Google says a lawsuit filed against it last week was drafted from the point of view of Google’s critics and their consultants.
Photo: David Paul Morris/Bloomberg News
For more than a decade, Google assured publishers its online advertising tools were designed to help them make more money. Many were skeptical.
Last week, an antitrust lawsuit by Texas and nine other states against Google gave publishers’ frustrations a legal voice, alleging that the tech giant runs a digital advertising monopoly and rigs the market in its favor.
“One of the messages news publishers always get is, ‘Stop complaining. Google just has better ad products,’” said David Chavern, the president of the News Media Alliance, a news-publisher trade group. The suit showed “they also controlled everything about the market, and that has had really bad and profound effects on publishers,” he said.
Several publishers cooperated with the states to build a case, people familiar with the situation said, and much of the suit lines up with the complaints publishers have made about Google for several years.
Publishing executives say they were surprised by the volume of internal Google documentation included in the suit. Communications between Google employees, much of it redacted, suggest the employees were aware Google advertising tools didn’t always help publisher clients make more money than other ad tools, according to the suit.
Last week’s lawsuit said “Google employees agreed that, in the future, they should not directly lie to publishers,” citing Google employees’ largely redacted expressions of worry over the way ad tools had been positioned to publishers.
According to an unredacted draft version of the suit viewed by The Wall Street Journal, one senior Google employee fretted that one of Google’s tools “generates suboptimal yields for publishers and serious risks of negative media coverage” if it were “exposed externally.” The filed suit redacts this employee’s comment.
Google has called the suit meritless. A Google spokeswoman on Monday said the suit was drafted from the point of view of Google’s critics and their consultants, adding that the ad-tech industry is crowded and competitive.
Wall Street Journal publisher News Corp, an outspoken Google critic, was among the companies contacted by antitrust investigators, along with New York Times Co. , Gannett Co. , Nexstar Media Group Inc., Condé Nast and others, people familiar with the matter said.
Most publishers depend on Google’s ad products to generate revenue. Google controls more than 90% of the market for the tools that large publishers use to put their ad space up for sale and dominates every link in the chain that connects publishers to online advertisers.
#g-GOOGMAIN-box.ai2html_export { max-width: 700px; width:100%; margin: 0 auto; } .g-aiImg { margin-top: -1.2px; } .g-_valign { margin-top: -2px; } div[class^=”g-_textoutline-white”] { text-shadow: -1px -1px 0 #fff, 1px -1px 0 #fff, -1px 1px 0 #fff, 1px 1px 0 #fff; } div[class^=”g-_textshadow-white”] { text-shadow: 1px 1px 2px #fff; } div[class^=”g-_textoutline-black”] { text-shadow: -1px -1px 0 #000, 1px -1px 0 #000, -1px 1px 0 #000, 1px 1px 0 #000; } div[class^=”g-_textshadow-black”] { text-shadow: 1px 1px 2px #000; } div[class^=”g-_textoutline-grey”] { text-shadow: -1px -1px 0 #dddddd, 1px -1px 0 #dddddd, -1px 1px 0 #dddddd, 1px 1px 0 #dddddd; } div[class^=”g-_textshadow-grey”] { text-shadow: 1px 1px 2px #dddddd; } @media all and (max-width: 585px) { .at4units .ai2html_export { max-width: 355px !important; } } @media all and (min-width: 586px) and (max-width: 665px){ .at4units #g-GOOGMAIN-box.ai2html_export { max-width: 540px !important; } } .at8units #wsj-article-wrap .inline .ai2html_export, .at8units #wsj-article-wrap .offset .ai2html_export, .at8units #wsj-article-wrap .bleed .ai2html_export { margin: 0 auto; max-width: 620px; } #g-GOOGMAIN-box .g-artboard { margin:0 auto; } #g-GOOGMAIN-box p { margin:0; } .g-aiAbs { position:absolute; } .g-aiImg { display:block; width:100% !important; } .g-aiSymbol { position: absolute; box-sizing: border-box; } .g-aiPointText p { white-space: nowrap; } #g-GOOGMAIN-box tspan { position:relative; overflow:hidden; } #g-GOOGMAIN-box tspan p { font-family:Retina,Helvetica,Arial,sans-serif; font-weight:300; font-size:15px; line-height:20px; filter:alpha(opacity=100); -ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100); opacity:1; letter-spacing:0em; text-align:left; color:rgb(51,51,51); text-transform:none; padding-bottom:0; padding-top:0; mix-blend-mode:normal; font-style:normal; height:auto; position:static; } #g-GOOGMAIN-box tspan .g-pstyle0 { font-weight:500; font-size:18px; } #g-GOOGMAIN-box tspan .g-pstyle1 { font-weight:700; } #g-GOOGMAIN-box tspan .g-pstyle2 { font-family:”Retina Narrow”,Helvetica,Arial,sans-serif; font-size:13px; line-height:16px; height:16px; text-transform:uppercase; } #g-GOOGMAIN-box tspan .g-pstyle3 { font-weight:700; text-align:center; } #g-GOOGMAIN-box tspan .g-pstyle4 { color:rgb(255,255,255); } #g-GOOGMAIN-box tspan .g-cstyle0 { font-weight:500; } #g-GOOGMAIN-_300px { position:relative; overflow:hidden; } #g-GOOGMAIN-_300px p { font-family:Retina,Helvetica,Arial,sans-serif; font-weight:300; font-size:15px; line-height:20px; filter:alpha(opacity=100); -ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100); opacity:1; letter-spacing:0em; text-align:left; color:rgb(51,51,51); text-transform:none; padding-bottom:0; padding-top:0; mix-blend-mode:normal; font-style:normal; height:auto; position:static; } #g-GOOGMAIN-_300px .g-pstyle0 { font-weight:700; } #g-GOOGMAIN-_300px .g-pstyle1 { font-family:”Retina Narrow”,Helvetica,Arial,sans-serif; font-size:13px; line-height:16px; height:16px; text-transform:uppercase; } #g-GOOGMAIN-_300px .g-pstyle2 { font-weight:700; text-align:center; } #g-GOOGMAIN-_300px .g-pstyle3 { color:rgb(255,255,255); } #g-GOOGMAIN-_300px .g-cstyle0 { font-weight:500; } #g-GOOGMAIN-_540px { position:relative; overflow:hidden; } #g-GOOGMAIN-_540px p { font-family:Retina,Helvetica,Arial,sans-serif; font-weight:300; font-size:15px; line-height:20px; filter:alpha(opacity=100); -ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100); opacity:1; letter-spacing:0em; text-align:left; color:rgb(51,51,51); text-transform:none; padding-bottom:0; padding-top:0; mix-blend-mode:normal; font-style:normal; height:auto; position:static; } #g-GOOGMAIN-_540px .g-pstyle0 { font-weight:700; } #g-GOOGMAIN-_540px .g-pstyle1 { font-family:”Retina Narrow”,Helvetica,Arial,sans-serif; font-size:13px; line-height:16px; height:16px; text-transform:uppercase; } #g-GOOGMAIN-_540px .g-pstyle2 { font-weight:700; text-align:center; } #g-GOOGMAIN-_540px .g-pstyle3 { color:rgb(255,255,255); } #g-GOOGMAIN-_540px .g-cstyle0 { font-weight:500; } #g-GOOGMAIN-_620px { position:relative; overflow:hidden; } #g-GOOGMAIN-_620px p { font-family:Retina,Helvetica,Arial,sans-serif; font-weight:300; font-size:15px; line-height:20px; filter:alpha(opacity=100); -ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100); opacity:1; letter-spacing:0em; text-align:left; color:rgb(51,51,51); text-transform:none; padding-bottom:0; padding-top:0; mix-blend-mode:normal; font-style:normal; height:auto; position:static; } #g-GOOGMAIN-_620px .g-pstyle0 { font-weight:700; } #g-GOOGMAIN-_620px .g-pstyle1 { font-family:”Retina Narrow”,Helvetica,Arial,sans-serif; font-size:13px; line-height:16px; height:16px; text-transform:uppercase; } #g-GOOGMAIN-_620px .g-pstyle2 { color:rgb(255,255,255); } #g-GOOGMAIN-_620px .g-pstyle3 { font-weight:700; text-align:center; } #g-GOOGMAIN-_620px .g-cstyle0 { font-weight:500; } #g-GOOGMAIN-_700px { position:relative; overflow:hidden; } #g-GOOGMAIN-_700px p { font-family:Retina,Helvetica,Arial,sans-serif; font-weight:300; font-size:15px; line-height:20px; filter:alpha(opacity=100); -ms-filter:progid:DXImageTransform.Microsoft.Alpha(Opacity=100); opacity:1; letter-spacing:0em; text-align:left; color:rgb(51,51,51); text-transform:none; padding-bottom:0; padding-top:0; mix-blend-mode:normal; font-style:normal; height:auto; position:static; } #g-GOOGMAIN-_700px .g-pstyle0 { font-weight:700; } #g-GOOGMAIN-_700px .g-pstyle1 { font-family:”Retina Narrow”,Helvetica,Arial,sans-serif; font-size:13px; line-height:16px; height:16px; text-transform:uppercase; } #g-GOOGMAIN-_700px .g-pstyle2 { color:rgb(255,255,255); } #g-GOOGMAIN-_700px .g-pstyle3 { font-weight:700; text-align:center; } #g-GOOGMAIN-_700px .g-cstyle0 { font-weight:500; }
Google’s Ad Machine
Online ads are typically sold in auctions that happen in an instant, when a user’s webpage is loading. Google dominates at virtually every step of the process. Here’s how the digital advertising machine works:
Google’s Ad Machine
Online ads are typically sold in auctions that happen in an instant, when a user’s webpage is loading. Google dominates at virtually every step of the process. Here’s how the digital advertising machine works:
THE SELL SIDE: PUBLISHERS
The publisher also gives the exchange information about the reader—age, income, browsing history and interests, for example.
Ad space
for sale
In this example, the publisher uses Google’s DoubleClick for Publishers, the leading ad-serving tool.
When a user visits a large online publisher’s website or app, the publisher uses an ad server to sell ad space on its pages.
The tool puts the publisher’s ad space up for sale on exchanges, marketplaces where transactions happen in real time between sellers (publishers) and buyers (advertisers).
Once a match is made on the exchange, an ad pops up on the user’s screen.
REAL-TIME AUCTION HOUSES
Google has the largest such marketplace, the DoubleClick Ad Exchange, or AdX.
To get its ad in front of the user, the advertiser places bids in the auction marketplace—and the highest bidder wins.
THE BUY SIDE: ADVERTISERS
An advertiser, representing its client’s products, uses sophisticated buying tools to purchase ads.
The advertiser can specify the types of audiences it wants to target—such as location, gender or age of user—and the price of the offer.
In this example, an advertiser uses Google’s buying tool, DV360, the industry leader.
THE SELL SIDE: PUBLISHERS
The publisher also gives the exchange information about the reader—age, income, browsing history and interests, for example.
Ad space
for sale
In this example, the publisher uses Google’s DoubleClick for Publishers, the leading ad-serving tool.
When a user visits a large online publisher’s website or app, the publisher uses an ad server to sell ad space on its pages.
The tool puts the publisher’s ad space up for sale on exchanges, marketplaces where transactions happen in real time between sellers (publishers) and buyers (advertisers).
Once a match is made on the exchange, an ad pops up on the user’s screen.
REAL-TIME AUCTION HOUSES
Google has the largest such marketplace, the DoubleClick Ad Exchange, or AdX.
THE BUY SIDE: ADVERTISERS
To get its ad in front of the user, the advertiser places bids in the auction marketplace—and the highest bidder wins.
An advertiser, representing its client’s products, uses sophisticated buying tools to purchase ads.
The advertiser can specify the types of audiences it wants to target—such as location, gender or age of user—and the price of the offer.
In this example, an advertiser uses Google’s buying tool, DV360, the industry leader.
The publisher also gives the exchange information about the reader—age, income, browsing history and interests, for example.
THE SELL SIDE: PUBLISHERS
Ad space
for sale
In this example, the publisher uses Google’s DoubleClick for Publishers, the leading ad-serving tool.
When a user visits a large online publisher’s website or app, the publisher uses an ad server to sell ad space on its pages.
The tool puts the publisher’s ad space up for sale on exchanges, marketplaces where transactions happen in real time between sellers (publishers) and buyers (advertisers).
REAL-TIME AUCTION HOUSES
Once a match is made on the exchange, an ad pops up on the user’s screen.
Google has the largest such marketplace, the DoubleClick Ad Exchange, or AdX.
THE BUY SIDE: ADVERTISERS
An advertiser, representing its client’s products, uses sophisticated buying tools to purchase ads.
To get its ad in front of the user, the advertiser places bids in the auction marketplace—and the highest bidder wins.
The advertiser can specify the types of audiences it wants to target—such as location, gender or age of user—and the price of the offer.
In this example, an advertiser uses Google’s buying tool, DV360, the industry leader.
THE SELL SIDE: PUBLISHERS
Ad space
for sale
When a user visits a large online publisher’s website or app, the publisher uses an ad server to sell ad space on its pages.
The publisher also gives the exchange information about the reader—age, income, browsing history and interests, for example.
In this example, the publisher uses Google’s DoubleClick for Publishers, the leading ad-serving tool.
The tool puts the publisher’s ad space up for sale on exchanges, marketplaces where transactions happen in real time between sellers (publishers) and buyers (advertisers).
REAL-TIME AUCTION HOUSES
Google has the largest such marketplace, the DoubleClick Ad Exchange, or AdX.
THE BUY SIDE: ADVERTISERS
An advertiser, representing its client’s products, uses sophisticated buying tools to purchase ads.
In this example, an advertiser uses Google’s buying tool, DV360, the industry leader.
The advertiser can specify the types of audiences it wants to target—such as location, gender or age of user—and the price of the offer.
To get its ad in front of the user, the advertiser places bids in the auction marketplace—and the highest bidder wins.
Once a match is made on the exchange, an ad pops up on the user’s screen.
Some publishers, including News Corp, are in talks to license content to Google for a product called Google News Showcase, people familiar with the situation said.
Matthew Schruers, president of the Computer & Communications Industry Association, a trade association that includes Google, said that the digital-advertising marketplace has gained ground over more traditional forms of advertising in recent years because advertisers find it is often the best return on their investment. “The price of digital ads has fallen dramatically over the past decade,” he said.
This trend had been good for advertisers but less so for publishers, he said.
Much of the states’ suit focuses on Google’s ad server, a tool that helps publishers put ad space up for sale, and how it interacts with the other key elements of Google’s empire: its ad exchange, the marketplace where ad deals are struck in real time; and the buying tools used by advertisers. A key advantage that Google has over rivals is that it can keep track of internet users with a single identifier in all these products.
The suit highlighted “dynamic allocation,” a feature of Google’s ad server that allowed advertisers using Google’s ad exchange to bid in real time for ad space on publishers’ websites, armed with information about prices publishers had set for other exchanges, ensuring that bids through Google could always win. Publishers had long complained this feature hurt competition that drove down their ad prices.
The suit said internal Google discussions showed that “Google knew that dynamic allocation prevented competition among exchanges and did not maximize publisher revenue.”
Google in Focus
The Google spokeswoman said the dynamic-allocation feature was built by DoubleClick, the ad-tech company that Google acquired in 2008 and used as the foundation for its business of tools for buying and selling ads.
The bulk of the suit deals with how Google reacted when the industry tried to sidestep the company with a technology known as “header bidding.” In automated online advertising, when a user clicks on a webpage, the publisher puts ad space up for sale on an exchange. For years, Google’s ad server sent publishers’ ad space to one exchange at a time, meaning exchanges couldn’t compete against one another.
Header bidding, which required inserting a bit of code into websites, allowed publishers to hold simultaneous auctions across multiple exchanges when users clicked, thereby boosting their ad prices.
Publishing executives say they were aware Google was working against header bidding, but were surprised at the deception alleged in the suit.
Google kept its own exchange, AdX, out of the header-bidding auctions. Instead, publishers held an auction involving everyone but Google, and then Google had the option to top the highest bid, getting what industry executives refer to as a last look. Google said in 2017 it would no longer get a last look, but according to the suit, the company secretly maintained a different version of the last-look feature.
In an alternative to header bidding, Google began to allow competition between multiple ad exchanges through a program called Exchange Bidding, which occurred inside Google’s ad server. Google collected a fee of at least 5% for ad space publishers sold on a non-Google exchange, according to the suit, and added a feature “that made it so Google’s AdX exchange won publishers’ inventory even over another exchange’s much higher bid.”
One publishing executive said that rumors of the latter practice had been circulating in the industry for years, and likened it to Keyser Söze, the crime lord in the film “The Usual Suspects” who seems so fantastical as to perhaps be imaginary.
Exchange Bidding is the Google feature that the senior Google employee was referring to in the unredacted draft complaint as generating “suboptimal yields for publishers.” The unredacted complaint said Google executives referred to their attempts to undermine header bidding and force publishers back onto their ad server as the “Holy Grail.” This phrase is redacted from the filed complaint.
This same dispute over header bidding led to Google’s deal with Facebook, which the suit alleges involved Facebook agreeing to forego header bidding in exchange for secret advantages in Google’s auction. On Tuesday, The Wall Street Journal reported that an unredacted draft of the lawsuit said that Google and Facebook agreed to “cooperate and assist one another” on antitrust matters as part of their agreement.
This same dispute over header bidding led to Google’s deal with Facebook, which the suit alleges involved Facebook agreeing to forego header bidding in exchange for secret advantages in Google’s auction.
“The idea that we’re rigging ad auctions in Facebook’s favor is nonsense,” said the Google spokeswoman. She said the suit’s characterization of why Google built Exchange Bidding, later called Open Bidding, is untrue, arguing that it was attempting to offer clients a faster-loading product.
A Facebook spokesman said: “Our processes and agreements for bidding on advertising promote choice and create clear benefits for advertisers, publishers, and small businesses—any allegation that this harms competition or any suggestion of misconduct on the part of Facebook is baseless.”
The suit also alleges that Google’s Accelerated Mobile Pages, or AMP program, was primarily designed to force publishers off header bidding, since pages that use AMP don’t integrate well with header bidding.
The Google spokeswoman said the suit’s core claim about AMP is false. She said it was designed to improve user experience on mobile devices.
—Lukas I. Alpert, Jeff Horwitz and Ryan Tracy contributed to this article.
Write to Keach Hagey at [email protected]
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
