Remedies to Google's ad tech Monopoly

I’m Alan Chapell. I’ve been working at the intersection of privacy, competition, advertising and music for decades and I’m now writing for The Monopoly Report. If you have a tip to share in confidence, find me on Twitter or Bluesky.

Our latest Monopoly Report podcast is out with Erez Levin - Media futurist. I’ve had lots of discussions about accepting/rejecting the third-party cookie on privacy grounds. Erez makes the case for TPC deprecation as part of a plan improve ad quality and to help take the ads ecosystem to the next level of maturity.

Wait - Chrome WON’T deprecate cookies?

That’s what they tell me. A few quick thoughts:

1. Nothing is forever - Is this a permanent shift? Likely until at least the end of 2025 as various regulators around globe have their say. Other than that, we’re exactly one memo or blog post away from the next shift.

2. Android Addressability? - It’s worth noting that the Android ad ID deprecation appears to be moving forward as scheduled. At some point, I’m hopeful that the UK CMA either takes steps to close that gap - or at least explains their rationale for failing to address mobile competition issues.

3. This is also a product fail - One thing that shouldn’t get lost in all the celebration or lament (depending on your POV) - this initiative has been one of the most ass backwards product development paths in the history of the tech space. Yeah, this was an ambitious undertaking, but in any other world, this approach and execution gets multiple people fired. The fact that this does not appear to have happened suggests that the ultimate goal here may have been more about distraction and delay and less about creating a more private web.

4. What about the Privacy Sandbox? - I’m sure Google will continue developing the Privacy Sandbox tools - although participation may not be the same absent the threat of cookie deprecation. It’s certainly noteworthy how Google gets more industry uptake when the marketplace believes they don’t have viable alternatives.

5. Trust the Sandbox Platform? - In my view, the Sandbox tools should be DOA unless they allow for independent audits to demonstrate that they are both effective and a marked improvement to consumer privacy interests.

I have a feeling that this won’t be last time this gets discussed on these pages.

Hard to Spin being Ruled a Monopolist Three Times

The Brinkema ad tech trial decision is in and now Google is officially a monopolist three times over in the U.S. Ari’s recent piece offers some fantastic insights that mostly serve to demonstrate how complicated all this stiff is to unwind.

What’s worse, Google has once again been found to have “systematically” spoiled evidence – to the point where some are calling for Google’s head of legal to have his law license revoked. I’m sure that all the issues with Google’s internal chat functionality was some kind of misunderstanding - kind of like when grandpa couldn’t figure out how to configure the DVR.

Where do we go from here?

The DOJ ad tech trial moves to a remedies phase where the first step is for Google and the DOJ to each propose a way to reset the competitive balance. I’m fairly confident that the DOJ is going to push for a much larger divestment than others are predicting - one that may include parts of Google’s demand side tech stack.

And if Google’s proposed remedies in the Search case are any indication, they’ll be asking for oversight of the ads space by a blue ribbon panel run by….. well, Google - and perhaps a letter of apology from Jonathan Kanter.

It’s early - also a reminder that Google is really good at this stuff

In my view, making specific predictions on how this will play out might be viewed as a fools errand as of today given that remedies phase hasn’t even started.

One thing that Google has done masterfully over at least the past decade is play 3D chess. Time and time again, Google has been able to setup scenarios in ad land where - regardless of the outcome - Google wins. And think we all need to keep this in mind as we think through potential remedies. Some may say that Google is on the ropes - I worry that Google may have us all exactly where they want us.

So rather than make a prediction regarding how this plays out, I thought it might be helpful to share my thoughts on some of the forces at play - and what I think is squarely on and off the table.

The tl;dr is that I find myself closer to the “break Google up into as many pieces as you can” camp and deal with the consequences of that later. But I’ll admit, that approach also carries its own set of challenges and risks.

The Physics Governing Remedies 

Nothing is 100% certain at this point, but there are a few relatively firm truths that will almost certainly impact how things progress:

• Pro-Google settlement with deal-maker in chief? Anything is possible, but the headwinds are strongly against a quickie settlement that is super favorable to Google for a number of reasons: (a) Politically, Google is the current odd man out right now with fewer friends across the DC political spectrum, (b) The DOJ could in theory settle on behalf of the Federal Government, but that would still leave the State AG’s (i.e., the co-Plaintiffs alongside the DOJ) - who seem much less inclined to settle.

• Big Fines? - This came up in the “blockbuster emergency” pod I did with Ari Paparo and Arielle Garcia. I’m told that the DOJ can’t impose a monetary penalty outside the request for treble damages in connection with “the losses sustained by federal government agencies that overpaid for web display advertising.” Perhaps the State AG’s can impose fines - but any fine would likely cover only a % of the ill gotten gains. So like I said to Ari on the pod, I’m left with… “meh”.

• It’ll Probably be One Global Settlement – I understand that the DOJ says they are viewing the Search trial and ad tech trial settlements separately. I’m taking that with a grain of salt. For one thing, I just can’t see Google striking a deal to divest say… DFP in Canada while separately divesting only AdX in the U.S. As of today, all eyes are on U.S. courts. But sooner or later, Canada, the EU and the UK are going to want to weigh in.

• What about Chrome? – The biggest sticking point is going to be over Chrome (duh!). In order for Google to give up Chrome without forcing a decade of appeals, they need to see more risk/pain to holding out than they’d feel in losing Chrome. Candidly, I’m not sure that’s even possible, but can see a few potential scenarios where it becomes more likely:

  • If Android divestment is taken off the table as part of a deal to divest Chrome,

  • If the delay / scrutiny is causing Google to fall behind in the race to AI – but even there, I’d imagine that Chrome is crucial to Google’s AI ambitions,

  • If the U.S. wants to play hardball and threaten to raise additional charges as leverage - including some that would involve jail time for certain Googlers.

• Google may no Longer Want its Ad tech Stack - I’ve been saying this for years. Google has already offered part of its sell-side ad tech stack pursuant to a potential settlement - and has been directing revenue away from that side of the business for years. Does Google have any interest in continuing to operate AdX & GAM, given that doing so will likely involve lower margins and additional oversight? Btw, I wouldn’t be too quick to assume that DOJ divestment proposals won’t include part of Google demand platforms.

• Nobody cares about your SSP/DSP – I wouldn’t necessarily assume that the government is solving for your particular issue, or to keep your particularly platform around. The goal here is to make sure that we return to a baseline where advertisers and publishers aren’t getting cheated. We may not get there, but it’s important to note - this effort doesn’t include ensuring that the particular problem that you solve for continues to exist.

• Behavioral Remedies and Ongoing Shenanigans - I’m sure that an agreement re: how Google behaves going forward will be part of the mix. But the more severe, complex and/or intrusive those rules are, the harder they’ll be to enforce over time. Mandating interoperability and/or forcing Google to open up its demand to others is just as likely to be rife with mis-appropriation of process, gaslighting and further manipulation by Google. Think of it as the Privacy Sandbox fiasco on steroids.

• Will Congress create an EU-inspired law? - I recognize that there is some support in Congress for “reigning in big tech”, and that includes some new antitrust rules. Will that have an impact on these proceedings? Anything is possible, but please consider the following: (a) Congress isn’t necessarily in a better position to appreciate the complexity of the market than the Court, (b) Relying on a new law assumes that Google will operate in some degree of good faith going forward (which ignores lots of big tech’s compliance with the EU DMA to date), (c) it assumes that the rest of the world will “just go along with” whatever ruleset the U.S. tries to impose (particularly given what’s going on geopolitically right now), and (d) we probably don’t want the U.S. Government having so much power over these systems for much the same reason we don’t want Google to have that much power.

Is divestment the “only” option?

Divestment might be viewed as the least bad option on the table from the perspective of the DOJ (and for what it’s worth… me). Here are a few of those challenges around divestment as an approach:

• Divesting Google’s ad tech stack and/or Chrome creates the possibility of moving the problem rather than fixing the problem.

• Google’s sell side tools probably aren’t worth much without Google’s demand - and they strike me as a high hassle, low margin business post-divestiture. But I wouldn’t be so quick to assume that demand side divestitures are completely off the table here.

• It’s hard to believe this Republican led Government is really willing to force those tools into a public benefit corporation for publishers.

What’s the timing?

I’m hearing that there’s at least a chance that remedies phase in this trial and the the separate DOJ search trial are completed by late summer - just as the separate State AG case is set to begin. (And we might hear back from Canada’s Competition Tribunal by then too).

So… If we’re looking for our best chance of a settlement in the near term, August / September would be as a time as any to place your bet.

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