Google knew publishers would be unhappy when it implemented measures in 2019 to prevent them from diverting ad sales to rivals but recognized its control over the digital ad market could stop publishers from fleeing the internet giant's ad market, according to internal documents filed in the company's antitrust trial on Thursday.
Royers Reports In the ongoing antitrust trial against Google, the U.S. Department of Justice and a coalition of states are trying to prove that the company unfairly controlled the market for technology that powers online advertising. A key piece of evidence in the case is Google's removal of features that publishers used to reduce their reliance on the tech giant.
Internal emails and documents shown in court revealed that Google employees discussed how the company was losing revenue because publishers were using their power to set minimum bids on Google AdX higher than they could on other exchanges. As a result, when ads were served through multiple exchanges, publishers would often sell their ads to exchanges other than Google.
The documents also revealed that Google knew publishers were willing to accept reduced margins on some ad sales in exchange for the right to prioritize other ad tech companies that charged lower rates. In a 2017 email exchange, a Google executive explained that this helped publishers “keep Google at bay and put pressure on us (as well as any industry).”
As Google prepared to end the feature in 2019, employees discussed how to mitigate backlash from publishers. Nitish Korula, then a research scientist at Google, said in an email that rolling out the change alone “would be seen as a complete loss of a capability that we were running for our own (perceived as “nefarious/selfish” reasons).”
Ultimately, Google introduced the change along with other features that publishers liked, such as ensuring that Google's ad sales tools received a “final review” and ending the practice of allowing sellers to outbid other sellers. Former Google employee Rahul Srinivasan testified that the change was meant to simplify the system and make it fairer, and that Google estimated that ad auction revenue for its top 500 publishers increased by an average of 2.7%.
But publishing executives from companies including The New York Times, News Corp and The Weather Company strongly opposed losing control. In an April 2019 meeting recording played in court, Jana Mellon, then an advertising executive at Business Insider, said, “It had become nearly impossible for us to work with partners other than Google and find ways to grow revenue.”
The trial is expected to last several weeks, and if U.S. District Judge Leonie Brinkema finds Google guilty of violating the law, she will later consider prosecutors' requests to force Google to sell Google Ad Manager, the platform that includes its publisher ad server and ad exchange.
Read more at Reuters here.
