Judge rules Google has illegal 'monopoly' on web ad technology

Google has an illegal monopoly of some web advertising, a federal judge ruled Thursday, delivering a victory to the federal government that brought the antitrust challenge against the tech giant.

U.S. District Judge Leonie Brinkema found that Google is too dominant  — in one case nine times the size of its next closest competitor — while pushing its own rules on the ad markets.

“Google has willfully engaged in a series of anticompetitive acts to acquire and maintain monopoly power in the publisher ad server and ad exchange markets for open-web display advertising,” the judge concluded.

She said the next step will be to determine the consequences.

Judge Brinkema’s ruling followed a three-week trial last year in which she said experts explained Google’s ability to shut out potential competitors from some key online ad markets.

She said customers ended up with lesser product quality because of Google’s monopoly.

The Justice Department, joined by nearly 20 states, argued that Google maintained an illegal monopoly in three ad tech markets: the publisher ad server market, which manages advertising inventory; the ad exchange market, which runs auctions to place ads; and the advertiser ad network market.

Google disputed those divisions.

Judge Brinkema sided with the government on two of them, but said there was no distinct advertiser ad network market and thus no monopoly there.

Google saw that as somewhat of a victory.

“We won half of this case, and we will appeal the other half,” Lee-Anne Mulholland, the firm’s vice president for Regulatory Affairs, said.

“The court found that our advertiser tools and our acquisitions, such as DoubleClick, don’t harm competition. We disagree with the court’s decision regarding our publisher tools. Publishers have many options, and they choose Google because our ad tech tools are simple, affordable and effective,” she said.

The Competitive Enterprise Institute, a free market group, said monopolies have two standard yardsticks — artificially high prices or artificially low supply — and Google’s behavior didn’t trigger either of those.

“If Google did have a monopoly, it was doing a terrible job of taking advantage of it,” said Ryan Young, a senior economist at CEI.

At issue is whether Google distorts the market for placing ads with online publishers.

Judge Brinkema said Google used DFP, its platform for publishers to sell their ad space, to give preferential treatment to its own ad exchange, AdX.

That amounted to an artificial boost in revenue and gave Google inside information on how ad space auctions were operating at any time, Judge Brinkema concluded.

When an alternative to AdX emerged in 2014, letting publishers solicit real-time bids from other ad exchanges, Google struck back.

Judge Brinkema said it created a new tool that pushed activity into Google’s own DFP environment — and extracted a fee for transactions made outside of AdX.

Google also lowered bids from sales on non-AdX exchanges.

One main competitor saw a 40% drop in revenue.