Tim Peterson’s Post

Transcript

Now about 100. OK, how beta is 100? Do you wanna counter? No. Alright, auction is closed outside bids. Let's see here. Alright, I will bid $101.00. And when the auction? No, the auction was closed. No, the auction was closed for players. But I'm not just a player, I'm the bank. For me, the auction stays open. What? That seems like a questionable interpretation of the rules. Thank you. It's called monopoly. This is how to win. Be the bank, control the auction. Just like the online ad market. What the? Well, not likely to be Exhibit A on September 9th when the US Department of Justice opens its case against Google. Using the company's ad tech business of violating antitrust law monopoly example does kind of get at the heart of what Google stands accused of. Or as the Justice Department put it in its lawsuit against Google, one industry behemoth, Google has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high tech tools used by publishers, advertisers, and brokers to facilitate digital advertising. You can find a detailed breakdown of the Justice Department's case against Google on digitized YouTube channel, but here's a quick refresher. As the case goes to court, the basic gist is that Google owns tools that run the gamut of the digital ad infrastructure between advertisers and publishers. And the crux of the DOJ's claims is that Google has used this end to end position to prioritize its own ad tech tools over rivals and stifle competition. In argument against the DOJ's claims is that Google's ad tech tools are far from the only options on the market. I mean, just look at this graph from Luma Partners that charts all the different ad tech tools out there. But it's not just that Google owns ad tech tools across the entire programmatic advertising. It's also that Google owns one ad tech tool in particular that gives it a special edge. That tool would be its ad server, formerly known as DoubleClick for Publishers and now called Google Ad Manager, that publishers use to manage their ad inventory. Walks, the DOJ and other detractors allege is that it has used primarily its ad server and which it acquired with that double click acquisition. It's a tool knows double click for publishers. But what it is alleging is that it has essentially manipulated the double click add server and then use data within that to manipulate the pricing it sends out to market in a manner that preferences Google's other tools. As the name implies, is used by publishers to serve up impressions to the programmatic marketplace. As a result, a publisher using Google's ad server gives Google access to ad impressions before the rest of the market. And Google allegedly used that pole position to cherry pick impressions for the rest of its ad tech operation. Google recognized that because Publisher Ad Server set the rules for how and to whom publisher advertising opportunities are sold, owning a publisher ad Server was key to having visibility into and control over the publisher side of digital advertising. By controlling the Publisher Ad Server on the other end of the transaction, Google could further entrench its advertiser customer base by giving advertisers access to more advertising opportunities. And pushing more transactions their way. Yeah, I think it is that AD server. I mean, that is really at the crux of all of this. Amongst the allegations are that Google is this ad server to inflate bids from its own DSP, effectively getting publishers hooked onto its own exchange. Google's ad server seems to be at the root of the Justice Departments monopoly argument, and two stats in particular seemed to make its case in 2008 when Google acquired Double Click, the ad tech firm that is the foundation of Google's ad tech business. Double Clicks Adserver had a 60% share of the market by 2015. That share had reached 90% then. Google seems to have maintained its chokehold on the ad server market cases. At this point, none other than the other two members of the so-called digital advertising Tripoli, Meta and Amazon have tried but failed to stand up their own ad server businesses. And when I've spoken to. To some of my sources through the years and you've pointed out they've just said it is really, really difficult to get off an answer server, let's not forget. Facebook tried to launch an ad server. It didn't work. It didn't work. It had to pivot that into a an ad measurement business. Amazon itself, it tried to launch an ad server it it did, it bought one in a bankruptcy bankruptcy auction whereby a company that tried to compete with Google. That was seismic if you remember going back to 2019 and it filed bankruptcy. Amazon tried to launch it, and as emerged in the headlines a couple of weeks ago, it is currently in the process of Sun setting up business. So you've got some pretty big big tech, you know, fellow big tech members have tried to rival the though with with tools of its own, and neither of those have worked. OK, so that all sounds pretty dominant, but the Justice Department isn't arguing that Google is just too damn good at competing. It's accusing Google of stifling competition. And this is where that ad server dominance really seems to come into play. There is according to the DOJ tool whereby Googles ad server gives its own ad exchange the first access to any and impression about to go into the market again in a manner that's preferences its own technology and other rival at exchanges simply don't get the first bite of the cherry speak in response to Google having this first look advantage. Other tech companies came up with something called header bidding, which made it so that instead of a website requesting bids for an ad impression from ad tech companies one at a time, starting with Google, the bid request would go out to multiple ad tech companies simultaneously. Sounds like a neat solution to the problem, right? Sure, if it weren't for the fact that the winning bids would come back to Google's ad server, which acting like the banker from Monopoly skit at the start of this video, but then make a call to Google's ad exchange to give it a chance to outbid the competition. There's all kind of paints. Picture of the composition among add exchanges to win impressions is like a tournament with two brackets, except Google gets an entire bracket to itself. In the case of its last leg advantage, it's at exchange automatically advances to the championship game for a chance to outdo the best offer to emerge from its rivals. And in the case of the first look advantage, Google can effectively win the impression before the tournament even kicks off. And seemingly all thanks to its publisher ad server serving as a kind of puppet master to the programmatic market. OK, so that's all a. So much short summary of the Justice Department's case against Google as the two go to court. Again, you can go to Digital's YouTube channel to find a whole series explaining the ways in which the DOJ claims Google uses ad tech tools to manipulate the programmatic ad market. And be sure to check out Digital Site for ongoing coverage of the trial, eventual verdict, and most importantly, it's repercussions. Thanks for watching.