The Latest Antitrust Case Against Google Is, By Far, The Most Serious

There have been a whole bunch of antitrust lawsuits filed against Google over the last few years. The DOJ filed one in October of 2020 that was pathetically weak. That one seemed like it was Attorney General Bill Barr appeasing then President Trump with what Trump hoped would be an election-boosting attack on evil woke big tech." Then, in December of that year, a bunch of states, lead by Texas' Ken Paxton filed another antitrust lawsuit, which we noted got some fairly basic things completely wrong, but had some potential to be legit depending on what was behind a bunch of redactions. That case has plodded along, and the amended complaint filed last year was much stronger than the original complaint and looked pretty damning to us. Then there was another antitrust lawsuit from a bunch of other states.

So, it seems a bit odd for there to be yet another one, again from the DOJ and also with a random assortment of states, some of which repeats allegations from the other antitrust lawsuits filed previously.

However, of all the antitrust complaints filed against Google so far, this one strikes me as the strongest, and the most damning. It's almost as if the various attempts to rush out half-baked antitrust lawsuits wasn't a great idea, and maybe they should have waited until they were able to put together all of these details.

This one focuses, like the Texas one, on Google's position in online advertising, and how (according to the complaint) it has abused its position in multiple ways. Specifically detailed in the complaint are a bunch of things that certainly do seem to raise antitrust concerns: buying up competitors whose independent success would limit Google's ability to totally dominate the market, taking such control over all parts of the ad stack that it could effectively undercut any competitive efforts and give an advantage to its own ads, effectively buying off Facebook to diminish the thread of header bidding" which was poised to make the market more competitive, and manipulating fees to take a larger cut for itself.

We have seen some of this in practice. As we noted a year and a half ago when we pulled all Google code from Techdirt, we had to pull all ads with it. Because no matter how many companies there were offering to sell ads for Techdirt, every single one of them backstopped their inventory with ads from Google, and they kept inserting tracking code because of it. And we'd had lots of problems with Google ads on our site. At least from where we sit, there doesn't appear to be anything approaching a competitive market in online ads. Everything seems to run through Google.

I actually thought after we wrote about all this we'd maybe hear from companies offering non-Google ads. But, none showed up, because I'm not sure any actually exist. And the complaint calls this out:

But competition in the ad tech space is broken, for reasons that were neitheraccidental nor inevitable. One industry behemoth, Google, has corrupted legitimate competitionin the ad tech industry by engaging in a systematic campaign to seize control of the wide swathof high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising.Having inserted itself into all aspects of the digital advertising marketplace, Google has usedanticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threatto its dominance over digital advertising technologies.

I've notably been skeptical of many antitrust arguments. I think people throw around antitrust" way too freely, and it often makes no sense and does not apply. All too often, failed competitors trot out antitrust" as an excuse for their own failures to innovate and compete.

But this case seems much more legitimate, and the kind of thing that antitrust law was created to deal with.

And, honestly, the dumbest thing about this is that there's really no reason that Google should have done most of this. It has a business that has and will continue to throw off so much cash. It didn't need to corner the entire online ad ecosystem. Stories like these in the lawsuit seem pretty damning:

Google also sought to co-opt what it perceived to be its two biggest threats(Facebook and Amazon) into Open Bidding. In internal documents, Google concluded that whileit [c]annot avoid competing with FAN [Facebook]," it could, through a deal with Facebook,build a moat around our demand." Internal documents recommending a deal with Facebookrevealed Google's primary motive: [f]or web inventory, we will move [Facebook's] demand offof header bidding set up and further weaken the header bidding narrative in the marketplace."Thus, for these reasons, Google ultimately agreed to provide preferential Open Bidding auctionterms to Facebook in exchange for spend and pricing commitments designed to push more ofFacebook's captive advertiser spend onto Google's platforms. Google sought to head offAmazon's investment in header bidding technology with a similar offer, albeit without the samesuccess.

Google also adjusted its auction mechanisms across its ad tech products to divertmore transactions to itself and away from rivals that might deploy header bidding. On thepublisher side, Google allowed AdX-and only AdX-to change its auction bid by alteringGoogle's own fee after seeing the price to beat from another exchange.

On the advertiser side, Google first considered outright blocking its advertiserbuying tool from buying inventory made available via header bidding. The goal: dry out HB[header bidding]." When Google decided that strategy would be too costly for Google, it pivotedto a different and more insidious strategy with the same effect.

Google recognized that instead of stop[ping] bidding on HB [header bidding]queries, we could bid lower on HB queries," and win the same impressions on Google's adexchange instead. No rival exchange was in a position to compete with this strategy because norival had the scale necessary to compete against the industry giant, especially considering thebuilt-in advantages that Google afforded its own ad exchange and publisher ad server. Google,and Google alone, had control over both the leading source of advertiser demand and the dominant publisher ad server. So, Google programmed its advertiser buying tool to advantage itsad exchange.

Google's bidding strategy on header bidding transactions proved remarkablyeffective in stunting the growth of header bidding, but Google still worried that its moat was notfully secure. Google learned that some publishers were using price controls within Google's ownDFP publisher ad server to sell advertising inventory to rival exchanges outside of Google'sclosed-wall system, even in instances where Google's own AdX exchange had offered to paymore for the inventory. Publishers did so for a variety of reasons, including considerationsrelated to ad quality, volume discounts, diversification of demand sources, data asymmetries, orother factors.

When Google identified this threat, it simply removed the feature from DFP andinstead imposed competition-stifling Unified Pricing Rules. Under these new rules, publisherscould no longer use price floors to choose rival exchanges or other buyers over AdX or GoogleAds, no matter the reason. Google effectively took away their own customers' right to choosewhat buyer or ad exchange best suited their needs. In doing so, Google once again bought itself afree pass on competition.

This strikes me, again, as the kind of thing we described recently in the enshittification" post. As Google grew, it brought in professional" management who was judged on Wall St.'s ever more greedy whims. And the only way to satisfy the beast is to squeeze more and more value out of the system, often at the expense of everyone else.

It's a shame, given Google's very public philosophy in the early days, trying to avoid shitty ads and sketchy practices that were anti-user. But, as Cory Doctorow noted in his post this is how things go:

Here is how platforms die: first, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves. Then, they die.

I still think many of the concerns about Google and things it does are way overblown. But on the ad side, Google has become a problem. It could have avoided this by just competing in the market and providing a better service. But the complaint certainly suggests it gave up on doing that, and started manipulating the market instead.

We'll see how Google responds to this lawsuit, but, at the very least, I hope that an actually competitive market for internet ads emerges out of this, no matter what happens.