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Multi-Homing Enables Competition in the Ad Tech Stack, yet Google's Dominance Blocks itby@legalpdf
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Multi-Homing Enables Competition in the Ad Tech Stack, yet Google's Dominance Blocks it

by Legal PDFSeptember 11th, 2023
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Multi-Homing describe publishers' preference to offer their inventory for sale through more than one ad exchange

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USA v. Google LLC Court Filing, retrieved on January 24, 2023 is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This is part 8 of 44.

III. DISPLAY ADVERTISING TRANSACTIONS

E. How Multi-Homing Enables Competition in the Ad Tech Stack


71. The purpose of the ad tech stack is to bring together publishers and advertisers. Publishers benefit when there are more advertisers to bid on their inventory, and advertisers benefit when there are more impressions available to buy. As a result, the various markets that make up the ad tech stack exhibit strong “indirect network effects,” i.e., the value of the services provided by these ad tech tools increases as the number of participants on both sides of the product increases.


72. Additionally, because each possible advertising opportunity (or impression) is unique based on a variety of factors (e.g., the identity of the user, the substance of the website, the location on the webpage), the value of a particular impression opportunity can vary significantly across advertisers. For example, a banner ad at the top of an automotive website would be highly valuable to a car dealership located in the same zip code as the user; that same banner ad space would be less valuable to a home improvement store located in another state. Digital advertising technology, when operating in a healthy, competitive environment, attempts to create the most value for its customers by matching publisher advertising opportunities with the advertisers willing to pay the most for them. By multi-homing across ad exchanges, both website publishers and advertisers are able not only to seek the best possible match for a given advertising opportunity, they are also able to contribute to, and benefit from, competition more generally.


73. Ad exchanges compete for publisher inventory and advertiser demand at two distinct but related levels. First, they compete for adoption by publishers and advertisers, i.e., the opportunity to see a publisher’s inventory or submit an advertiser’s bid. Second, once an exchange has been adopted, it competes with other exchanges to win the ability to process a particular advertising transaction (i.e., to win individual advertising auctions). At both levels of competition, ad exchanges compete not only on price but also on quality and access. Generally, an ad exchange with more advertisers will be more valuable to publishers, and vice versa. When both sides in a market single-home (i.e., only connect with a single ad exchange), sellers (publishers) tend to flock to the ad exchange with the most buyers (advertisers), all else being equal. Advertisers likewise prefer the ad exchange that has the most advertising inventory from publishers. Google’s dominance of scale on both sides of the ad tech stack thereby strengthens Google’s dominance overall in the industry and weakens its rivals’ ability to compete. Conversely, when participants on both sides actively multi-home, there may be multiple exchanges that offer access to the other side of the market, applying competitive pressure to decrease fees or increase quality in order to win business. Thus, actions that impair the ability of one or both sides to multi-home are invariably corrosive to competition.



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This court case 1:23-cv-00108 retrieved on September 8, 2023, from justice.gov 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.