Closing Arguments in the Ad Tech Remedies Case

This newsletter is being written on an iPhone in an airport lounge so cut me some slack if there are typos. 

I was back in Northern Virginia today listening to the closing arguments in Google’s ad tech antitrust remedies trial. As I wrote after the conclusion of the 11-day evidentiary hearings, I went into today thinking it was a coin flip on whether Judge Brinkema would order an AdX spin-out or settle for behavioral remedies. After today I think Google’s going to get their way and there won’t be a spin out.

Before I go through the arguments made by each side I want to quote Brinkema at some length from her comments to the plaintiff’s counsel. She interrupted him early in his allotted hour time slot and said (may not be exact quote):

“Evidence shows time is of the essence. No one can predict three to five years from now.”

“What I’m really looking for from both sides is how quickly these remedies can come into effect.”

“With the looming damages and the New York court’s adoption of these findings, Google is in an impossible situation and will certainly appeal.”

“During appeal, which remedies would apply? Divestiture most likely would not be enforceable during appeal.“

This is the same line of thinking that I’ve had and have confirmed with lots of legal-adjacent folks. Essentially there is so much money now at stake in the civil cases (with treble damages FTW) and those cases are basing their findings on this ruling, that Google won’t settle this case no matter how beneficial it might be. They’ll fight this to the Supreme Court if necessary and that means years in which AdX and GAM stagnate. Meanwhile, the Judge is cognizant of the decline in open web ads and the threat of AI, and so, as she said, time is of the essence.

Behavioral remedies are more likely to be implemented even while an appeal continues. And, very importantly, the two sides are not very far apart on those remedies and Google’s revived proposal moved closer to the DOJ’s asks on some critical issues.

So if I had to predict right now we’re getting behavioral remedies that will be a compromise mix between the proposals of the two sides with no structural remedies.

The Plaintiff’s Closing

Plaintiff’s counsel started with the memorable statement “we know the narrative of Google as benevolent dictator is wrong.” He then proceeded to make the argument that divestiture was the only clean, safe, and permanent solution to the monopoly problem.

The most effective line of argument poked holes in behavioral proposals from Google. When Google says they won’t “intentionally” give themselves a latency advantage versus competitive exchanges, he asked, will the court be forced to judge every technical change against an intentionality standard? Similar points were made about AdWords bidding preferences that might take into account quality, privacy, and speed. Which of these criteria are legit and which are anti-competitive?

Google’s Closing

Karen Dunn gave a forceful and sharp closing argument for Google.

Addressing the judge’s concerns she went off script to kick off and stated “all of our proposals can be implemented within a year, except for programmatic guaranteed and private deals in prebid which will take 18 months.”

(Careful readers may note that the inclusion of these deal types into prebid was a notable omission from Google’s earlier proposals, one that would prevent meaningful migration away from AdX. Google revised their proposed settlement to address this criticism in their latest filings).

Mrs. Dunn spent a lot of time emphasizing that the remedies proposed by both sides overlapped and that Google was offering remedies that addressed many of the specific complaints from publishers and exchange witnesses. In contrast, she argued, a divestiture was extreme and risky.

Other arguments against divestiture:

• would include video and mobile ads which were not part of the monopoly findings

• no guarantee a buyer would keep the platforms at current levels of support

• 92% of publishers get GAM for free, no guarantee about what happens to them

Finally there’s the economic argument, which I’ve made as well. If Google doesn’t own AdX anymore then the efficiency that comes from vertical integration declines, advertiser ROAS goes down (on display), and AdWords dollars naturally shift to YouTube and other channels. A slide showing the percent of spend from AdWords shifting from display to YouTube was shown.

Other stuff we learned

A couple of nuggets caught my attention. In no particular order:

The two sides are already well underway in the process of picking a monitor who will assure whatever is ordered is properly administered. This monitor will then be able to hire a couple of technical advisors, so polish those resumes kids.

Google has accepted a six year monitoring period (original proposal was three).

In lieu of the open source auction proposal Google is pushing the idea of some kind of auditable log output (like a stack trace) from the ad server to allow publishers to validate why ads were served the way they were.

The DOJ has a sense of humor. They showed a slide to illustrate Google’s AI Overviews and its effect on publishers. The search term demonstrated was “how to monopolize a market .” LOL.

Google referred to friend-of-the-pod Steph Layser as “The Google Slayer.” Someone please run this through Nano Banana.

What’s next?

Expect a ruling from Brinkema in January or February. The publisher case in New York will get started around then as well. The Texas case is waiting on this Virginia ruling before moving forward, so figure we will hear more in the Spring. The EU case is supposedly not waiting for Virginia (because of, you know, sovereignty and stuff), but actually is, so I expect to hear about more delays in their ruling until early next year.

Everyone enjoy the holidays — except for Brinkema’s clerks.