Google Launches Defense in Antitrust Case, Alleging Ad Technology Monopoly

ALEXANDRIA, Virginia — Google on Friday launched its defense against allegations that it has an illegal monopoly on online advertising technology, with testimony from witnesses who said the industry is far more complex and competitive than the federal government makes it out to be.

“The industry has been incredibly fluid over the last 18 years,” said Scott Sheffer, vice president of global partnerships at Google, the company’s first witness in the antitrust trial in federal court in Alexandria.

The Justice Department and a coalition of states allege that Google built and maintained an illegal monopoly on technology that facilitates the buying and selling of online ads visible to consumers.

Google counters that the government’s case wrongly focuses on a narrow type of online ad — the generally rectangular ones that appear at the top and right of a webpage. In their opening statement, Google’s lawyers said the Supreme Court had warned the justices against taking action on a rapidly evolving technology like the one Sheffer described because of the risk of error or unintended consequences.

Google says such a narrow market definition ignores competition from social media companies, Amazon, streaming TV providers and others that offer advertisers a means to reach consumers using the internet.

Justice Department lawyers called the witnesses two weeks before the case ended Friday afternoon, detailing how automated ad exchanges conduct auctions in milliseconds to determine which ads will be shown to which consumers and how much they will cost.

The department alleges that the auctions are structured in a subtle way that benefits Google while excluding potential competitors and prevents publishers from making as much money as they could by selling their ad space.

The report also states that Google’s technology, used at all stages of the advertising transaction, allows Google to retain 36 cents of every dollar spent on a specific ad, a commission that amounts to billions of dollars every day.

Executives at media companies such as Gannett, which publishes USA Today, and News Corp., which owns the Wall Street Journal and Fox News, have said Google dominates the market because of the technology publishers use to sell ad space and advertisers use to buy it. The products are intertwined, so publishers must use Google technology if they want easy access to a large number of advertisers.

The government said in a complaint filed last year that Google should be forced to at least sell some of its publisher business to break up its dominant position.

In his testimony Friday, Sheffer explained how Google’s tools have evolved over the years and how the company vets publishers and advertisers to protect against issues like malware and fraud.

The trial began Sept. 9, just a month after a judge in the District of Columbia found Google’s core business, its ubiquitous search engine, to be an illegal monopoly. That trial is still ongoing to determine what remedies, if any, the judge can impose.

The advertising technology at issue in the Virginia dispute does not generate the same revenue for Google as its search engine, but it is still estimated to bring in tens of billions of dollars a year.

Regulators abroad have also accused Google of anti-competitive behavior. But the company scored a victory this week when an EU court overturned a €1.49 billion ($1.66 billion) antitrust fine imposed five years ago that related to another segment of the company’s online advertising business.