Google expert at antitrust trial said the government underestimated competition for online advertising dollars

Federal regulators say Google holds an illegal monopoly on the technology that connects online advertisers with publishers is underestimating the competition the tech giant faces, an expert hired by Google testified Thursday.

Mark Israel, an economist has prepared an expert report on Googleon behalf of said government statement that Google holds a monopoly on advertising technology that is improperly focused on a narrow market of what the government defines as “open web display advertising,” essentially rectangular ads that appear at the top and along the right side of a website when a consumer browses on a desktop computer.

But the government’s case doesn’t explain the variety of competition that occurs beyond those rectangular boxes, Israel said. In the real world, advertisers have dramatically shifted where they spend their money to social media companies like Facebook and TikTok as well as online retailers like Amazon.

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When you take into account all online display advertising, not just the narrow segment defined by government cases, Google capturing just 10% market share in the US by 2022. That’s down from about 15% a decade ago, he said.

Additionally, advertisers have moved away from placing their ads on desktop and laptop screens where Google is believed to be controlling the market, and money has shifted to ads placed on screens applications and mobile devices. Israel cited marketing data showing display ad spending on desktop and laptop devices fell from 71% in 2013 to 17% in 2022.

Israel said the government’s case “seems to be a missed opportunity to compete today”.

His testimony came as Google wrapped up its defense in the third week of its antitrust trial that began earlier this month in Alexandria, Virginia. U.S. District Judge Leonie Brinkema said she expected the government to issue a brief dismissal on Friday. The trial will then adjourn, with both sides expected to file proposed findings of fact in November and return to court for closing arguments in December. She said she expected will issue a ruling later this year.

The government’s lawsuit accuses Google of building and maintaining an illegal monopoly that limits choices and increases costs for online publishers and advertisers. Controlling the market, the government claimed, allowed Google to keep 36 cents of every dollar for every ad bought and sold through its ad technology system.

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The government said Google controls ad technology at every step of the process, including the dominant technology used by publishers to sell their ad space, the dominant technology used by advertisers Advertisers want to buy used ad space, and the ad exchanges in between conduct auctions in just a few milliseconds to match advertisers with publishers.

The government’s lawsuit contends that Google illegally linked those markets together, forcing publishers to use Google’s technology if they want access to Google’s large archive of advertisers. .

The government, using market definitions that are narrower than those used by Israel, has stated that Google controls 91% of the publisher ad server market and 87% of the ad network market.

Google said the government’s case also fails to take into account the billions of dollars the company has invested to ensure its products work together to create better value for publishers and advertisers by How to connect the right advertisers with the right consumers.

Israel cites data showing that publishers working with Google are generating more revenue for each ad space they provide, while advertisers pay less for each click they advertise. their creation.

Israel said that only happens because Google’s technology continuously improves ad quality by connecting advertisers with consumers based on their interests and purchasing history.

Israel also disputes the government’s claim that Google receives 36 cents on the dollar for ad sales it facilitates. He said data shows the rate has dropped to 31% or 32% in recent years. More importantly, he said, competitors have even higher adoption rates, with an industry average of 42 cents on the dollar.

The Virginia trial differs from another case brought by the government alleging that Google’s popular search engine constitutes an illegal monopoly. In that case, a judge in the District of Columbia ruled in favor of the government and declared the search engine a monopoly, but no decision has yet been made on any potential remedies. any. The government is expected to release proposals on proposed remedies next month. Those could include restricting Google from paying tech companies to lock Google out as the default search engine for gadgets like mobile phones, or even finding ways to force Google to sell part of its operations. your business. (AP)

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