Google’s ad tech empire may be $95B and “too big” to sell, analysts warn DOJ

Just a couple of days into the Google ad tech antitrust trial, it seems clear that the heart of the US Department of Justice’s case is proving that Google Ad Manager is the key to the tech giant’s alleged monopoly.

Google Ad Manager is the buy-and-sell side ad tech platform launched following Google’s acquisition of DoubleClick and AdX in 2008 for $3 billion. It is currently used to connect Google’s publisher ad servers with its ad exchanges, tying the two together in a way that allegedly locks the majority of publishers into paying higher fees on the publisher side because they can’t afford to drop Google’s ad exchange.

The DOJ has argued that Google Ad Manager “serves 90 percent of publishers that use the ad tech tools to sell their online ad inventory,” AdAge reported, and through it, Google clearly wields monopoly powers.

In her opening statement, DOJ attorney Julia Tarver Wood argued that acquisitions helped Google manipulate the rules of ad auctions to maximize profits while making it harder for rivals to enter and compete in the markets Google allegedly monopolized. The DOJ has argued those alleged monopolies are in markets “for publisher ad servers, advertiser ad networks, and the ad exchanges that connect the two,” Reuters reported.

Google has denied this characterization of its ad tech dominance, calling the DOJ’s market definitions too narrow. The tech company also pointed out that the Federal Trade Commission (FTC) investigated and unconditionally approved the DoubleClick merger in 2007, amidst what the FTC described as urgent “high profile public discussions of the competitive merits of the transaction, in which numerous (sometimes conflicting) theories of competitive harm were proposed.” At that time, the FTC concluded that the acquisition “was unlikely to reduce competition in any relevant antitrust market.”

But in its complaint, the DOJ argued that the DoubleClick “acquisition vaulted Google into a commanding position over the tools publishers use to sell advertising opportunities, complementing Google’s existing tool for advertisers, Google Ads, and set the stage for Google’s later exclusionary conduct across the ad tech industry.”

To set things right, at the very least, the DOJ has asked the court to order Google to spin off Google Ad Manager, which may or may not include valuable products like Google’s Display and Video 360 (DV360) platform. There is also the possibility that the US district judge, Leonie Brinkema, could order Google to sell off its ad tech business entirely.

One problem with those proposed remedies, analysts told AdAge, is that no one knows how big Google’s ad tech business really is or the actual value of Google Ad Manager.

Google Ad Manager could be worth less if Google’s DV360 platform isn’t included in the sale or if selling either the publisher or advertiser side cuts out data allowing Google to set the prices that it wants. The CEO of an ad platform called Permutive, Joe Root, told AdAge that “it is hard to say how much of the value of Google’s ads business is because it has this advertiser product and DV360, versus how much of its value comes from Google Ad Manager alone.”

Root doubts that Google Ad Manager is “on its own that valuable.” However, based on “newly released documents for the trial,” some analysts predict that “any new entity spun out of Google” would be “almost too big for any buyer,” AdAge reported.

One estimate from an ad tech consultant who helms a strategic advisory firm called Luma Partners, Terence Kawaja, suggested that Google’s ad tech business as a standalone company “could be worth up to $95 billion” today, AdAge reported.

“You can’t divest $100 billion,” Kawaja said. “There is no buyer for it. [Google] would have to spin it off to shareholders, that’s how any forced remedy would manifest.”

News Corp held “hostage” by Google, witness says

To make the DOJ’s case, several witnesses have been called, including publishers and Google rivals allegedly harmed by Google’s supposed anticompetitive behaviors.

On Tuesday, a former vice president of ad tech for News Corp, Stephanie Layser, told Brinkema that the news organization risked losing $9 million in 2017 if News Corp walked away from Google’s advertising platform, Reuters reported.

“I felt like they were holding us hostage,” Layser testified.

Layser said this was due to the high switching costs and Google making it “impossible to negotiate” so that publishers could make “more informed buying decisions,” AdExchanger reported. In fact, when she tried to press for what she considered fairer terms, Google employees allegedly called her “emotional and unproductive,” Layser testified. The CEO of Digital Content Next, Jason Kint, posted on X (formerly Twitter) that this was “more evidence Google will tear someone apart if they are a public critic.”

Layser also contradicted Google’s arguments that Google competes on the merits, telling Brinkema that running “old” DoubleClick technology that’s “clunky and slow” was not preferred, Big Tech on Trial reported on X. However, the tech was unavoidable because of Google’s tying of the publisher ad server to its ad exchange.

Because “nothing changed” following mostly failed negotiations with Google, Layser told Brinkema that News Corp conducted a six-month internal evaluation to determine if the news organization could afford to switch from AdX to another ad platform called AppNexus. But “the fear of losing Google’s ad demand was just too great,” AdExchanger reported.

Kint reported that Brinkema seemed to understand Layser’s dilemma, asking, “So you wanted access to the cash—the largest group of advertisers—but you didn’t want to go through their system to get it?”

Layser alleged that Google had all the power, confirming that publishers could “no longer choose how to best monetize our inventory.” By the time she left News Corp in 2022, as much as 80 percent of the organization’s revenue came through AdX, Layser testified.

In its defense, Google lawyers argued that Layser was asking Google to turn AdX into a “community asset,” AdExchanger reported, seeming to suggest that Layser wanted Google to hand over the code for AdX. Layser disputed this, suggesting that there should be industry standards to ensure software doesn’t allow for unfair competition.

Kint joined analysts suggesting that Google’s hoping to defeat the DOJ’s claims that tying its ad tech products together is anticompetitive by raising a “refusal to deal defense” justifying how Google runs its sprawling ad business.

Big Tech on Trial suggested that Google’s cross-examination of Layser was “strong,” pointing out that “News Corp was able to deprioritize Google’s services without losing revenue.”

However, Lee Hepner, senior legal counsel for the American Economic Liberties Project who is monitoring the trial, posted on X that Layser’s testimony likely landed with Brinkema.

Hepner said that Layser showed that for increasingly money-strapped publishers—to whom “every penny matters”—keeping up with Google’s constantly shifting ad exchange rules was necessary because “they can’t afford the risk of seeking alternative sources of revenue.” And while publishers scrambled to maintain revenue in a “fast-moving industry,” Google’s “20 percent take of every dollar that passes through AdX” stayed “the same,” despite being “higher than the fee on any other exchange,” Hepner said.

“If News Corp can’t negotiate a fair shake, no one can,” Hepner suggested.

While publishers sought a fair deal, Google’s rivals were willing to go to great lengths to woo publishers away from Google. According to another DOJ witness, Andrew Casale, the president and CEO of a rival ad exchange called Index Exchange, said that eliminating fees didn’t meaningfully allow his exchange to compete.

“As an ad broker, Casale said it’s virtually impossible to gain scale in a Google-dominated market,” an Open Markets Institute policy analyst attending the trial, Karina Montoya, reported for the Center for Journalism and Liberty. “To compete, Index Exchange even reduced its fees to zero for some time, expecting to place more ads on publishers’ websites, but the increase in sales was ‘nominal at best,’” Casale testified.

Because it’s “highly uncommon” for publishers to switch exchanges, “it’s virtually impossible to gain scale in a Google-dominated market,” Casale said, seemingly providing strong backing for the DOJ’s case.

DOJ to call “hostile” witnesses next

So far, Brinkema has heard from publishers and rivals who can help the DOJ paint the picture that Google intentionally built its ad tech to seize alleged monopolies. She’s also heard deposition from Eisar Lipkovitz, a former Google vice president of engineering who led Google’s video and display ad efforts from 2018–2019.

Lipkovitz did not appear in court, AdExchanger reported, but his deposition from last year was read aloud. In that deposition, Lipkovitz testified that he still had “PTSD” from his “deeply frustrating” attempts to get Google to innovate in ways that could appease publishers. He also revealed that Google’s 20 percent take of every dollar passing through its ad exchange was an amount set by Neal Mohan, “probably.”

Mohan is the CEO of YouTube but used to be SVP of display and video ads at Google from 2008–2015, AdExchanger noted. He is on the DOJ’s witness list and is expected to eventually testify, “no doubt” being classified by DOJ as an “adverse witness,” AdExchanger suggested.

The YouTube CEO isn’t the only former Google ad exec the DOJ wants to force on the stand. On Wednesday, Google ad exec Brad Bender is scheduled to testify despite multiple efforts to get his subpoena quashed, AdExchanger noted.

Bender played a key role in Google’s acquisition of DoubleClick, forwarding an internal email to his team in 2009 from Google’s former president of display advertising, David Rosenblatt, which seemingly accurately predicted that the merger would set Google up to “end up controlling or managing probably 90 percent of display inventory on the web.” If that happened, Rosenblatt wrote, it would make Google’s ad tech like the New York Stock Exchange, putting Google in a position to monitor every ad sale and doing for display ads “what Google did to search.” At that time, Bender told his team it was a “worthwhile read.”

Since that email, the DOJ has successfully proven that Google’s got a monopoly in search. While the DOJ hopes to next prove that Google acted just as anticompetitively with its ad tech in the way that Rosenblatt described, Google is trying to claim that the DOJ’s focus on display ads is outdated. Google accused the DOJ of failing to consider that “the average large publisher uses six platforms to sell ads—and can choose from over 80 options.”

However, Brinkema heard from the DOJ’s first witness Monday, Gannett executive Tim Wolfe, that “Gannett feels like it has no choice but to continue to use Google’s ad tech products.”