchange competed in real time against other ad exchanges, as Google had previously refused to participate in any header bidding auctions. “Open Bidding” 178. Internally, however, Google understood that the purpose of Open Bidding was to “stem[] the bleeding” and “combat the risk of header bidding.” Google understood that if it could blunt header bidding’s momentum, it could maintain its “control point and advantage” gained through its publisher ad server monopoly and ultimately “[g]et pub[lishers] to move away from header bidding back into our platform.” 179. Google outwardly portrayed Open Bidding as a more publisher-friendly way for participating ad exchanges to bid in real time on publisher inventory, as Open Bidding substantially reduced a publisher’s cost to integrate an ad exchange other than Google’s AdX within DFP. By contrast, to utilize header bidding, publishers had to configure thousands of lines of pricing rules in the publisher ad server and update each webpage with new code. Google also offered to share with participating Open Bidding ad exchanges its “last look” advantage over header bidding that dynamic allocation previously had provided only to Google’s ad exchange. 180. But Open Bidding also came with major drawbacks for both publishers and participating ad exchanges. Google handicapped rival ad exchanges to impair their chances of winning impressions through Open Bidding, which otherwise might increase their overall attractiveness to publishers. Google did so in four pivotal, mutually reinforcing ways. 181. , Google extracted for itself an additional fee on every transaction won by a rival exchange, reducing the net payout publishers received from integrating with other ad exchanges. Google imposed a 5% fee on rival ad exchanges’ transactions through Open Bidding, effectively lowering the net bid of Open Bidding ad exchange participants by 5% relative to AdX’s bid. This additional 5% charge effectively amounted to a 25% or more increase in the average ad exchange fee, making bids from rival ad exchanges much less attractive to publishers. First 182. , even if a rival ad exchange won an auction, the rival ad exchange paid Google, and Google paid the publisher. Publishers received payments and reporting related to Open Bidding-won advertisements from Google, not rival ad exchanges, decreasing the number of touchpoints between rival ad exchanges and publishers. By taking control over the payment and reporting functions, Google effectively disintermediated rival ad exchanges from their own publisher customers and, in the long-run, made it less likely publishers would view those rival ad exchanges as valuable partners and continue to use them. Second 183. , if a rival ad exchange also owned an advertiser buying tool (as Google did), that exchange could not allow its own advertiser buying tool to participate in Open Bidding auctions. This decreased the competitiveness of those ad exchanges from the perspective of publishers. Third 184. , through Open Bidding, Google was able to increase its data advantage by obtaining access to the bids of its rivals for each impression, which it could not see in header bidding auctions. Thus, even when other ad exchanges opted to participate in Open Bidding, they initially did not have access to the same data: they were forced to share their bids with Google without any reciprocity.[20] Although Open Bidding provided an additional avenue for rival ad exchanges to participate and potentially to win inventory, those ad exchanges were forced to cede control over the transaction to Google and take steps that diminished their overall competitiveness. By contrast, alternative forms of server-side header bidding offered by market participants without Google’s market power have much lower—or no—fees and do not include the restrictions and limitations that Google incorporated into Open Bidding. Notwithstanding these benefits, Google’s conduct has stunted adoption and growth. Thus, in the end, Open Bidding fulfilled Google’s intent to counter header bidding in a manner that ultimately protected Google’s publisher ad server monopoly, and in turn, Google’s ad exchange, AdX. Fourth 185. Despite Google’s success in using Open Bidding to blunt the impact of header bidding, Google came to fear that a header bidding wrapper (code designed to run a multiexchange header bidding auction), such as Prebid or Amazon’s Transparent Ad Marketplace (“TAM”), could one day supplant the publisher ad server as the ultimate decision-maker of which ad to serve. Doing so would threaten the means by which Google had given its ad exchange an unfair advantage over rival ad exchanges. If header bidding were able to aggregate enough advertiser demand, Google believed publishers might be willing to risk adoption of a header-bidding-focused ad server, because of the diminished importance of advertiser demand exclusively available through Google Ads. 186. In light of this fear, Google set out to lobby other unique sources of advertising demand (such as Facebook) or potential aggregators of advertising demand (such as Amazon) to adopt Google’s Open Bidding rather than invest in header bidding infrastructure. [20] Only recently has Google begun to share some bidding information with Open Bidding participants—but not header bidding ad exchanges—in a form that has largely proven unworkable. 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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