No images? Click here Welcome to The Corner. In this issue, we preview Google’s September trial, at which the Department of Justice will lay out its antitrust case against the tech giant for its dominance over the digital advertising, or ad tech, market.
Last week at a pre-trial hearing, Judge Leonie Brinkema set the terms for the jury trial at which the Department of Justice (DOJ) will present its antitrust case against Google for its control over the core advertising technologies (“ad tech”) that undergird today’s dominant digital business models. The judge’s comments, along with other recent court filings, make clear the Google ad tech trial, to begin in September, will be one of the most complex of the internet era. The hearing also underscored how this case will likely prove pivotal for the future of journalism and the news media market. Indeed, it took place amidst recent headlines highlighting the extreme and growing crisis in journalism due largely to Google’s monopoly over digital advertising. In the hearing, which took place in a federal court in Alexandria, Virginia, Judge Brinkema said she will allow the parties to present a tutorial on the ad tech market, given its complexity; that disputes between the parties about posting exhibit trials for the public record will not interrupt the trial’s development – unlike in the Google Search trial in Washington, D.C.; and that she intends to make sure the general public has full access to the trial. Most jurors and other members of the general public know little if anything about how the online advertising market works, so a detailed introduction to the industry will likely prove key to the DOJ’s ability to make its case. But agreeing with Google on what a “fair” explanation entails will likely prove challenging for the DOJ, especially when Google has demonstrated it wants to keep as much market and business information as possible away from the public eye. In fact, recent filings show that Google is already battling the DOJ on requests to disclose hundreds of documents that Google’s testifying experts used to form opinions about the case. Some facts are undeniable. Ad tech tools have become the backbone that connects advertisers and news publishers on the web. This market is made up three products: publisher ad servers (for publishers to manage their ad spaces), ad buying tools (for small and large advertisers to buy ads), and ad exchanges, where the first two meet to place a series of bids that ultimately land in ads being shown to users. Today, Google controls most of the market share in the entire supply chain: DOJ depicts Google’s dominance in each product market of the ad tech stack that connects publishers with advertisers. (Source: DOJ complaint) This concentration of power and control matters: the ad tech industry is worth $300 billion just in the U.S. But telling the story won’t be easy. It is an industry in which decisions about when and where ads are placed are controlled largely by algorithms, and where there is an almost complete lack of transparency on platforms’ fees and pricing. The DOJ will need to simplify that black box and get to the heart of how Google conquered this market on the backs of news media: by manipulating ad prices in ways that allowed Google to siphon ad revenues away from news and by eliminating ad tech competitors that could have brought more revenues for news rooms. Drilling down on examples laid out in the complaint will also be key, such as when, in 2017, Google shifted $200 million of ad spend away from news publishers using ad exchanges competing with Google. To put it in perspective, if one the largest philanthropic programs supporting journalism today were to exhaust its $500-million pledge in five years, back then it would have only put back half. Globally, Google’s monopoly over the ad tech market has recently come under more widespread legal scrutiny. In August 2021, the French Competition Authority hit Google with a fine for anticompetitive practices in this market — the only ruling Google has not disputed in Europe. The head of the regulator said it was the hardest case she had been involved in. In June 2023, the European Commission charged Google with basically the same antitrust violations that the DOJ did for its case. This week, 32 European news publishers sued Google for the same practices, seeking damages of about €2.1 billion. But the DOJ’s lawsuit is the most comprehensive so far. During six weeks, the DOJ will have to swiftly and effectively cover about 15 years of Google’s anticompetitive practices, try to open the black box of ad tech algorithms, and demonstrate that breaking up Google’s ad business is the right path to redress the harms to fair competition. In addition, there will be the burden of dealing with Google’s contentious attitude toward public access to information — a true acid test for antitrust enforcement in the modern era. Center for Journalism & Liberty Hosted “Value of News” Webinar with Economists, Scholars Earlier this week, the Center for Journalism and Liberty at Open Markets Institute hosted “The Value of News,” a webinar that convened experts to discuss the fair value of news content used on digital platforms such as Google and Facebook amid the rapid decline of journalism. CJL Director and moderator Dr. Courtney Radsch kicked off the webinar by pointing out the current method for valuing the news used by lawmakers and promoted by Big Tech platforms “disregards the way news content improves the platforms for users, even if they don’t click on a headline.” Participants said their research show that news content, even without click-through, is far more valuable to online platforms than the companies admit. Behavioral economics researcher Alexis Johann spoke about his findings that internet users in Switzerland are more satisfied with online search results when those results include news content, indicating users trust Google search results owing to the credible news sources that make up a part of those results. Their study estimates that 40% of the advertising revenue from informational searches on Google should go to news publishers. Media scholar Dr. Anya Schiffrin estimates that fair compensation for publishers “is in the billions, not millions” on an annual basis; this is a figure far larger than the $100 to $200 million news publishers in Australia and Canada have negotiated with tech platforms. Economist Dr. Cristina Caffarra, who was involved in the development of Australia’s bargaining code between publishers and platforms, observed that legally binding bargaining requirements between news publishers and platforms end up giving the platforms too much power. Ermela Hoxha, who leads strategic partnerships at The Guardian, emphasized how the power imbalance is perpetuated because the platforms don’t share their data on how users engage with content. Watch the full webinar here.
The Federal Trade Commission this week sued to block the proposed $25 billion merger between Kroger and Albertsons in what would be the country’s largest-ever supermarket merger. Open Markets Institute’s food program manager Claire Kelloway applauded the FTC’s move, which comes in the wake of similar antitrust lawsuits by the Colorado and Washington state attorneys general. “Critically, this case recognizes the harm of grocery mergers on labor markets and organized worker power, particularly highlighting how this deal would undermine unions' ability to negotiate fair collective bargaining agreements,” Kelloway said. “The suit also rightfully calls out the many ways Kroger and Albertsons proposed spin offs to C&S Wholesale would not have preserved fair competition.” Read Kelloway’s research and reporting on food and grocery consolidation and their impact on food quality, prices, jobs, and wages here. Open Markets’ statement was covered by grocery shopping website Coupons in the News. 📝 WHAT WE'VE BEEN UP TO:
🔊 ANTI-MONOPOLY RISING:
We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter. 📈 VITAL STAT:$93 MillionThe amount of a settlement pharma giant Pfizer has agreed to pay to wholesale drug distributors to address antitrust claims that the company conspired with India's Ranbaxy Laboratories to delay sales of cheaper generics for the cholesterol drug Lipitor. Lipitor, first introduced in 1997, garnered more than $130 billion in sales during its first 14 years on the market. (Reuters) 📚 WHAT WE'RE READING:The War Below: Lithium, Copper, and the Global Battle to Power Our Lives — Senior Reuters journalist Ernest Scheyder takes a deep dive into the intense geopolitical maneuvering over supplies of critical minerals necessary to fuel the green transition and enable continued technological innovation. His sweeping account examines the role policymakers, environmental activists, and large corporations are set to play in the unfolding battle to control where and how the resources to build the future will be extracted and processed. 🔎 TIPS? COMMENTS? SUGGESTIONS? We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue. |