That’s a wrap: Where arguments landed in US v. Google II

Miraculously, US v. Google II ended on day 15, a whopping three weeks earlier than initial estimates. During the last week of trial, Google had the opportunity to present its defense, which, as expected, focused on technical legal arguments, choosing to reframe their conduct, rather than to refute it. Many in the courtroom see this as a function of necessity. The facts aren't on their side, and Google's credibility has long been damaged by evidence deletion.

The crux of Google's argument asserts that even if their conduct in isolation is bad for publishers, it could be good for advertisers on a whole. And if it's good for advertisers, it's good for the market. The problem is that they were unable to really see this argument through. Google focused their efforts on, for example, trying to land their preferred market definition so that the rest of their points might make a material difference. Unfortunately for the defense, proving their market definition argument requires some big logical leaps, even without considering the DOJ's masterful case to the contrary.

Dubious definitions and distinctions

For Google to land its argument that adtech is a single two-sided market, the Court would need to agree on a couple of ill-argued points. (And ignore even numerous contradictions and absurdities.)

First, the defense made the case that adtech is not comprised of distinct product markets serving different customers and purposes. Rather, it is one massive product market for tools that connect buyers and impressions. The product, in their view, is the "connection" that is made. They rely on this in order to downplay their market share, and distort the competition that they face.

Second, they stated that this massive market is a two-sided platform, where both buyers and sellers are present for the transaction, and there are indirect network effects such that benefitting one side of the market ultimately benefits another. They rely on this to distort their exclusionary conduct and justify their harms. It's not tying and exclusionary conduct, they say. It's vertical integration. Therefore Google's legitimate refusal to deal has procompetitive effects that benefit everyone.

A weak combination

Unfortunately for Google. combining these two arguments weakens the plausibility of each one on its own. The DOJ indeed agrees that the ad exchange can be considered two-sided. But, as we saw with Dr. Israel's testimony this week, extending this to the publisher ad server, for example, creates an absurd result. Google needs the Court to believe Israel's suggestion that if a publisher ad server degrades in quality, it will somehow result in advertisers moving spend to social platforms. To many in the courtroom, this is a ridiculous argument. In fact, the DOJ demonstrated this throughout the trial and in their rebuttal. Google further contradicts itself in maintaining that the presence of more sellers would increase the value of the platform to buyers, while simultaneously saying that restricting RTB to AdX is procompetitive, as it allows Google to allegedly perform robust vetting and ensure inventory quality, safety, and security.

Then there's the matter of reasonable substitutes, where Google, especially through Israel's testimony, put forth a number of substitutes that are either not viable, or are not actual substitutes. According to the Google argument, a publisher can just "move" their ad inventory from web to apps, Israel suggested, which ignores the practical realities.

If a publisher doesn't have an app, Judge Brinkema asked, wouldn't that cost publishers money? In that case, yes, there would be an additional step, Israel concedes. Daily Mail's Wheatland further illustrated the impracticality and insufficiency of app ad sales as a substitute for open web display upon rebuttal. Only 2% of their readers have downloaded the Daily Mail app, even after a campaign aiming to increase app usage.'

Transparent wrap

While DOJ's case focuses primarily on harm to publishers, there was an approximately 30 minute stretch at the beginning of Israel's testimony where his only mention of anything publisher-adjacent was to explain the origin of the "cellophane fallacy" as the theory that prices for cellophane might go up so much that people resort to wrapping their sandwiches in newspaper. Ultimately, Google demonstrated to the Court its complete disregard for its publisher customers, while simultaneously insufficiently making the case how advertisers benefitted.

Bill Isaacson: How many small independent publishers are left?

Dr. Israel: There was some discussion in my report. Clearly, many fewer than there were.

This is all confused further by Israel's suggestion that products in this alleged market are both complements and substitutes. They're asking for the Court to do quite a bit of mental gymnastics, with eyes closed. They'd also expect the Court to ignore all of the evidence presented by the DOJ's credible experts and sincere fact witnesses about the scope and effects of Google's abuse of power and to look past the emails and documents demonstrating the damning realities of Google's intent. In a move that could only be intended to win by confusion, they ask the Court to follow the arguments made by a career-expert-witness who derives 80% of his income from such assignments and has been lambasted for his "misunderstanding and misapplication of antitrust concepts" in the past.

No-nonsense Judge Brinkema said Google's contradictory position on market definition in Northern District of California is "problematic for Google." He called their employee testimony "highly questionable." So, it seems unlikely that this judge will follow Google blindly into this particular rabbit hole to its far-fetched wonderland.

We'll find out soon enough. The parties must submit their revised Findings of Fact and Conclusions of Law by November 4th, and closing arguments are set for 10 a.m. on November 25th, with a decision to follow likely by January '25. In the meantime, Google can't put the toothpaste back in the tube. The evidence is out there, and their systematic, multi-year effort to capture and maintain control of the adtech ecosystem to the detriment of its customers is on full display. The company is currently awaiting remedies for the Search antitrust case, and still has the 2025 adtech antitrust trial in Texas to look forward to. As light continues shining into Google's darkest corners, their troubles are just beginning.

Recap: week 2 of US v. Google II

A recap of week one of US v. Google II