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 10 of 44. HackerNoon’s Legal PDF Series here IV. GOOGLE’S SCHEME TO DOMINATE THE AD TECH STACK A. Google Buys Control of the Key Tools that Link Publishers and Advertisers 76. Google entered display advertising on the back of its early strength in search and search advertising. In 2000, Google launched Google Ads (then called “AdWords”), a selfservice buying tool for advertisers. At the time, advertisers could use Google Ads to purchase advertising on the webpage displaying Google search results. 77. As Google’s search engine dominance grew, it attracted large numbers of small and large businesses that considered advertising on Google’s search results page to be critical to reaching customers searching for their products or services. After amassing this pool of advertisers, Google realized it could not only sell them advertising space on Google’s search results page, but also step in as an intermediary to sell them advertising space on non-Google websites as well. Thus in 2003, Google changed the default setting on Google Ads so that businesses were automatically opted into using Google Ads to advertise on third-party websites through what became known as or “ .” Today, Google Ads has grown to represent over two million advertisers, spending about $11 billion worldwide on open web display inventory per year. Google Ads is a substantial, unique source of advertising demand and revenue for publishers. Google Display Network, GDN 78. In 2006, Google found itself without sufficient access to non-Google premium advertising inventory to meet its advertisers’ demand. Effectively integrating Google Ads with existing publisher-facing platforms would have benefited both Google Ads advertisers—by increasing their access to inventory—and Google—by increasing advertising sales, and in turn Google’s total revenues as a percentage of those sales. Instead, Google sought to maintain more control over advertising purchases made by its Google Ads’ advertisers. In particular, it limited the ability of its Google Ads’ advertisers to buy inventory from Google’s rivals. Google recognized that if it could secure access to its own pool of publisher inventory, it could control the entire transaction, end-to-end, and become the “the be-all, and end-all location for all ad serving.” To that end, Google built and launched its own publisher ad server, but the product failed to gain traction. 79. Rather than innovate and compete, Google found a shortcut. In 2007, Google announced that it would buy DoubleClick for $3.1 billion. DoubleClick offered the industryleading publisher ad server, called DoubleClick for Publishers or “DFP”, which at the time had an estimated 60% market share. DoubleClick also was developing a nascent ad exchange, called AdX. 80. The DoubleClick acquisition was a pivotal moment for Google’s display advertising technology business and its strategy to dominate the ad tech stack. The deal provided Google with direct access to website publishers (and their inventory) on DoubleClick’s publisher ad server and, for the first time, a significant presence on both the advertiser and publisher sides of the ad tech stack. Google feared that if a rival acquired DoubleClick, Google would not control all the tools that link Google’s advertisers with publisher inventory; in short, a rival could “disintermediate” Google. Disintermediation risked allowing another company to control how and where publishers sell impressions to advertisers, something Google would not tolerate because it would limit Google’s ability to generate monopoly profits. Setting the stage for what was to come, the DoubleClick acquisition provided Google the unilateral power to implement a series of anticompetitive restraints, using its dominance on both the publisher and advertiser sides of the market to inhibit competition across the entire ad tech stack. 81. The Federal Trade Commission (“FTC”) investigated Google’s proposed acquisition of DoubleClick. The FTC considered “the possibility that Google could leverage DoubleClick’s leading position in third party ad serving to its advantage in the ad intermediation market” and whether Google could “exclusively bundle AdWords [advertiser demand] with [its publisher-side platforms] AdSense and DFP.” 82. The FTC ultimately declined to challenge Google’s acquisition of DoubleClick for the reasons set out in its public closing statement. The FTC concluded that “DoubleClick does not have market power despite its high market share”—over 60% at the time—and that “firms can and do switch ad serving firms when it is in their self-interest to do so.” Based on these assumptions, the FTC believed any anticompetitive conduct by Google “would likely be defeated by customers switching to one of the other third-party ad serving products.” 83. Google’s contemporaneous business documents paint a very different picture, however. Six months after the FTC closed its investigation without taking action, one senior Google executive wrote about the importance of controlling access to publisher inventory through the DFP publisher ad server, stating “the thing we want ‘secured’ is the DFP platform adoption” because “if we have this” then Google would “have a +20% monetization advantage.” In other words, Google believed it could sustainably charge a higher price on advertising transactions than its competitors because it controlled the process and rules by which publisher inventory could be sold. 84. Google knew the emerging ad tech market better, and acknowledged in internal documents that “due to [the publisher ad server’s] position as the operating system for ad sales, switching costs are very high.” Because of this “stickiness” of publisher ad servers, Google knew it could manipulate the system in its favor—and to the detriment of competition—without fear that publishers would switch to other publisher ad servers. After the acquisition was completed, the former DoubleClick CEO explained at an internal Google strategy meeting, “My view is nothing really matters but the platform [publisher ad server]. Nothing has such high switching costs. If there’s a better network or exchange, you can just switch to it. Switching platforms is a nightmare. Takes an act of God to do it.” 85. Following the DoubleClick purchase, Google cemented its position as the dominant intermediary between advertisers and publishers through a series of additional acquisitions that eliminated potential competitors and further bolstered Google’s position in open digital advertising. For example, in 2009, Google paid $750 million to purchase AdMob, a technology system that allowed publishers of mobile apps to sell ads as well. While Google’s conduct in the distinct market for mobile app advertising is outside the scope of this Complaint, Google’s anticompetitive conduct in the mobile apps market is consistent with the conduct alleged in the market for display advertising. 86. In 2010, Google acquired Invite Media for approximately $81 million. Invite Media offered a demand side platform. Google subsumed Invite Media into a demand side platform it was developing, Display & Video 360 (at the time, known as “DoubleClick Bid Manager”). By capturing an increasingly large share of bigger, more sophisticated advertisers and advertising agencies, Display & Video 360 complemented Google Ads and expanded Google’s control over advertiser demand. 87. In 2011, Google bought AdMeld for approximately $400 million. As discussed further below, AdMeld had developed technology to provide “yield management” functionality to publishers. Yield managers like AdMeld helped publishers manage inventory and optimize revenue by comparing offers from multiple advertiser demand sources at the same time. This comparison feature made it easier for new ad exchanges and advertiser demand sources to enter the ad tech industry because it gave publishers the incentive and ability to switch between ad exchanges and advertiser demand sources in response to better prices and service. 88. The DoubleClick, Invite Media, and AdMeld acquisitions helped Google achieve dominant positions at each level of the open web ad tech stack and set the stage for Google to control and manipulate the process by which publishers sell and advertisers buy open web display inventory. 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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