"We Cannot Invest In Journalism As We'd Like To" - The Daily Mail Testifies to Google's Control of Ad Tech

The Daily Mail's Chief Digital Officer testifies that Google's ad tech is unavoidable, and repetitive testimony continues to irk Judge Brinkema.

Key Facts

• Google’s acquisition of AdMeld was motivated by Google’s fear of “disintermediation” of its exchange

• Chief Digital Officer of Daily Mail says that without access to Google’s ad tech, it cannot monetize itself using just Facebook, Amazon, or Disney

• Daily Mail would have lost over $350,000 per month - 28% of its programmatic revenue - if it moved away from Google’s publisher server and lost Google’s exclusive access to ad demand

• Google admits that when ad demand is only available through one product, publishers are “compelled” to use it

• Judge Brinkema truncates the government’s witness list and indicates she intends to do the same to Google. The rocket docket is real!

On day 8 of the Google Ad Tech trial, the DOJ burned through witnesses and we didn’t cover too much new territory.

The day began with Scott Spencer, former Director of Product Management at Google. Mr. Spencer’s testimony was notable for how short it was, he was on the stand for less than an hour, and Google offered no cross examination.

Mr. Spencer, like nearly all the Google witnesses, was heavily coached, evasive, and offered very little. The most substantive part of his time on the stand was a dispute over evidence between the government and Google’s counsel concerning the admissibility of evidence involving Google’s statements to international regulatory bodies. Google’s counsel fought hard against this being admitted, Judge Brinkema was inclined to allow it, but ultimately the parties were instructed to confer tonight on the issue. If it gets in, we can expect it will be readily apparent why Google was so opposed to its admission.

Next up, expert witness Dr. Rosa Abrantes-Metz, Managing Director of Berkeley Research Group, returned to the stand.

Her testimony included several important nuggets, before devolving into an arcane and grating tug of war over narrow, technical details for the balance of her cross-examination.

After Google’s AdMeld acquisiton, Google deprecated functionality related to real time bids (RTB), according to Dr. Abrantes-Metz. (On cross, Google’s counsel would joke that ‘deprecated’ is his least favorite word in this case. Interesting as “deprecate” is a common tech euphemism for the elimination of features used at companies like Google...) Google sought to get Dr. Abrantes-Metz to agree that no other Admeld functionalities were deprecated, or eliminated, after the acquisition.

Google exhibits showed a fear of disintermediation, and concerns that “Yield Managers break our ability to dynamically allocate from DFP.” Disintermediation refers to the fear that Google would lose direct control over the link between publisher inventory and advertiser demand, and would be unable to impose its policies and fees. The function of Yield Managers (like AdMeld and PubMatic) was to manage the decision as to which ad network would monetize a publisher’s remnant inventory, giving publishers more choice, and resulting in more price competition for Google’s AdX.

A previously-shown exhibit was displayed, where Google discussed server-side integrations related to AdMeld being “plagued with issues,” which makes sense in terms of being offered to provide non-competition related rationales for “deprecating” AdMeld features.

On cross-examination of Dr. Abrantes-Metz for Google, Bill Isaacson sought to undercut a key part of the government’s market definition - “open web display ads” - as being no more than a term of art concocted by Prof. Robin Lee for the purpose of this case, and not a term that was otherwise used in the industry prior to the case. (Recall there have been multiple industry witnesses who testified to their understanding of the term prior to the filing of the government’s lawsuit.)

Many people began to trickle out of the courtroom during the cross-examination. It was simultaneously highly technical, narrowly-focused, and familiar.

Mr. Isaacson spent some time trying to develop the idea that AdX and DFP, Google’s publisher ad server, must be bundled (or tied) to facilitate the transfer of real time bidding (RTB) between platforms (in other words, a pro-competitive rationale for Google’s conduct). Much time was spent on this. Dr. Abrantes-Metz took the position that a customer does not have to “buy” both from a technical standpoint in order have this functionality.

Mr. Isaacson then presented a graphic showing that by 2019, Google’s market share had declined by 10%. (From my perspective, the data seemed to reflect Google coming down from a 40% market share in 2018 to approximately 35% in 2022.) The data reflected many small competitors, was full of many trendlines, and was difficult to read. Regardless, the idea was to show that Google’s market share was also declining in recent years as part of an overall decline in display ads. We’ve heard Google’s counsel argue that “walled garden” advertising is increasing. It was unclear at times exactly what market share was being analyzed.

Mr. Isaacson asked the witness if she was aware of any publishers besides Vox and News Corp. (recall Ms. Layser’s testimony last week) who had expressed dissatisfaction with Google after the summer of 2019. The timeframe referenced in Isaacson’s question was set following the April 2019 meeting between Google and publishers that took place in New York City (we heard audio from this meeting last week) demonstrating broad anger on the part of publishers towards Google. By framing the question in this way, Google evades a pretty broad swath of publisher discontent that we’ve already heard about.

In other words, it’s like asking if besides Christmas, Hanukkah, Kwanzaa, Boxing Day, and New Year’s Eve, you are able to think of even one holiday in the month of December.

The next witness was Matthew Wheatland, Chief Digital Officer of Daily Mail.

Apart from the familiar ground that publisher witnesses have covered, Mr. Wheatland efficiently walked the Court through the fact that Daily Mail cannot monetize itself using Facebook, Amazon, or Disney, as these companies do not operate ad servers or facilitate the sale of open web display ads. Mr. Wheatland testified that the Daily Mail’s estimated loss would have exceeded $350,000 per month, approximately 28% of its programmatic revenue, if they were to move their ad inventory away from Google’s publisher ad server - and lose access to Google’s exclusive access to advertiser demand.

The inability of publishers to move their inventory away from Google is an important illustration of Google’s dominance of open web display advertising. Google’s strategy (as would once again be the case on cross) has been to hammer publishers on ad opportunities on other platforms - like Facebook, TikTok, and other “walled gardens” - or play up these other firms as competitors. The fact that these other sites do not compete on display ads, key to the issue of market definition in this case, is important for the government to distinguish. Distinguished it was.

Moreover, Mr. Wheatland recognized the Daily Mail is not a software company, and cannot build its own ad server to compete with Google, something other publishers have told us as well.

Google’s cross examination was conducted by Jeannie Rhee. Ms. Rhee came in quite hard on Mr. Wheatland, and was firmer than we’ve seen from other counsel.

While generally witnesses on cross examination are responding to yes or no questions (counsel is allowed to “lead” the witness on cross), this trial has seen that standard relaxed. Ms. Rhee however often demanded yes or no responses, cut off the witness numerous times, and had an elevated tone towards him that we have not seen a ton of.

Ms. Rhee introduced as exhibits social media posts and other materials from the Daily Mail that touted the availability of its content on other platforms like TikTok, Twitter (X), and elsewhere, with the goal of showing that the Daily Mail had monetization opportunities besides Google.

The problem here, as the witness would partially (be allowed to) attest to, is that the Daily Mail is in the business of journalism and text articles, which can only be monetized with display ads, in which Google has an alleged monopoly. These other platforms presented ancillary monetization opportunities for other content like videos produced by the publisher.

In other words, it was another market definition shell game.

Separately, Judge Brinkema’s patience with a few issues has been wearing thin, and perhaps rightfully so. In addition to the pace of the trial, which she has lamented at times for moving slowly, she admonished each side today for something she has called out before, but not this strongly—the length and leading attributes of attorneys’ questions to witnesses. She told counsel for each side that if this were a jury trial, the questions would be cut dramatically.

Judge Brinkema admonished counsel to stop with the leading questions and to let the witness do the testifying.

Google’s counsel then brought in exhibits showing that in 2018, Google invited the Daily Mail to an alpha test of Uniform Price Floors that led to revenue increases for the publisher. Mr. Wheatland insisted this increase was only “short term,” which harkened back to Ms. Layser’s testimony last week in which she responded, repeatedly, with “in the short term” to a series of benefits Google had touted.

The last couple hours of the day were dominated by deposition read-ins and video.

Brian Rowley, former Strategic Partner Lead at Google had a money line in his deposition video when he said that since Google’s ad demand is only available through one source, it “compels” publishers to use it (discussing Google Ad Manager, or GAM). A pretty astonishing admission, given this case is all about how Google leveraged its position in markets to enhance their dominance in other markets.

Judge Brinkema finally asked the question we’ve all been wondering, how many witnesses does the government have left at this point, on the one hand making the government show some of its cards, on the other hand telling them to move things this along. Judge Brinkema insisted that any new witnesses bring in new testimony, and not just “tell us again that they think the 20% Google take rate is unfair” (paraphrasing).

In other words, the Rocket Docket, famous for moving matters along, is true to form. When the government sought to introduce the deposition testimony of Bo Bradbury, the client lead for the US Air Force advertising account, Judge Brinkema shut it down as cumulative evidence. When the Justice Department responded that Google was seeking to call potentially 9 government witnesses, Judge Brinkema said that wouldn’t be happening either. Cumulative as it may be, it’s curious that Judge Brinkema and the parties didn’t iron more of this out in status conferences or in pre-trial motions.

As a separate note, these extended read-ins of depositions and the playing of deposition videos has highlighted the folly of this practice in bench trials. When read-ins commence, the courtroom clears out, with all but one or two lawyers for the government and for Google remaining to handle objections to certain testimony and otherwise be present to represent their side. Since there is no jury present to hear this testimony, you’d think it could just be admitted into evidence sans any sustained counterparty objections, saving the Court a lot of time. On the other hand, the process is the process, and if not played in open court, this evidence may never actually be heard or considered.

Lead government lawyer Julia Wood told Judge Brinkema that the United States had a series of short read-in and video testimony left, before calling star government witness Jonathan Bellack tomorrow morning. Mr. Bellack is a former Google executive present across the balance of the most impactful exhibits in this trial, is a percipient witness to Google’s allegedly illegal conduct, and is the author of the infamous “New York Stock Exchange” quote.

The government may rest its case tomorrow, and if not then, before the end of day Friday.

Finally, revisiting an exhibit from yesterday’s proceedings, which shows that Google understood Header Bidding to be a competitive threat to Google’s Ad Exchange - and that it increased revenue for publishers. What’s good for publishers is not always good for Google…