Google as Ted Lasso

I’m Alan Chapell. I’ve been working at the intersection of privacy, competition and advertising for decades and I’m going to be writing for The Monopoly Report. Check out our latest Monopoly Report podcast this week to hear our “emergency pod” about the latest in the Google ad tech antitrust trial. And in case you’re wondering about the final article on browsers vs ad tech, we’ll be publishing that next week.

The final arguments are in for both Google and DOJ

At close to midnight this past Monday, Google and the Plaintiffs (i.e., DOJ and multiple U.S. States) each filed their respective post-trial proposed findings of fact and conclusions of law. You can find Google’s here and the DOJ filing here. Or if you have a few days to kill, you can check out all of this great content from Check My Ads here. (Well done, CMA!)

In case you’re only looking for the tl;dr, I’ll offer this:

Not a lot of NEW in these filings - Rather, it seems like both sides have clarified their previous arguments. That makes sense – given that both sides have had almost a month to digest the case. And it’s not like one side was going to introduce new evidence into the proceedings. In that light, the way to think about these filings is that they’re one of the last opportunities for the parties to articulate the best version of their argument to the Judge.

The DOJ narrative is on its face more plausible – (arguments oversimplified)

In reading through this, I was able to piece together the following narrative for each of the parties, and feel that the DOJ narrative holds more water.

• Per the DOJ - Google: (1) set out to dominate the market as witnessed by multiple emails and witness testimony, (2) they did so using a variety of anti-competitive techniques such as buying and parking potential competitors, tying their products, and manipulation of auctions, (3) Google’s actions evidence more concern for maintaining their monopoly than serving their customers, and (4) they hid and probably destroyed evidence and used questionable legal tactics to shield their plans from discovery (not to mention, they keep changing the name of their products so literally nobody can figure out what’s up). (Something, Something, consciousness of guilt).

• Per Google - (1) We make up a smaller and smaller portion of an increasingly growing market (where everyone benefits), (2) Here’s a handful of witness (mostly on our payroll) who assert that we’ve always done our best to fairly compete, and (3) any publisher who didn’t think they were treated fairly was free to leave given the fluidity the market (as we define it), and (4) Those who are complaining are jealous competitors of ours who just want to own or control our services or have the Government take control of them. My overriding thought regarding much of Google’s positioning is that one can only see it if you squint your eyes really hard.

Who’s going to win? – I’ve said all along that the evidence against Google here is pretty damning. And I think that’s even more clear now that everyone has had an opportunity to digest and restate their case. Personally, I’d be shocked if Google prevails here. But I’d also state that it’s really NOT about this particular judgment. Whatever Google’s long-term strategy is with respect to this case, it’s probably not predicated on whether or not they win at this level. There will be appeal after appeal. And as much as I like to be critical of Google, they are really smart and incredibly strategic. They are probably seeing a window or two off in the distance that I’m unable to appreciate.

There are a few things that I thought were pretty interesting about these filings. Maybe it’s because I’d sort of stepped away from this case and haven’t thought much about it since September. If you’re looking for a better understanding of some of the key issues that are playing out, (or if you want to understand the Ted Lasso angle) I hope you read on…

Market Definition

In antitrust law, a market definition is a way to ascertain the relevant economic area where the alleged anticompetitive behavior is measured. Most antitrust cases in the U.S. (particularly over the past fifty years) ultimately come down to the market definition. Google is arguing that the relevant market is practically the entirety of digital advertising. The problem for Google is that there are a few things which undercut that position, including:

• Flip-Flopping - DOJ notes that Google flipped-flopped in its market definition. Specifically, Google’s position in this case re: market definition was significantly different from one Google had previously made in a case in different circuit. Google certainly isn’t the first company to make contrary arguments to different Courts, but there’s an old saying that comes to mind: “You can’t have your cake and eat it too.”

• Buy and sell side are not the same - Google's argument for a large, single two-sided market might hold water on the advertiser side where there's much more elasticity. For many advertisers, they will happily use TikTok, but if TikTok gets banned, they can move their spend to Meta, or the WSJ or even Marketecture. But that same argument comes off as absurd on the publisher side. Publishers are much more limited in terms of their ability to go elsewhere. They need to chase the demand. But they can’t chase that demand using TikTok’s plumbing or even TikTok’s advertiser demand.

• Google claims that there’s little evidence of Monopoly power - Google argues what they’re doing in display ads is identical to what TikTok, Meta and Amazon are doing as they look to build out their tech stacks. But that narrative only holds water if you agree that digital advertising is a single market – and that walled gardens are the same market as the display market across publishers like WSJ and long and mid tail pubs.

The DOJ position is that the market should be viewed differently, and that the O/O properties of the walled gardens are very different from those of display ad publishers. Using the DOJ narrative, Google has monopoly power in each of three relevant markets: publisher ad servers, ad exchanges, and advertiser ad networks for open-web display advertising. And each of those offerings serve to reinforce the monopoly power of each other.

Refusal to Deal vs Tying Cases

Another important component is whether or not the alleged anticompetitive activities are deemed a “refusal to deal” verses a “product tying” case. A refusal to deal means that one company chooses not to do business with another company - and it is generally legal outside of certain discriminatory practices. Tying is a business practice where a seller of a product requires a buyer to purchase a second product in order to buy the first product. Whether a case is convincingly framed as a refusal to deal vs tying has a huge impact on the legal standard that the Plaintiffs would need to prove – and could also impact the potential remedies in play should Plaintiffs prevail. I’d go as far as to say that Google is toast if this is tying case.

As you might imagine, Google wants this to be a refusal to deal case. Also, Google attempts to rebut the tying argument by stating that publishers CAN use DFP without leveraging ADX. But doesn’t that claim have things backwards? DFP isn’t tied to ADX. Rather, ADX is tied to DFP. Publishers may very well want to get off of DFP. But they can’t because you need use DFP to gain access to the ADX demand via Google Ads.

A final thought regarding Google’s overall litigation vibe

I think Google’s tone in this case has been consistent with how Google operates more generally. And that may not bode well for Google’s overall chances. One thing I’ve learned over the years is that not every forum is the same. And Google’s use of the same “Ted Lasso” schtick (e.g., charmingly gaslighting) may not be resonating as well in the Court system as it does within ad tech circles. Google doesn’t have the same influence in this venue, nor the ability to dictate the rules of engagement, or control the narrative.

This isn’t meant as a knock on Google - their charm can be disarming. And don’t be fooled by the self-deprecating smile - Lasso was a killer competitor. Same with Google. But I get the sense that Google is taking what’s worked in the past and applying it here. And I’m skeptical that it’s serving them well here. The further we go through the court system, the more apparent that’s becoming.

And that might be the biggest takeaway for me.

Alan’s Hot Takes…

Here are a few stories that hit me over the past week:

• EPIC files an FTC complaint against OpenAI– Privacy advocate EPIC has filed a complaint with the Federal Trade Commission (FTC) against OpenAI, alleging violations of consumer protection laws through the development and deployment of its AI products. If you think current U.S. federal law isn’t well suited to regulate digital ads - OpenAI says, “hold my beer.”

• Privacy Safe Adtech(?) - Lots of companies out there with relatively new tech that purports to be an improvement when it comes to privacy. If that’s you, please DM me. I want to know more.

• Congress Publishes a scathing rebuke of Lina Kahn’s FTC - The U.S. House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) announced the release a staff report titled “The Federal Trade Commission Under Chair Lina Khan: Undue Biden-Harris White House Influence and Sweeping Destruction of Agency Norms.” Don’t sugar coat things, guys - tell the people what you really think of the FTC.

• Are you RED or BLUE – Now that the election is over, I’m hoping we can set aside our political differences and focus other areas of debate, such as - what do we mean by privacy? See super accurate chart below…

If there’s an area that you want to see covered on these pages, if you agree/disagree with something I’ve written, if you want tell me you dig my music, or if you just want to yell at me, please reach out to me on LinkedIn or in the comments below. I’m also available to consult on how the ouija board of digital media is moving or to help with due diligence on M&A.