US v Google

Google’s conflicts of interest took center stage on day two, bookended by explosive testimony from more of the DOJ’s witnesses. Much of the day focused again on establishing the market, while setting the stage for what’s to come on Google’s exclusionary conduct.

1. Stephanie Layser | ex-NewsCorp, currently at Amazon Web Services (Publisher)

Stephanie, who has spent 14 years working on behalf of publishers, explained that out of 75-80 publishers she has consulted for, only ONE didn’t use DFP. Out of 250 she has worked with or spoken to about their tech stacks, that number is only three There are “legions” of people that have never used a different ad server, herself included. Despite this dominance, Stephanie tells the court that DFP isn’t a superior product - it’s a “20-30 year old” piece of “slow and clunky” tech. So much for Google’s alleged “billions in innovation.” DOJ ran through a list of other platforms and tools - Taboola, other exchanges, social platforms - and whether they’re alternatives to DFP. Obviously they are not.
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She explained that NewsCorp wanted to switch ad servers back in 2017, but the revenue risk was too high because of Google ads demand. 40-60% of NewsCorp revenue was from AdX, and of that, 40-60% was Google Ads demand.
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The practical cost of switching meant less money, less journalists, and less innovation, says Stephanie. She tried for years to get access to real-time pricing. WSJ wanted to be able to innovate around their paywall and ad experience. They couldn’t without access to this data. They couldn’t switch ad servers because they’d lose access to the demand. Multihoming couldn’t work - and even in an inefficient dual ad server solution, DFP would be unavoidable. Judge Brinkema says, “You wanted access to advertiser cash, but didn’t want to go through the DFP system for that,” so the tying argument appears to have landed.
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We hear about Stephanie’s multi-year campaign to get Google to share log-level data. “It’s impossible to negotiate with Google,” she said, as she explained that you used to be able to stitch together DFP and AdX reporting, but logs were incomplete without Google Ads bids. After two years of begging, Google said okay to log-level data - then “broke the keys” needed to merge the data across AdX and DFP. As usual, Google pretended their anti-competitive conduct was in the name of privacy.
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Meanwhile, Header Bidding allowed for real-time competition and transparency into logs, resulting in 20-50% more revenue for the publishers she helped implement it. Last look, she explains, offered little incremental value to publishers.
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Unified Pricing Rules “took control out of our hands” so we could “no longer choose” how best to monetize inventory. She gave feedback to Google at the time that UPR was in Google’s best interest; not publishers’. An email read “Adx is currently tied to DFP functionality, leaving me to be forced into using the adserver should I want full access to AdWords, GDN, and DV360 on a real-time pricing basis.” She felt “frustrated,” “stuck,” and couldn’t innovate, and said the move hindered “fair competition in the adserver market” and decried Google’s subversion of publisher “freedom to switch.” What’d Google do? They called her “emotional and unproductive.” There are apparently also tape recordings of audio conversations - we didn’t get to hear them (yet?), as Google’s attorneys pushed back.
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Her AdExchanger Op-ed said that as a first step, it’d be easy for Google to contribute AdX to prebid - i.e. build an adapter. On cross-exam, Google tried to position this as some anti-capitalist manifesto, and I see their proxies have picked where their attorneys left off. Ignore it, as it is nonsense.
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On redirect, Stephanie spoke to Google’s unfair auction dynamics. DOJ asks for examples. In the most powerful testimony thus far, Stephanie says, “I’m talking about Unified Pricing Rules. I’m talking about dynamic allocation. I’m talking about every feature they shoved down our throats over the course of time we were using DFP.”

2. Jay Friedman | CEO of Goodway Group (Agency/Marketing Services - buy-side)

The buy-side perspective immediately following Stephanie’s was in stark contrast, as he calls variable pricing a move to “game the system.” This paints a clear picture of the inherent conflict of interest in Google’s model of “serving” both sides.
Most of this line of questioning focused on establishing why other channels are not substitutes for open-web programmatic, and Google played the same games as yesterday with their marketing funnel visual.
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The cross-examination delved into Twilight Zone territory, as Google whipped out several 9-year old Quora quotes, and tried to position short social posts from yester-year and excerpts from Jay’s marketing books as meaningful contradictions. More games from Google on contorting the definition of Supply Path Optimization, and out-of-context quotes.
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On redirect, Jay explains that his books by design include generalizations and limited nuance, saying to the DOJ, “If my books looked like your legal briefs, nobody would read them.” LOL!

3. Eisar Lipkovitz | Former VP of Engineering, Display Ads (Google) | live reading of deposition transcript and video deposition

The day ended with a bang, as we watched the video deposition of former VP of Engineering, Eisar Lipkovitz.
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He was supportive of extending GDN’s ability to bid on rival exchanges,” saying that some of his former colleagues liked to “play games.” The first of many times he alludes to his residual PTSD from working at Google.
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He says that AdX was aggressive and entrepreneurial, while DFP was lazy and slow. A portrait of Google’s internal bureaucracy and dysfunction emerges. AdX was building competing tech. It was “stupid” and “idiotic.” “They don’t want to do anything,” he says, “just want to talk about stuff” and “lie” or “omit information.”
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He acknowledged that frustration with the waterfall led to Header Bidding. Google knew about this frustration and didn’t act. He said that last look advantage was a hack.
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He said that with Poirot,the goal of the project was to bid differently on rival exchanges. They “assumed” this would end in DBM (now DV360) purchasing more through AdX. This wasn’t disclosed to publishers. He stops short of calling it a “dirty” auction, before admitting that Dynamic Revenue Share made the auction “less simple” …or “clean.”
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He says that Unified Pricing Rules was a lazy solution that doesn’t sound great. “You don’t earn trust” by “forcing” customers to do something that you failed to convince them to do.
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AdX take rate was 20% because “Neal decided, probably.” The DOJ asked him questions about a document that spoke to “draining the swamp” in relation to Header Bidding, since the ecosystem is “allowing” Header Bidding to exist.
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He recommended cutting rev share to 7-10%. After 8 months, there was a formalized plan to cut it to 10-15%. “8 months to produce a document with such wimpy goals.” Also, internal discussion about shifting rev share to buy-side. Must be nice to be able to rob Peter to pay Paul, while being paid by both of them.
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He rants about how the PM relied on a regime change, and repeatedly speaks to his enduring bitterness and residual PTSD. He couldn’t get anything done. He didn’t have the authority to make decisions, and it wasn’t clear who actually did. “The machine won.” I felt this one in my bones.
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His deposition closes with an internal discussion of the conflicts of interest in owning the ad server, exchange, and largest ad network. “It’s like Goldman owning the stock exchange.” There’s a lot of “similarity in concept,” he says, between the financial market and adtech. Finance “got regulated for a reason,” while there are still “no laws or rules in our industry.” Amen.

Tomorrow, we’ll hear from:

Brad Bender, Former VP of Product (Google)
Professor Ravi Ramamoorthi (Academia)
Arnaud Creput | CEO of Equative (Ad exchange) | deposition transcript live reading
Felix Zeng, Head of Programmatic at IBM, formerly at The Weather Company (Publisher)
Jed Dederick, Chief Revenue Officer, The Trade Desk

Trial Update, September 10th: Google’s unfair auction dynamics and conflicts of interest take center stage as we hear about “every feature they shoved down [publishers'] throats” as “the machine won”