(Alexandria) Google on Friday opened its defense against allegations that it has an illegal monopoly on online advertising technology with testimony that the industry is far more complex and competitive than the federal government has portrayed.
Scott Sheffer, Google’s vice president of global partnerships and the company’s first witness in its antitrust trial in federal court in Alexandria, argued that “the industry has been exceptionally fluid over the last 18 years.”
The Justice Department and a coalition of states argue that Google built and maintained an illegal monopoly on technology that facilitates the buying and selling of online ads seen by consumers.
Google counters that the government’s case wrongly focuses on a narrow type of online ads — essentially the rectangular ones that appear at the top and right side of a web page.
In their opening statement, Google’s lawyers said the Supreme Court had cautioned justices against taking action when dealing with emerging technologies, such as those described by Mr. Sheffer, because of the risk of error or unintended consequences.
Google says defining the market so narrowly ignores the competition it faces from social media companies, Amazon, streaming TV providers and others that offer advertisers ways to reach consumers online.
Justice Department lawyers called witnesses to testify for two weeks before resting their case Friday afternoon, detailing how automated ad exchanges conduct auctions in milliseconds to determine which ads are placed in front of which consumers and how much they cost.
The Justice Department argues that the auctions are subtly rigged to advantage Google at the expense of potential competitors and to prevent publishers from making as much money as they could by selling their ad space.
He also claims that Google’s technology, when used across all facets of an advertising transaction, allows Google to keep 36 cents of every dollar of any particular advertising purchase, billions of which occur every day.
Executives at media companies like Gannett, which publishes USA Todayand News Corp., which owns the Wall Street Journal and Fox News, said Google dominates the landscape with the technology used by publishers to sell ad space as well as by advertisers looking to buy it. The products are tied together, so publishers must use Google’s technology if they want easy access to its vast directory of advertisers.
The government said in its complaint, filed last year, that at a minimum Google should be forced to sell the part of its business that serves publishers to break its dominance.
In his testimony Friday, Scott Sheffer explained how Google’s tools have evolved over the years and how it has vetted publishers and advertisers to guard against issues like malware and fraud.
The trial began on September 9, just a month after a District of Columbia judge declared that Google’s core business, its ubiquitous search engine, was an illegal monopoly. That trial is still ongoing to determine what remedies, if any, the judge can impose.
The ad technology at issue in the Virginia case doesn’t generate the same kind of revenue for Google as its search engine, but it’s still estimated to bring in tens of billions of dollars a year.
Overseas, regulators have also accused Google of anticompetitive conduct. But the company scored a victory this week when a European Union court overturned a $2.26 billion antitrust fine imposed five years ago that targeted another segment of the company’s online advertising business.