Trial Update, September 17: Google saw AWbid as an opportunity to poach publisher customers, and defense plays buzzword bingo

Nirmal Jayaram, Sr. Director of Engineering, Google

US v. Google day 7 began with Google buy-side engineer, Nirmal Jayaram. He is still employed by Google, and has met with Google counsel six times in preparation, which is evident in his apparent amnesia on direct exam, and the 8 times he evaded DOJ questions with a “I would not characterize it that way.”  Interesting details, thus, come from docs and emails.

We start with internal discussions where Google believes that the buy-side was “subsidizing” the sell-side. Google believed GDN was “artificially handicapped” to boost attractiveness of AdX by not bidding on 3rd party exchanges.  Google also realized that publishers did not like GDN’s visibility into confidential AdX data. The involvement of buy and sell-side teams in these conversations puts conflicts of interest again in the spotlight. Google discussed the possibility of a firewall, but Jayaram confirms he’s not aware of such a formal firewall existing.

We then go into AWbid. Google felt Google Ads needs to become a cross-exchange buyer to stay relevant. We see results of some pilot studies on the impact of GDN not participating in AdX auctions: -70% in Google revenue, -65% in publisher payout. Google wanted to then explore impact of expanding AWbid to allow all GDN demand to bid across exchanges. Sell-side was worried as GDN was largest buyer on Sell-side products, and worried about impact to publisher relationships.  We learn that in ‘16, the most GDN would spend cross-exchange was 7.6%. They run some more scenarios, and a sell-side plus is the ability to use AWbid data as a “lead list” to poach customers from rival exchanges. Nice.

Header Bidding is next. A buy-side perspective memo recommends that “as a pure advertiser agent,” DBM should participate in HB, and GDN should evaluate the same. The memo calls the downsides (latency, 1st price auction, self-competition) overblown, which the cross-exam naturally disregards. We get into Jedi, which Google knew was “not competitive.” Due to lower margin, better access, and 1st party cookie access, buyers embraced HB. Again, we see that Google knew its margins were unsustainable.

Next, we see an exec meeting deck that says outright that HB benefits publishers and advertisers, but hurts GAM. Jedi was supposed to put pressure on companies providing “HB infra.” We see Google discuss the “levers” they could pull, like not bidding on HB queries.  We see Poirot “thought experiments” (most of which we’ve seen before) - DOJ landing that Poirot was a way to bid shade on exchanges suspected of HB. Google positions this as bid shading where there’s a ‘dirty auction’ (pretending to run 2nd price, but running 1st price). The outcome is -31% rev loss for AppNexus, -26.5% for Index, etc. “Poirot generates margins by shifting inventory to AdX,” reads an e-mail, where Google was contemplating beginning to charge for the feature. They didn’t want to lose Poirot adoption, and figured the move to 1st price would make the “drawback go away.” We also see emails discussing that DV360 advertisers “may figure out” that Poirot adjustment factor is daily exchange-level, not query specific, before DOJ goes into spoliation issues.

Jayaram’s amnesia resolves upon cross-examination. Defense also wove in their own direct examination questions about Bernanke and Project Bell. As depicted in my running defense buzzword bingo tally, we heard the same arguments about latency, brand safety, fraud, and spam that Google has made during every cross of their employees or former employees to date. Even where these were directly contradicted by evidence introduced during direct examination.

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Tim Cadogan, former CEO of OpenX

OpenX operated both an ad server and an ad exchange. Much of the direct examination focused on OpenX’s decision to shutter the ad server for the same reasons we’ve heard throughout about why DFP has a stronghold given AdX to DFP and Google Ads to AdX exclusivity. Regarding the exchange, DOJ sought to further cement market definition, asking whether DSPs, Ad Networks, Ad Servers, or Native Ad providers are considered main competitors to the OpenX ad exchange. Naturally, Cadogan said no, and explained why.  Social is on “a different planet,” he says. We hear about the sudden 40% drop in DV360 spend on OpenX exchange in 2018, which Cadogan cites as the main driver of a 45% headcount reduction. He says OpenX asked DV360 what happened. They even asked Google’s cloud computing division for answers in desperation. Judge Brinkema asks if they ever received a response. Cadogan said he did not recall receiving one.

Cross-examination went off the rails. Defense counsel went from needlessly aggressive to helplessly frazzled. Cadogan’s dry humor was the most amusing part of the day. He, at one point, congratulated Google lawyers for finding a needle in a haystack - one deck that didn’t reference inability to access AdX demand as a driver of OpenX ad server churn.  The argument was circular. Google points to product weaknesses, and Cadogan explains - elaborating further on redirect - the vicious cycle: they couldn’t win publishers, so they couldn’t generate money, which means they couldn’t invest in product improvement.  Google references a sealed M&A deck, and Cadogan peers over his glasses to say “this is a pitch deck” so yes, there will tend to be “chest-pumping.”
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Brian O’Kelley (part III), former AppNexus CEO

We get the last 9 minutes of this video deposition. It was Google’s questioning of O’Kelley. They referenced an old Ad Exchanger article about fraudulent AppNexus inventory. O’Kelley clarifies what actually happened, and concedes he didn’t do a great job of representing it to the market. The end.
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Jeremy Helfand, former EVP of Ads and Data Platforms at Disney

This was a short deposition read-in. This one from Disney EVP of Ads and Data Platforms. We hear about Disney having its own adtech stack, including its own ad server. Still, they use DFP (GAM) for display. The tried to ask AdX to bid into DRAX, their exchange, and Google didn’t play ball.
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Susan Schiekofer, Managing Director of Digital Investment, GroupM

We end with another deposition read-in with Susan of GroupM, a media agency under WPP.  More market definition fodder. DOJ again focuses on how buyers view channels, and Susan explains how Display is distinct. It was a short deposition, and I left before the end.

Tomorrow, we hear from Xoogler Scott Spencer at 9AM, who has featured prominently across many Google internal emails and documents.

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