DOJ vs. Google, Day Two: Tales from the Ad Tech Underground

The publisher, ad exchange, ad buyer, and ad server enter the courtroom.

No, wait, that was on Monday..

But the second day of Google’s antitrust hearing in Alexandria, Virginia, on Tuesday was as intensely focused on the intricacies of ad technology as the first.

Testimony began in the morning with Stephanie Layser taking the podium and recounting her often-irritating experiences using Google’s ad server during her time at the New York Post, MailOnline, and News Corp. (Layer is now global head of ad publisher technology solutions at AWS.)

According to Layser, using DFP (DoubleClick for Publishers, Google’s ad server) was like being held hostage. And changing ad servers was out of the question because the risk of revenue due to loss of demand for Google ads was too high.

That’s not to say News Corp hasn’t tried.

Log out

In 2017, News Corp conducted a six-month internal review called Project Cinderella (Google is not the only company that can come up with project code names) to check if it is possible to replace DFP with AppNexus.

The upshot was… no. Not only would it take too long, but the fear of losing demand for Google ads was just too great.

In the same year that News Corp conducted this assessment, demand for Google ads accounted for between 40% and 60% of News Corp’s programming revenue.

So Layser launched an ultimately unsuccessful pressure campaign to introduce product features that would make News Corp. less dependent on Google. One of her deepest and longest-cherished desires for years was to gain access to log-level impression data from DFP and AdX and merge it so she and her team could make more informed buying decisions.

As Layer recounted from the stand, Google eventually promised to give her a key that matched the data sets, and she was really excited. But just before that was to happen, Google obfuscated the key for supposed privacy reasons, she said, and there was no leverage to negotiate.

“You can’t negotiate with Google,” Layser said. “It was easier to negotiate with other exchanges because they have to compete in headline tenders.”

“Nothing has changed”

Yet Layser stubbornly remained that squeaky wheel.

In 2019 Google Announces Unified Pricing Policy (UPR), which eliminated the ability for a publisher to use different floor prices within DFP. Just a fancy way of saying that publishers could no longer use floor prices as a way to direct spend to specific exchanges.

Previously, News Corp often set higher lows for AdX, allowing it to be less dependent on Google demand. These lows automatically eliminated demand from lower-priced, lower-quality AdX.

But the UPR “took control away from us,” Layser said, “so we no longer had choices about how to best monetize our resources. … I felt trapped.”

Unable to bear the thought any longer, Layser emailed Google to request a meeting to discuss her concerns and to once again push for access to AdX advertisers without having to use Google’s ad server. She eventually met with two (female) Google employees who were unsympathetic.

“They called me emotional and unproductive,” Layser said.

And what happened next?

“Nothing has changed,” Layser told the DOP lawyer.

Everyone, calm down

Meanwhile, Layser – one of the original architects of header bidding – was also a staunch supporter of Prebid, the open-source header bidding software that all major exchanges except Google now use.

Layser has long argued that Google should create a Prebid adapter for AdX.

She emphasized this in July 2019 column published on AdExchangerwhich Google’s lawyer cited during Layser’s cross-examination. In the article, Layser wrote that Google should “support AdX on Prebid.org” – which prompted a strange series of questions from Google’s lawyers, accusing Layser of wanting Google to make AdX open source “community property“and not run it as a profit-oriented enterprise.

The judge in the case, U.S. District Court Judge Leonie Brinkema, gave Layser an opportunity to explain. The judge turned to Layser from her seat on the witness stand and asked, “What do you mean by ‘community property’?”

To which Layser responded that she believes there should be a standard set of protocols that everyone in the industry follows, like OpenRTB. “When we compete with each other,” she said, “the software should be something we work on together.”

This is completely different than asking Google to pass the AdX code to Prebid, which Layser did not suggest.

The Spirit of Quora

After Layser concluded his testimony, the government called Goodway Group CEO Jay Friedman to continue to emphasize that “open internet display advertising” is a separate market.

“It’s been around for 10 or 15 years,” Friedman said. “It’s a very common term in the industry.”

To spare you the recap of hours of talk about market definitions, upper and lower funnel marketing tactics, and an incredibly long (and related “how”) explanation of frequency constraints, here’s the bottom line: buyers don’t treat every channel the same, even if those channels may produce similar results.

But Google’s lawyers also took a few jabs, citing Friedman himself in materials that contradicted and undermined his claims that many media channels cannot be easily replaced, including excerpts from his two self-published marketing books and old posts on Quora.

In one nine year old post on QuoraFriedman responded to the question, “Is there an effective alternative to native and banner ads?” by saying, “What about streaming video?”

The Internet never forgets.

“Neal decided that probably”

The day concluded with testimony from Eisar Lipkovitz, former vice president of engineering at Google, who was responsible for video and display advertising from 2014 to 2019.

Lipkovitz wasn’t there in person. Instead, parts of his testimony from last year were read aloud in court — ums, ahs, and all — and the rest was videotaped.

And that was fascinating, folks.

Lipkovitz had left Google several years ago, so he was still close enough to remember the details, but far enough away that he didn’t feel the need to sugarcoat his statements.

For example, he talked about how there was no love lost between the Google ad exchange team and the people at DFP. “The AdX team was very entrepreneurial and didn’t like the DFP team,” Lipkovitz said. “The AdX team was aggressive and built a lot of things, and the DFP team was lazy and slow to innovate.”

(News Corp’s Steph Layser would probably agree with the last part of that statement.)

Sridhar Ramaswamy, who was then vice president of advertising and commerce at Google, moved Lipkovitz from another division to the display and video ad unit to try to change the dynamics of the company.

However, when he tried to do something, Lipkovitz encountered an obstacle.

For example, he was very much in favor of a product called AWbid (AdWords bidding), which allowed the Google Ads platform to buy inventory on third-party exchanges for remarketing campaigns. However, anonymous others at Google were “vocally opposed” to AWbid and ultimately killed it.

That experience, and others like it, were deeply frustrating. For example, it took the better part of a year to come up with an ultimately unsatisfactory (Lipkovitz called it “weak”) proposal for how to cut AdX margins from 20% to satisfy publishers after headline bidding surged.

“I still suffer from post-traumatic stress disorder,” Lipkovitz said.

By the way, if you ever wondered why exactly the AdX rate was set at 20%, now we have a reason. The Justice Department lawyer who dismissed Lipkovitz happened to ask about it in passing.

“Neal probably decided,” Lipkovitz said. (Sounds … arbitrary.)

Here it comes

The Neal in question is Neal Mohan, currently the CEO of YouTube. But before that, he was VP of Display and Video Advertising at Google from 2008 to 2015. Mohan is on DOJ Witness Listand when he testifies (a date has not yet been set), he will no doubt be classified as an “adversary witness,” which is legal jargon for a hostile witness.

Speaking of opposing witnesses, we have one on Wednesday’s show: Brad Bender, who joined Google as part of its 2008 acquisition of DoubleClick and held a number of executive positions in Google’s ad technology division until his departure in 2022. Bender unsuccessfully tried to have his subpoena quashed so he wouldn’t have to testify, but to no avail.

Also scheduled to testify Wednesday is a witness whose testimony is not in any way unfavorable: Jed Dederick, chief development officer at The Trade Desk. 🍿

Although, as the old saying goes, there is no eating or drinking allowed in the courtroom.