Day 8: Googlers are from Mars, Lawyers are from Venus

The Monopoly Report is going daily during the trial. Our intrepid founder is in a windowless room without a phone or laptop to get you the good stuff.

Day 8: Googlers are from Mars, Lawyers are from Venus

Have you ever said something to a nerd like “Luke’s lightsaber was cool” and they respond with “well, actually it depends on which one you are referring to” followed by a lot more information than you wanted. Well, that’s basically how it is when the lawyers ask what seem to be simple questions of the Google witnesses like “does AdX bid into DFP”, to which former AdX lead Scott Spencer strenuously objected that AdX did not, in fact, bid into DFP" (it just gets the floor price then runs an auction, then submits the winning bid — see, totally different).

Here’s what happened.

What we learned today?

• AdX’s market share has been declining since the move to first price auctions.

• DFP’s pricing has been slowly declining.

• Even judges want trials to get over with.

Dog days of the DOJ case

The DOJ’s witnesses today added very little new information to the case, a point the judge noted, fairly forcefully at one point (see below). The DOJ is very likely to rest tomorrow and we know there are only three more in-person witnesses, Jonathan Bellack and two experts. Unless something changes I think we have a very good idea about where their side of the case lands. I will provide my non-lawyer, highly-opinionated summary:

Plaintiff’s witness 23: Scott Spencer, former Google

Scott’s testimony was extremely brief, he got back on the shuttle after only about forty minutes of grilling by the DOJ with no cross-exam. There was really not much new news in his testimony and many of the documents had been shown to prior witnesses.

In an email about allowing AdX demand into other ad systems Scott wrote:

When asked about integrating Dynamic Allocation into other exchanges Scott said he doesn’t think any other exchanges wanted to do this. Which is a bit of an odd thing to say.

Plaintiff’s witness 19: Rosa Abrantes-Metz (cont.)

Mrs. Abrantes-Metz is an economist and expert witness for the DOJ. She testified that many of Google’s behaviors were stifling competition. The more interesting part of today’s testimony was regarding Google’s acquisition of AdMeld.

AdMeld

The DOJ has made the argument that after the AdMeld acquisition Google shut down its key services and stifled competition. While the expert supported this point of view, calling it a “killer acquisition”, Google’s cross-examination poked some holes in this theory. Specifically:

• Google did integrate the yield management functions into DFP, but just discontinued the RTB integrations into external parties that were used by a minority of customers.

• AdMeld CTO indicating that doing integrations with other systems (e.g. non-DFP ad servers) was “plagued with problems.”

• An internal document about integrating said “the business case is not justified.”

As a former product manager myself, I cringed at some points when it appeared that a lawyer and an economist were debating how much engineering work a given feature would take.

DFP rate card

One interesting tidbit was some revelation of the trend in DFP rate card over time. Google showed that rack rates for the ad server have been trending down:

Google AdX market share

Based on a Google expert witness’ document we haven’t seen so far, there appears to be a steady loss of market share by AdX more or less since they moved to first-price auctions and got rid of last look (numbers are approximate based on a graph displayed). I will note that this could also be correlated with the rise of The Trade Desk.

Plaintiff’s witness 24: Matthew Wheatland, Daily Mail US

Like last week’s testimony from Stephanie Layser of News Corp, Matthew showed an internal analysis of the amount of revenue potentially lost by switching off of DFP and losing the AdX demand.

• 45% of programmatic demand was won by AdX, and of that 18% was “unique demand” meaning there were no other bidders.

• There would be an effect on CPMs from other headers, like Amazon TAM, if they removed AdX demand because of bid shading.

• The direct loss of revenue (UK only) would be ￡219,000/month, with an estimated total loss, including auction dynamics of ￡355,000/month, or 28% of total programmatic revenue.

We also saw an analysis of the effect of Unified Pricing Rules on The Daily Mail. Short version is that AdX won a lot more at lower prices. Longer version:

The cross-examination of this witness was largely feckless, but at some point the judge asked the witness if “the video ads at the bottom of the page are display ads”, and that one question more than anything may impact the case.

Plaintiff’s witness 25: Robert (“Bo”) Bradbury, GDS+M (by read-in)

This testimony was originally part of the case where the government was using public advertisers, like the US Air Force to demand a jury trial. Google made that go away, and as a result this testimony wasn’t heard. The judge stopped it after a couple of minutes saying it was repetitive and irrelevant. She then said this, which I love:

Plaintiff’s witness 26: Aparana Pappu, Google (by read-in)

Aparana led engineering for all of AdX and DFP at some points. Her testimony didn’t add too much except for an interesting discussion of AdX rates. In particular, for Programmatic Guaranteed, Aparna suggested in an email that the rate should be 2% since that’s what credit cards charge, and the only value of AdX in a PG deal is clearing the fees.

Plaintiff’s witness 27: Bryan Rowley, Google (by video)

Bryan worked for Chris Lasala in product commercialization. Not much in his testimony, except he’s the first Google to admit that there was pressure from the sell-side to not expand AWBid. All the other witnesses have hinted around this but not said so directly.

What’s next?

Tomorrow should be the last day of the DOJ case, then Google gets its turn.