ALEXANDRIA, Va. — Google opened its defense Friday against allegations that it has an illegal monopoly on online advertising technology. Witnesses testified that the industry is far more complex and competitive than the federal government claims.
“The industry has been extraordinarily volatile over the past 18 years,” said Scott Sheffer, Google’s vice president of global partnerships, the company’s lead witness in the antimonopoly trial in federal court in Alexandria.
The Justice Department and a coalition of states allege that Google has built and maintained an illegal monopoly on the technology that facilitates the buying and selling of online advertising by consumers.
Google argues that the government’s case unfairly focuses on a narrow type of online advertising — essentially, the rectangular ads that appear at the top and right sides of a web page. In its opening statement, Google’s lawyers said the Supreme Court has warned judges not to take action when dealing with rapidly emerging technology like Sheffer described because of the risk of error or unintended consequences.
Google says defining the market so narrowly ignores competition from social media companies, Amazon, streaming TV providers and others that provide advertisers with the means to reach consumers online.
Justice Department lawyers called witnesses to testify for two weeks before dropping their case Friday afternoon, explaining how automated ad exchanges conduct auctions in a matter of milliseconds to determine which ads are shown to which consumers and how much they cost.
The ministry alleges that the auctions are subtly manipulated, favoring Google and excluding potential competitors, and preventing publishers from making as much money as possible from selling their advertising space.
It also says that Google’s technology, when applied to all facets of an advertising transaction, allows Google to keep 36 cents of every dollar of a specific ad purchase. Billions of dollars of that are purchased every day.
Executives at media companies such as Gannett, publisher of USA Today, and News Corp., owner of the Wall Street Journal and Fox News, have said that Google dominates the landscape with technology used by publishers to sell advertising space and by advertisers to buy it. The products are tied together, so publishers must use Google’s technology if they want easy access to the large pool of advertisers.
The government argued in its complaint last year that Google should at least be forced to sell the portion of its business that focuses on publishers to break its dominant position.
In his testimony Friday, Sheffer explained how Google’s tools have evolved over the years and how the company monitors publishers and advertisers to protect against problems such as malware and fraud.
The trial began on Sept. 9, just a month after a judge in the District of Columbia declared Google’s core business, its ubiquitous search engine, an illegal monopoly. That trial is still ongoing to determine what remedies, if any, the judge can impose.
The advertising technology at issue in the Virginia case doesn’t generate the same revenue for Google as the search engine does, but it is still expected to bring in tens of billions of dollars a year.
Overseas, regulators have also accused Google of anticompetitive behavior. But the company scored a victory this week when an EU court overturned a 1.49 billion euro ($1.66 billion) antitrust fine imposed five years ago that targeted a different segment of the company’s online advertising business.
