Trial Update, September 27: DOJ uses their rebuttal to pick apart Mark Israel’s nonsensical suggestions

After a whirlwind three weeks, the US v. Google trial has ended!Both sides began the day by thanking their teams. Judge Brinkema extended the sentiment, praising both sides for how collegial they have been, given how much is at stake.

Google finished their last two read-ins before resting their case.

Ryan Pauley, Executive Director, Revenue Operations at Vox Media

The purpose of this read-in for Google was primarily to hear about Vox’s “Concert” ad network and SSP offering - I suppose to demonstrate alternatives.  Concert was stood up with “help” from the Google News Initiative, so we hear another plug for Google’s mission.  We also hear about how advertisers care about environments that are brand safe, perform well, and are free from fraud. Within the DOJ’s designations, we hear about Vox’s unsuccessful attempts at negotiating their AdX take rate, and that AdX represented 50-60% of their programmatic display sales. It had increased 10% after UPR. They had tested flooring strategies post-UPR and found that lowering the AdX floor earned them the most revenue.

Bryan Bumpers, Marketing Analytics Manager at Zulily

Google’s designations here were aimed at conveying how marketers make investment decisions, and hammering on their two-sided market definition.  We hear about how marketers look at sign-ups, CTR, and ROAS when deciding how to optimize their budgets. He discusses all the channels and partners Zulily advertises with. We hear about how they decreased their spending on Google Ads from $30M in ‘16 to $9-10M in ‘17, and that they also increased FB spending by $30M in the same year.  On the government’s side, we hear about how different channels serve different purposes, and have different ways of targeting audiences. Social is different from display.

After some administrative back and forth, the defense rests,  Google asked to be heard about the issue raised yesterday where Google took a contradictory position on adtech as a two-sided market within their motion to dismiss. Judge Brinkema explains that market definition is a core issue to this case, and one that the Court needs to resolve, looking at all of the evidence, and that it is somewhat problematic to Google that they took one position where it benefitted them, and a different one here.

The DOJ calls its single rebuttal witness, Matthew Wheatland of Daily Mail, who was among the DOJs last live witnesses during their case-in-chief. Google’s Karen Dunn fought hard to keep him off the stand, but Judge Brinkema ultimately allowed it.

Matthew Wheatland, Chief Digital Officer at Daily Mail

The DOJ looked to pose to Wheatland the various scenarios that Google’s experts - specifically Mark Israel - suggested as feasible alternatives for publishers. There was a flurry of objections from Google’s Ms. Rhee and back-and-forth between her and DOJ’s Ms. Wood.  One such objection was to DOJ’s question about whether the ad server market is competitive. At this point, after the objection, Judge Brinkema made a comment about how there’s no question the market is competitive. I believe she didn’t catch that the question was specific to the ad server market, and was reacting to her understanding of Israel’s positioning of the broader market for digital advertising. Ms. Wood said that especially given that answer, she feels strongly the witness should be allowed to testify.  Judge Brinkema explained that because the burden of proof is on the DOJ, she is offering the government some degree of latitude, and discouraged excessive objections by Ms. Rhee.

DOJ asks if Adsense is a substitute for DFP. No, it isn’t. DOJ asks if advertisers shift spend from open web display to social, does it impact publisher negotiations with Google (as Israel suggested). No, it does not. Daily Mail makes most of it’s money from open web display. That doesn’t change if marketers shift spend to social. Does increasing app and CTV media consumption impact Google negotiations? Same answer.

Does Google come up at meetings with other publishers? Yes. Does Facebook? Yes, but not with regard to adtech. Objections ensue once more, and Google’s extended team passes post-it notes, with some leaving the room frantically with evidence/deposition binders. DOJ asks what he makes of the suggestion that publishers should just work harder to sell directly. He says they sell as much as they can directly, and explains the support and resources needed for direct sales. He confirms publisher brand name is an important factor in direct sales.

Daily Mail has an app. Only 2% of their readers use it. So no, apps aren’t a viable alternative to open web display. Daily Mail even ran campaigns to encourage users to download their app. Beyond loyal readers, it just won’t scale. It also takes money. They have 5 developers for their Android app, 5 for their iOS app, and additional support staff for ads and analytics.

Has Google made it more difficult to do direct sales? Yes. He explains (without explicitly naming EDA) that Google implemented a feature that allows Google to reach up into direct inventory to have it compete against indirect, where others cannot. Building an in-house ad server isn’t viable. Even after the investment, you still will lose AdX real-time demand. Could they just use a Header Bidding wrapper? No. They have direct deals too, and they need an ad server for those. Also, if HB auction runs directly on the page, there’s no AdX competition.

He confirms there was no way to turn off Last Look. AdX direct is also not viable. No real-time pricing. Still replicates Last Look advantage. No, Publishers have not come to like UPR. UPR would let Google stop Daily Mail from selling an impression to IndexExchange at a $2 CPM if the DFP floor was set to $3. Judge Brinkema asked him to clarify if this is AdX or DFP. He explains it is DFP. The ad server gets the final decision on what renders. DOJ asks about fraud and quality. Daily Mail does track it. While other exchanges generally have more ads with poor experience, AdX has higher frequency of scammy or misleading ads. No, publishers don’t see benefits of Google’s integration.  It’s not cheaper. There are features they never asked for or wanted. For HB they have to create thousands of line items. Integration does not make it safer, and AdX does not have better quality ads. What he’d prefer, he explains, is to have  choice - in another world, maybe he would choose which products work best.

Ms. Rhee was militant on cross-examination but it wasn’t particularly effective. She tries to call his credibility into question by flagging that the same lawyer representing him also represented Gannett’s Wolfe, and a former employee of Newscorp (Layser). She shows a Joint Business Plan document between Google and Daily Mail very clearly written by Google, and grills him on it.  She then brings in irrelevant evidence of Hearst’s 15% take rate that is objected to and sustained.  She tries to illustrate that it’s just as hard for users to visit a website as it is to download an app, walking through the steps to do each. She tries to pretend that the only way to land on Daily Mail is by typing the URL into the browser.  I don’t know why Google decided that flying that close to the Search sun was a good idea, because she then needed to cut Wheatland off every time he tried to respond. Google brought in irrelevant evidence of Daily Mail being blocked by Google a few times for allegedly having inappropriate sexual content. He explains that Google blocks them from time to time, and only sometimes knows why, so they usually reach out and the issue is resolved. This has nothing to do with ad quality, but alas.  Finally, she walked through the Header bidding to DFP process to force him to confirm that publishers still ultimately technically choose the floor, even after UPR. DOJ clarified this on redirect. Ms. Wood ends by asking him what tool decides which ad gets loaded. The ad server, he says. Who is Daily Mail’s ad server? Google’s DFP.

What comes next?
‍The parties will have a month to submit their revised Findings of Fact, due November 4th.
Closing arguments are set for 10AM on Monday, November 25th.

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