On day three of the two-week remedies trial in the Justice Department’s ad tech case against Google, Judge Leonie Brinkema boiled down the argument to one key issue: trust. Brinkema interrupted testimony from a DOJ expert with a hypothetical: should she issue a strict order modifying Google’s behavior, could it resolve the issues at hand if “you had confidence that Google would actually act in complete good faith?”
The question felt particularly pointed, given how the Google trial Brinkema presided over last year unfolded. Over three weeks, the DOJ repeatedly presented examples of Google employees allegedly using chat messages to avoid leaving a paper trail for discovery. Brinkema later said the practice represented “systemic disregard of the evidentiary rules.” While she opted not to sanction Google for its lax approach to preserving evidence, she warned not to take its decision as condoning the behavior.
Soon, Brinkema will decide how hard to crack down on the monopoly that she ruled Google holds in ad tech. That decision may hinge on whether she thinks it will follow the rules this time.
Google’s remedies proposal involves a court order banning specific business practices and requiring it to engage in the ad auction process in ways similar to its rivals. But the DOJ says that leaves it easily capable of monopolizing the market again. The government wants to take power out of Google’s hands altogether by making it spin off ad exchange AdX and open source part of (and possibly even sell) its DFP tool for web publishers.
It’s the second time in just a few months that a judge has faced the question of breaking up Google. In a separate case over Google’s search monopoly, Judge Amit Mehta declined to do so, opting for lower-lift remedies like banning anticompetitive practices and sharing data. The facts that led Mehta to decide against a break up have no bearing on this case, the government argued in its opening statement. Still, Brinkema’s ruling could be an indicator of how widely judges share Mehta’s caution, as more cases against Big Tech companies roll toward a trial.
“The devil is in the details”
The DOJ was still in the midst of its case-in-chief on Friday, but Google’s attorneys were already driving at their core argument: that the government is underselling how difficult and risky its asks are. Google advertising executive Tim Craycroft testified that the DOJ’s proposals were “naive” and “incoherent.” This line of thinking seemed to land with the judge by mid-week. “The devil is in the details,” she said during the testimony of Jonathan Weissman, the DOJ’s expert witness on the technical feasibility of a break up. After he compared changing Google’s ad tech tools to changing tires on a car, Brinkema noted that a change to snow tires could result in a “bumpier” ride for the user.
But during Craycroft’s testimony, Brinkema appeared to entertain an even more extreme option the government hadn’t asked for: shutting down AdX altogether. This was apparently something Google itself considered within the past few years in an analysis it called “Project Monday,” Craycroft said.
“Why is that not a very simple and elegant solution?” Brinkema asked, after Craycroft noted that another Big Tech company could buy AdX and create its own monopoly. Though several ad exchanges exist today, the court found they’ve been denied a level playing field because of tactics like reserving full real-time bidding access to Google’s huge advertiser base through its own tools. Publishers testified in the liability trial that made it nearly impossible to leave, even though AdX was charging a supracompetitive take rate of 20 percent on transactions. Craycroft told the judge that deprecating AdX could be an elegant solution, but that would also get rid of other helpful features in the product.
Brinkema made clear she wants to learn what’s actually possible, as she considers options for leveling the playing field without harming publishers and advertisers who rely on Google products.
Google found a so-called business divestiture of AdX would be feasible within two years, Craycroft said, including offloading IP, moving customer contracts, and providing reference code to guide the buyer through duplicating product functions in its own systems. But he stressed Google couldn’t realistically provide source code guaranteed to work in an unknown buyer’s tech stack, as the DOJ requests. Former Facebook capacity engineer Goranka Bjedov, who helped migrate Instagram and WhatsApp during their acquisitions, testified that the reference source code would be sufficient for a full migration. If Brinkema finds a divestiture is possible, she’ll have to decide if she trusts Google enough not to force one.
Even after helping Google’s attorneys craft their remedies proposals, Craycroft told DOJ attorney Matthew Huppert that he could not commit to lowering AdX’s 20 percent take rate, which the judge had ruled to be above a competitive level, and said a tie between DFP and access to AdX real-time bidding, a sticking point for publishers, was “just how the product was built.”
The answer to Brinkema’s question about trust wasn’t necessarily reassuring for Google. Robin Lee, the Harvard economist she asked, said the problem was how many different ways Google could get around the intentions behind a court order. Lee said there’s an almost unpredictably exhaustive list of methods for tilting the scales in Google’s favor, and it’s got every incentive to take them.
Longtime Google critics were disappointed after Mehta’s ruling didn’t include a breakup. If Brinkema reaches a similar conclusion, The Trade Desk Chief Revenue Officer Jed Dederick testified, “I think there will be a sense that they got away with it.”
