Key Excerpts: Judge Rules Google Monopolized Digital Advertising Tech

For the second time in less than a year, a federal judge has found Google to be an illegal monopoly.

Judge Leonie Brinkema of the Eastern District of Virginia ruled Thursday that Google violated antitrust law by “acquiring and maintaining monopoly power” over key parts of the digital advertising market, while rejecting some of the Justice Department’s claims against the company. In August, another judge found that Google illegally monopolized online search, and next week, the same judge will consider legal remedies that could include requiring Google to spin off Chrome.

(Separately, a federal jury in 2023 found that Google held an illegal app store monopoly in an antitrust case brought by Fortnite-maker Epic Games.)

The ad-tech antitrust case centered on three opaque parts of the digital ads markets: the tools publishers use to manage ads, known as “publisher ad servers”; the “ad networks” advertisers use to connect to publishers; and the “ad exchanges” that facilitate transactions between advertisers and publishers.

Here are key excerpts from Brinkema’s ruling, including where the two sides came out on top:

DOJ win: Google has a monopoly power over publisher ads servers

The judge ruled that the Department of Justice (DOJ) proved Google possessed monopoly power over publisher ad servers through its DoubleClick for Publishers product, or DFP.

Brinkema wrote that Google had a “durable and ‘predominant share of the market’ that is protected by high barriers both to entry and expansion.”

“This conclusion is reinforced by evidence that Google has acted to degrade DFP’s features without fear that its customers would switch to alternative publisher ad servers,” she wrote.

The fact that Google’s product holds more than 90 percent of the worldwide market, Brinkema wrote, “‘leaves no doubt’ as to Google’s monopoly power.”

DOJ win: Google has monopoly power over ad exchanges

Brinkema wrote that Google’s “durable” ability to impose a 20 percent “take rate” on the transactions occurring on its ads exchange, AdX, and its “unwillingness” to lower it “even as the market matured and other ad exchanges reduced their prices” demonstrated monopoly power.

“Despite the availability of lower priced exchanges, customers generally have not left AdX due to Google’s substantial market power in the ad exchange market,” she wrote. “That market power has been fortified by high barriers to entry that resulted from Google’s scale and network effects across the open-web display ecosystem.”

DOJ win: Google illegally tied its publisher ad server and ad exchange service

Brinkema ruled that Google exercised “coercive power” by tying its ad exchange tool, AdX, to its publisher ad server, DFP. In doing so, it violated Section 1 of the Sherman Act, which prohibits unreasonable restraints on trade, and Section 2, because it “contribute[d] significantly to the maintenance or creation of monopoly power,” she wrote.

“By forcing Google’s publisher customers to use a product they would not necessarily have otherwise used, by making it difficult for rival publisher ad servers to compete on the merits, and by significantly reducing rivals’ market share, the tying of DFP to AdX has had a substantial anticompetitive effect in the publisher ad server market for open-web display advertising,” she wrote.

The finding helped cement her finding that Google both possessed and willfully maintained monopoly power.

Google win: No monopolization of advertiser ad networks

The judge rejected the Justice Department’s allegations that Google monopolized what it called “advertiser ad networks,” which advertisers use to connect to publishers.

In her decision, Brinkema wrote that the term “advertiser ad networks” itself is “not common in the digital advertising industry” and that the DOJ’s definition of it would “unduly exclude the publisher-facing side of two-sided ad networks.”

“Considering solely the advertiser-facing portion of an ad network, which is Plaintiffs’ position, would unduly ignore that ad networks intermediate between two groups, benefit from indirect network effects, and compete for transactions with other two-sided platforms,” she wrote.

Thus, she found that the DOJ “failed to show” there was a “relevant product market.”

Google win: No sanctions around evidence retention

The DOJ had asked the court to sanction Google for not taking adequate steps to preserve evidence related to the case, but the judge only gave the company a slap on the wrist.

Brinkema wrote that Google’s “systemic disregard of the evidentiary rules regarding spoliation of evidence and its misuse of the attorney-client privilege may well be sanctionable.” But because the court managed to find the company liable with the admitted evidence, she wrote, “it need not adopt an adverse inference or otherwise sanction Google for spoilation at this juncture.”

What’s next: Remedies hearing and an incoming appeal

After establishing Google’s liability, the court will now move to set a hearing to “determine the appropriate remedies for these antitrust violations,” Brinkema wrote.

For remedies, the DOJ has preemptively asked the court for both monetary damages and an order forcing Google to divest from its publisher ad server and ad exchange products.

But Google vice president of regulatory affairs Lee-Anne Mulholland said in a statement Thursday that the company “won half of this case and we will appeal the other half.” The remarks indicate the case could still drag on for months if not years.