Google defends its ad technology, saying it offers advertisers a safe ecosystem to transact in the online advertising world

Google technologies offer advertisers and publishers a secure ecosystem of tools to transact in the fiercely competitive world of online advertising, the company argued in federal court this week, countering the Justice Department’s claims that it is an illegal monopoly.

In a federal antitrust lawsuit, law enforcement agencies accuse Google of monopolizing technology used to buy and sell ads on websites, harming publishers and advertisers in the process.

Over the past week in Alexandria, Virginia, the company has been presenting its defense, pointing out how the close links between its products help it fight spam and fraud, and how customers can easily switch to other providers. The trial ended on Friday. Judge Leonie Brinkema scheduled closing arguments for November 25 in order to issue a ruling before the end of the year.

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“I think the Justice Department has the upper hand and a finding of liability is more likely,” said Justin Teresi, a Bloomberg Intelligence analyst who attended the hearing.

Search giant Alphabet Inc. argues that it has no legal obligation to make its advertising products interoperable with those offered by competitors and that advertisers have many options on the Internet beyond buying ads on websites. Google competes fiercely with social networks, video streaming sites and other apps for ad dollars, as its defenders have sought to demonstrate.

“Google will never tell this court that it is not a large company and that these investments and innovations are not in its financial interest. That was the case,” Karen Dunn, Google’s general counsel, said in opening statements. “We are one large company among many others, competing intensely millisecond by millisecond for every ad impression.”

Customer’s choice

The company says there are many options available to both website publishers and advertisers in addition to Google’s ad technology tools.

If a publisher doesn’t want to use Google tools, “there are dozens, if not hundreds, of pieces of technology they can use,” said Scott Sheffer, Google’s vice president of global partnerships. There are “multiple ways to access” ad demand from Google.

Instead of using a Google ad server that helps sites manage their advertising inventory, they can build one in-house, as companies like Amazon.com Inc., Reddit Inc., Snap Inc. have done. and Walt Disney Co. – said Mark Israel, Google’s chief economic expert. Small sites can use AdSense, which offers Google ads to publishers based on their content, Sheffer said. The company also offers AdX Direct, a product that connects to third-party ad servers such as those offered by Microsoft Corp or Equativ SAS.

During questioning by the Justice Department, Sheffer acknowledged that AdSense or AdX Direct do not provide the same access as if a publisher were using a Google ad server because only it receives real-time pricing information.

But even for publishers using Google’s ad server, there are ways to bypass the tight connection to the company’s ad exchange, said Nitish Korula, CTO of ad serving and quality. Sites can instruct the ad server to prioritize a different ad exchange over Google’s, he said. They could also increase bids by inputting a higher number into the ad server than the actual bid they received to force Google’s exchange to match it, he said.

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After questions from the Department of Justice, Korula admitted that few companies use the AdX Direct product. In 2020, he wrote that Google should keep it because it could help the search giant as an “antitrust concept.” He also admitted that the “boost” feature had “some disadvantages” as it would interfere with the website’s record keeping.

Ad quality control

The company’s lawyers say Google had a legitimate business reason to tightly integrate products into its advertising empire: It made it easier for engineers to reduce spam and ad fraud, benefiting the entire advertising ecosystem.

The company argued that making its tools available to external rivals too quickly could make it easier for nefarious actors looking to game the system and profit from ad fraud. On the other hand, better visibility into ads flowing through systems has allowed Google to catch fraudsters faster.

Per Bjorke, director of product for ad traffic quality, testified Tuesday that Google was one of two major companies that uncovered a multimillion-dollar ad fraud scheme called 3ve, leading to the shutdown of the operation and the indictment of its leaders in 2018 .

“The vast majority of the 3ve traffic we received and bought came from the third-party ecosystem,” Bjorke said. “I believe this is primarily because we have made it very difficult for bad actors to infiltrate our AdSense and AdX networks.”

Alejandro Borgia, Google’s director of product management for ad safety, testified that Google’s comprehensive suite of ad technologies has made it easier for the company to increase users’ trust in ads. “If users don’t feel safe, they won’t click on ads or turn on ad blockers,” he said.

In response, the Justice Department sought to demonstrate that there are other ways to combat spam and fraud beyond bundling advertising products. She argued that Google wasn’t the only company involved in this work – and at times it wasn’t particularly effective.

Michael Freeman, a Justice Department lawyer, asked Bjorke if he had heard of reports that found Google facilitated the placement of ads on dubious sites, including a 2022 ProPublica investigation that looked into how Google’s advertising company finances disinformation around the world.

“I don’t remember that particular report,” Bjorke said. “I probably read it at the time, but I don’t remember right now.”

Borgia, Google’s ad security leader, admitted that as of July 2021, the tech company was “actively managing” only 10 percent of its security policies, including only two related to fraud. However, Borgia said this does not mean that the company does not enforce these policies, only that it does not have dedicated models or teams dealing with them. “We ensure the security of these policies through other means,” he said, such as machine learning algorithms.

Read also: Google limits secrecy control in the US in a bid to bypass jury trials

A wide open digital landscape

The government maintains that Google dominates the market for display advertising displayed on websites. But Google says this is just a slice of today’s digital advertising world, where brands can engage with consumers through social media, apps and video streaming.

Israel, Google’s economic expert, said advertisers can and do switch between different ad formats and the government should have considered advertising across apps, social media, video and smart TV, which totaled $140 billion in the U.S. in 2022 dollars.

“Facebook, Amazon and TikTok are emerging as the strongest players” in digital advertising, he said, adding that Google sees them as a “significant competitive threat” that has advertisers handing over their money when needed.

Brian Bumpers, marketing analytics manager at e-commerce site Zulily, said the company often shifts the $58 million it spends on advertising annually between different places. In 2016, Zulily spent $30 million on Google Ads, but the following year it cut that amount to about $10 million and increased its spending on Facebook platforms to $30 million.

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“No legal obligation” to help rivals

Google argued that U.S. law protects the company’s right to decide whether its advertising products work with others. Forcing Google to provide technology and resources that allow its ad technology to work seamlessly with competitors’ tools would stifle innovation, a company lawyer said.

The government is trying to force Google to share its customers with competitors, said Dunn, Google’s general counsel.

When the government states that “competitive exchanges must have comparable access to Google Ads demand,” she said, “that is our customer base.”

Israel, a Google economics expert, said that forcing Google to give competitors the same access to its tools would harm competition and amount to “forced interoperability.”

Korula, the CTO, said Google’s Ad Exchange platform was built before real-time bidding was developed. “It would take years to rebuild a Google exchange that would enable this functionality,” he said.

“We did not prevent other exchanges from sending real-time bids” to the ad server, Korula said. No company has ever offered to undertake the technical work and costs to make their exchanges work with Google products, he said.

The Justice Department argued that Google has already undertaken much of the technology work that needs to be done to make its products work seamlessly against competitors.

In 2019, it launched a project internally codenamed Project Yavin to connect its exchange to internal ad servers operated by Microsoft’s LinkedIn and eBay Inc. It has also already allowed its Google Ads ad network to bid on certain types of ads on other exchanges, and it could expand that feature more broadly.

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