Welcome to The Corner. In this issue, we report from the Virginia courthouse where the DOJ is laying out its case against Google for monopolization of ad tech. And we look at Europe’s fascinating debate on how to rebuild its economy. No images? Click here Welcome to The Corner. In this issue, we report from the Virginia courthouse where the DOJ is laying out its case against Google for monopolization of ad tech. And we look at Europe’s fascinating debate on how to rebuild its economy.
Google ad tech trial reveals trapped publishers, crushed rivals, and self-dealing The Department of Justice and Google met again at a federal court in Virginia on Monday, kicking off a historic trial that challenges Google’s dominance over the market of digital advertising technologies, or ad tech. The case focuses narrowly on how Google intermediates sales of open display ads — sold primarily on news websites. For the next four weeks, federal judge Leonie Brinkema will hear testimony from news publishers, ad tech rivals, and industry experts on allegations that Google engaged in systematic anticompetitive practices to tighten its grip on digital advertising, while diverting ad spending away from those who challenged its power. The trial began barely more than a month after the judge in a separate DOJ lawsuit, focused on the search market, found Google to be an “illegal monopoly.” The DOJ set the tone in Monday’s opening statements, describing Google’s ad tech operations as a “trifecta of monopolies.” The presentation included a graphic that detailed how Google’s market share in each side of the ad sales process is well over 80 percent, including an ad exchange in the middle that clears around 50 percent of ad views transacted in the U.S. and globally. Google countered saying that open display is not a “real market,” and it claimed that ads on mobile apps, social media, streaming TV, and game consoles are interchangeable and substitutable products. The corporation’s main defense is that its ad tech products make digital ads sales more efficient, and it has not hurt publishers. The DOJ moved to quickly challenge Google’s overall defense. In the first three days, prosecutors presented a parade of witnesses who detailed how difficult it is to escape their reliance on Google, how rival ad exchanges can’t grow, and how today’s market structure continually reinforces Google’s dominance. Thus far, the DOJ has focused especially closely on how Google’s practices harm news publishers in the years since it bought DoubleClick in 2008. Former News Corp vice president of data and ad tech, Stephanie Layser, and Gannett’s vice president of revenue operations, Tim Wolfe, told the court similar accounts of their experience: no matter how many rivalsthey connect with to cap their reliance on Google, that corporation’s ad exchange, AdX, ends up clearing most of their ad sales. Both publishers detailed how AdX — which Google built after its acquisition of DoubleClick — is the only way to access Google’s full network of advertisers in real-time ad auctions. Wolfe revealed that 50 percent of Gannett’s programmatic ad sales come from AdX, for which the publisher pays $10 million in fees a year. Layer said News Corp tried to switch ad servers in 2017, at a time when the publisher earned up to 60 percent of its ad traffic from AdX. NewsCorp ultimately abandoned the plan out of fear that it would not be able to replace the revenue from outside of Google’s system. One consequence of Google’s AdX clearing most online ad sales is that it prevents other ad exchanges from gaining scale, expert witness Ramamoorthi Ravi explained. Ravi, professor of operations research and computer science at Carnegie Mellon, walked the judge through the different ways Google’s self-preferencing tactics hurt publishers and stifle competition. Google’s ad tech features “are not designed to work for the benefit of the customers and only advantage Google,” he said. One example Ravi used, which is also in the DOJ complaint, goes back a decade to when Google’s AdX had “first look” privilege on its ad server. This meant AdX was by default the first buyer to bid on an ad auction. At the time, publishers were working with other ad exchanges to get higher prices per auction. But the “first look” feature allowed Google to game the auctions by paying only $0.01 above the floor price for any ad. This allowed Google to win more than half the auctions, and prevented publishers from selling their space in a truly competitive auction to other buyers. If Google is found liable for breaking antitrust law in this market, Judge Brinkema will also have to rule — perhaps more immediately than in the search antitrust case — about one key remedy the DOJ is proposing: to break up Google’s ad tech business. Alongside other injunctive relief on specific anticompetitive practices, this would likely help to unleash a transformation of a market fundamental for funding journalism. Karina Montoya, senior reporter at the Center for Journalism & Liberty, has been reporting on the Google ad tech case directly from the courthouse. Follow new developments here and sign up here to receive updates directly in your inbox.
Open Markets Convenes Briefing in EU Parliament to Discuss Competition Policy Earlier this week, Open Markets helped organize a cross-party briefing in the European Parliament to discuss the next European Commission’s approach to competition policy. Hosted by René Repasi MEP, a leading figure in the European competition policy debate, the meeting brought together experts, advocates, and members of the European Parliament to discuss the recent report on the state of Europe’s competitiveness drafted by former European Central Bank president Mario Draghi; Europe’s role in taking on the tech monopolies; the threat that economic concentration poses to resilience and security; and the revolving door between the private sector and the EU’s competition agency. In his report, Draghi called for several reforms that echoed policies Open Markets Institute has long advocated, such as taking immediate action to address Europe’s dependence on concentrated supply chains, particularly in China; aligning the EU’s competition and industrial policies; and moving beyond a narrow focus on price in competition enforcement to account for factors including innovation and resilience. At a separate event on Europe’s digital sovereignty hosted by the European People’s Party, Open Markets senior fellow Johnny Ryan spoke about the need for robust data protection enforcement to rein in dominant tech giants. Ryan explained how these tech firms entrench their dominance by breaking European laws, and argued that effective enforcement will create the space for European innovators to emerge.
OMI Legal Director Sandeep Vaheesan’s Book on Publicly Owned Power Sector Coming Soon Sandeep Vaheesan, the legal director at the Open Markets Institute, will publish his first book Democracy in Power: A History of Electrification in the United States on December 3. Published by University of Chicago Press, the book narrates the history of how ordinary citizens wrested control of the U.S. power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives. Democracy in Power traces the rise of publicly governed utilities in the 20th century electrification of America and offers a blueprint for a decarbonized future. Vaheesan has written extensively about publicly owned power, including for The New Republic, Jacobin, and Democracy Journal. Pre-order Democracy in Power here.
Judge Halts Launch of Venu Sports in Closely Watched Live TV Monopoly Trial A federal judge has stopped the launch of a sports streaming service called Venu Sports through a preliminary injunction. Open Markets joined partner organizations in filing an amicus brief on behalf of Fubo, which was cited by the judge in her opinion blocking the service’s launch. The joint venture — which is owned by Disney/ESPN, Warner Bros. Discovery, and Fox — would have controlled as much as 80 percent of the national market for live sports broadcasts, which underpin the traditional linear, as opposed to streaming, television industry. OMI reporter Austin Ahlman wrote about the stakes of the hearing, based on a complaint by streaming service Fubo, in the Corner newsletter and Common Dreams, and he live-tweeted the hearing’s major developments on X. “With that market power, these giants could destroy what remains of the cable television market and stifle competition in the market for live programmatic streaming services before it fully gets off the ground,” he wrote. 📝 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:$295 vs. $5,000+The price consumers can now pay for an FDA-approved set of Apple Airpods hearing aids in comparison to the price they used to pay before the Food and Drug Administration allowed hearing aids to be sold over-the-counter without a prescription, a move that effectively broke up a cartel of hearing aid companies that maintained the prohibitive pricing. (CBS News) 📚 WHAT WE'RE READING:Character Limit: How Elon Musk Destroyed Twitter — New York Times tech reporters Kate Conger and Ryan Mac dive deep into Elon Musk’s takeover of the platform formerly known as Twitter, highlighting the way his impulses and political views are shaping and gradually diminishing the once-dominant communications platform as they go. By pulling back the curtain on the impetus for Musk’s erratic decisions and the effects those decisions are having on public discourse, Conger and Mac illustrate the dangers of allowing billionaires to take sole control of essential pieces of the web. 🔎 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. |