A Google expert during the antitrust trial claims that the government underestimates competition for online advertising money

Federal regulators who say Google has an illegal monopoly on technology that matches online advertisers with publishers are vastly underestimating the competition the tech giant faces, an expert hired by Google testified Thursday.

Mark Israel, an economist who prepared the expert report on Google’s behalf, said the government’s claims that Google had a monopoly on advertising technology inappropriately focused on a narrow market that the government defines as “open Internet display advertising,” essentially rectangular advertisements that appear at the top and right of a web page when a consumer is browsing the web on a desktop computer.

But the government’s position does not take into account the diverse competition that takes place outside these rectangular boxes, Israel said. In the real world, advertisers have radically changed the way they spend money, shifting to social media companies like Facebook and TikTok and online retailers like Amazon.

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If you consider all online display advertising, not just the narrow government-defined segment, Google will have just 10% of the U.S. market share by 2022, he said. That’s down from about 15% a decade ago.

Additionally, advertisers have moved away from placing ads on desktop and laptop screens, where Google supposedly controls the market, which has resulted in money migrating to ads placed on apps and mobile screens. Israel cited marketing data showing that display ad spending on desktops and laptops dropped from 71% in 2013 to 17% in 2022.

The government’s arguments “seem to ignore the current competitive situation,” Israel said.

His testimony comes as Google wraps up its defense in the third week of an antitrust trial that began earlier this month in Alexandria, Virginia. U.S. District Judge Leonie Brinkema said she expected the government to provide a brief explanation of its decision on Friday. The trial will then be suspended, with both sides presenting proposed findings of fact in November and returning to court for closing arguments in December. She said she expected to issue a decision by the end of the year.

In its case, the government accuses Google of building and maintaining an illegal monopoly that limits choice and inflates costs for online publishers and advertisers. The government says its control of the market allowed Google to keep 36 cents on the dollar for every ad bought and sold through its ad tech stack.

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The government argues that Google controls advertising technology at every stage of the process, including the dominant technology used by publishers to sell their advertising space, the dominant technology used by advertisers seeking to buy advertising space, and the intermediary ad exchanges that conduct auctions to match advertisers with publishers. milliseconds.

In its brief, the government argues that Google is illegally connecting these markets, forcing publishers to use Google technology if they want to access Google’s large advertiser base.

The government, using narrower market definitions than Israel’s, found that Google controlled 91% of the publisher ad server market and 87% of the ad network market.

Google says the government’s justification also fails to take into account the billions the company has invested to ensure that its products work together to generate more value for publishers and advertisers by matching the right advertisers with the right consumers.

Israel cited data showing that publishers working with Google generate more revenue for each piece of ad space provided, while advertisers pay less for each click generated by their ads.

This, Israel argues, is only because Google’s technology continually improves the quality of ads by matching advertisers with consumers based on their interests and purchasing history.

Israel also disputed the government’s claim that Google receives 36 cents on the dollar for advertising sales it facilitates. He said data shows that has dropped to 31% or 32% in recent years. More importantly, he said, competitors have even higher collection rates, with the industry average being 42 cents on the dollar.

The Virginia lawsuit differs from another case brought by the government that alleged that the ubiquitous Google search engine constituted an illegal monopoly. In this case, a judge in the District of Columbia ruled in favor of the government and declared the search engine a monopoly, but no decision has yet been made on potential remedies. The government is expected to present suggestions on proposed remedies next month. these could include limiting Google’s ability to pay tech companies to block Google as the default search engine for gadgets like cell phones, or even trying to force Google to sell part of its business. (AP)

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