Google Blunts Header Bidding By “Drying Out” the Competition

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

174. Google moved swiftly to respond to the perceived threat header bidding posed to its ad exchange dominance and publisher ad server monopoly. Instead of leaning into the increased real-time competition between ad exchanges spurred by header bidding—which would have led to higher revenue for publishers, lower ad tech fees, and better return-on-investment for advertisers—Google adopted a multi-prong strategy to forestall the adoption of header bidding by publishers and, as a Google partnership strategist phrased it in an internal email, “dry out” rival ad exchanges that adopted header bidding.

175. In doing so, Google aimed to return to a more outdated, closed, two-tiered system of competition for advertising transactions. Header bidding represented a real opportunity for the market to move to a more open system where publishers could effectively multi-home their inventory across competing ad exchanges and varied sources of advertising demand. Although Google realized that its original vision of all display advertising transactions flowing through Google’s ad exchange was no longer realistic, Google also recognized it could take advantage of its dominance at each layer of the ad tech stack to impede publishers, advertisers, and rival ad tech providers from further opening up the ad tech ecosystem and loosening Google’s control over where transactions flowed.