Google Expert Argues US Ad Case Is Too Narrow

Google argued in US district court that US regulators in an antitrust lawsuit focused on an overly narrow aspect of the digital advertising market and did not take into account the true scale of the competition in the industry, as the case goes on hiatus until November.

Economist Mark Israel, testifying on Google’s behalf, told Judge Leonie Brinkema that the government’s case focuses narrowly on “open web display advertising”, a term for ads appearing on web pages on desktop and laptop computers.

But the case doesn’t take into consideration that advertisers have shifted spending to social media platforms and online retailers, he said.

Taking into account all online advertising, Google had only a 10 percent US market share as of 2022, down from 15 percent a decade ago, he said.

Mobile ads

Spending has also shifted from computers to mobile devices, with display ad spending decreasing from 71 percent of the market in 2013 to 17 percent in 2022, he said.

The case “seems to miss where the competition is today”, Israel told the court, AP reported.

The government argues Google’s control of ad technology is inflating prices for online publishers and advertisers and allows Google to keep 36 cents on the dollar for ads bought and sold through its organisations, with Google allegedly controlling 91 percent of the publisher ad server market and 87 percent of the advertising ad network market.

Israel said the case doesn’t take into account the value brought to publishers and advertisers by Google’s accuracy in matching ads to consumers, which he said means publishers generate more revenue for each bit of ad space they make available, while advertisers pay less for each click an ad generates.

He said Google’s take of ad spending has dropped to 31 percenet or 32 percent in recent years and that competitors have higher take rates, with an industry average of 42 cents on the dollar.

Market shake-up

Israel’s testimony concluded the third week of the trial, which began earlier this month in an Alexandria, Virginia district court.

The trial is to go on hiatus as of this week, with both sides returning in November to submit proposed findings of fact and closing arguments in December, Brinkema said.

She said she expects to make a ruling by the end of the year.

While any outcomes from the trial are likely to be months or years away, the proceedings are being closely watched as advertising is the core of Google’s business model, generating hundreds of billions for the firm each year.

Numerous publishers and advertisers depend on the company’s services, meaning any major change would be disruptive.

The online advertising market is expected to reach some $691 billion (£528bn) overall this year.

Bench trial

The Department of Justice argues Google rigs auctions in its favour and gives its own products advantages while blocking competitors’ access to significant data.

The bench trial is to be decided by Judge Brinkema, who has shown disapproval of what she perceives as the company’s efforts to suppress internal evidence.

In August pretrial hearings Brinkema said she found it “absolutely inappropriate” that Google chief legal officer Kent Walker had advised employees to change chat settings to automatically delete posts in conversations about sensitive legal matters.

A US federal judge last month ruled Google acted illegally to maintain its search monopoly.

The judge gave the Justice Department until the end of the year to outline remedies, which could include divestiture of businesses such as Android or Chrome.