Antitrust

Google and the DOJ just wrapped their two-week remedies trial until closing arguments on November 17th. Judge Leonie Brinkema is still holding out hope for a settlement to avoid the tricky technical issues of a court-ordered remedy.

That’s what Brinkema wanted to know as the case wound down. She wants the parties to consider what kind of committee should be appointed by the court. “That is part of the key of making whatever the final remedy is work,” she said. “I would be very concerned about any monitor who might have any stake in the outcome.”

Google brought back its technical expert Jason Nieh for a brief response to the DOJ’s rebuttal. Nieh claimed that Wheatland’s conception of how the open-sourced final auction logic would work was new and not technically feasible. Brinkema pushed back, saying that her understanding was that all that functionality is “already there” inside DFP and “all they want you to do basically is open the box.” Nieh said that wouldn’t work since the code is always evolving and it would be harder to stick back together with Google’s system.

If the court only imposes behavioral restrictions on Google, Daily Mail Chief Digital Officer Matthew Wheatland warned in the DOJ’s rebuttal, there would still be a “gray area on our decision making process” to switch ad servers since they’d need to be sure the remedies would have “lasting effects” on Google’s actions.

We heard more testimony from Google’s technical expert Jason Nieh this afternoon about why he thinks divesting AdX and DFP would be much harder than the DOJ’s experts said. On Monday, the DOJ will bring DailyMail.com chief digital officer Matthew Wheatland in to testify in its rebuttal case, and may add an expert or two.

Former News Corp ad tech executive Stephanie Layser worries that even if Brinkema limits Google’s bad conduct, it will simply find a new way to make things difficult for publishers in ways that will be hard to detect. Layser said she felt like a “conspiracy theorist” about her suspicions Google was harming her business — until discovery in this case.

Google economic expert Andres Lerner testified that in the world that would have existed previously but for Google’s anticompetitive conduct, Google would still have monopoly power. Yet he generally agreed that remedies should unfetter the market from Google’s anticompetitive conduct. Brinkema said that seemed “inconsistent with the concept that some monopoly power can continue. There’s a tension there.”

Google security engineering VP Heather Adkins testified that while AI can help “autocomplete” some code that might be useful in a forced migration Google’s ad tools, vibe coding doesn’t produce secure enough code yet to make it so that a human doesn’t need to be looped into the process.

Elizabeth Douglas testified in Google’s defense that breaking up the ad tech tools her business relies on would introduce immense uncertainty in the one part of her business that feels relatively stable in terms of set up. But Google’s AI overviews, she said, are also part of the reason for WikiHow’s uncertain future, since they often keep users from clicking through to its pages.

DOJ attorney David Geiger asked Goodwin about his claim that AT&T’s breakup slowed tech progress — was he also aware it accelerated the development of the cell phone? Goodwin said no, and Brinkema interjected, “yeah, but we lost Bell Labs. That’s what people comment on.”

Former investment banker Shane Goodwin, who specialized in divestitures, gave several examples of such deals that later resulted in assets being sold back to the original firm, or didn’t achieve their goals. One example was the Sprint-T-Mobile merger that required a divestiture to Dish that was meant to result in a formidable 5G competitor.

The company continues its defense today after Brinkema declined to pause the case amid the funding gap for the DOJ.

Brinkema says this includes the fact that the expected outcome of this trial is a court order that Google could be held in contempt of court over if it breaks, and a long list of other lawsuits it faces. Wouldn’t these things temper Google’s behavior? Goel says Google likely would comply with a court order, but the problem is that it’s nearly impossible to list all the ways Google might later figure out how to advantage itself again.

PubMatic’s Goel said he didn’t have enough information about what a divested AdX would entail or how much it would cost to know if he would buy it. It’s a stark contrast from the search trial, where AI companies and rival search firms leapt at the chance to buy Chrome.

Rajeev Goel, CEO of rival ad exchange PubMatic, testified that he spoke to Google eight months ago about an issue where its advertiser tool wouldn’t buy some publisher inventory through PubMatic’s exchange. Goel said Google told him that was due to a bug they’re working to fix. Assuming that’s true, he said, Google still stands to make more money if it deprioritizes a fix.

Google executive Nirmal Jayaram, who previously worked on Google’s advertiser tools, warned that a divestiture would likely degrade products for advertisers, and lead more of them to move from open web display ads to other formats that give them a greater return on their investments.

That’s how Google Ad Manager engineering director Glenn Berntson described the difference between a divestiture of AdX that excludes Google’s proprietary infrastructure versus one that includes it. Both are huge undertakings, he said.

Brinkema said she’s thinking about whether she needs to consider different classes of publishers, since those of various sizes have different needs. Some small publishers, for example, may make deals with local businesses for advertising, while others may use Google’s tools only for programmatic ads.

Google executives say the products the DOJ seeks to pull apart are global in nature, and span and types outside of this case. Google product management director George Levittw testified that the DOJ’s request would be “the most complicated and risky project that I have seen in my time at Google.”

The company’s attorneys have so far called up three different executives who are making the case that a break up would be far more complex than the government portrayed.

Equativ CEO Arnaud Creput testified the French order “had no impact at all” on publisher ad server competition. That was partially because the three year remedies period was too short for publishers to execute a complex move. The DOJ wants a ten year monitoring period.

Brinkema denied in part Google’s motion to exclude testimony from French ad tech provider Equativ about their experiences with a French regulator’s orders to encourage more competition. She said she is interested in “whether Google would comply” with a court order only focused on behavioral changes.

The DOJ continues its case-in-chief today, where we expect to hear the rest of the testimony from technical migration expert Goranka Bjedov, as well as testimony from another Google ad tech rival.

Bjedov was flummoxed by a question from Google’s Jeannie Rhee about whether a buyer of AdX could make the product worse. Even after working with “clowns” in the past, Bjedov finds this scenario hard to imagine.

That’s the takeaway from Bjedov, who said that Google executive Craycroft’s distinction of a “business divestiture” from a full technical divestiture doesn’t sound meaningful. She said the purely instructional reference code he mentioned is exactly what she’d look for to do a migration.

That’s what DOJ expert witness Goranka Bjedov determined. Bjedov worked as a capacity engineer at Facebook and worked on their migrations of Instagram and WhatsApp post-acquisition. She estimated the job would take 80 competent engineers.

Racic, whose Prebid aims to give publishers choice, said that even if Google’s AdX sunsets in a year, publishers could easily switch to other sources. Google’s attorney suggested Prebid stands to gain if it gets to operate the open sourced auction logic, and its members include Google rivals.

Michael Racic, president of Prebid, an organization that runs an open source ad tech solution, says that Google’s proposals would still benefit itself over publishers. The judge seems interested in Racic’s perspective on how open source ad tech tools can work, and whether the final auction logic in DFP can be open sourced.

Craycroft made this suggestion after testifying that potential buyers for AdX from Big Tech or existing ad exchanges could create new competition concerns. Brinkema picked up on this idea, asking, “why is that not a very simple and elegant solution?” Craycroft said it could be, but AdX offers some additional benefits.

Craycroft testified that the government’s remedies proposals are “naive” and “incoherent.” Despite its claims that breaking up Google’s ad tech business would give publishers more freedom, he testified, the DOJ’s proposals would burden them with a new tech tool to manage.

Google advertising executive Tim Craycroft testified that the company had done several internal analyses about potentially divesting part of AdX or even shutting it down altogether. The DOJ is trying to show that Google’s own analyses indicate it would be feasible to spin out the product.