Jessica Lessin's take on DOJ vs. Google

The digital ad business is a rich target for trustbusters. Are Amazon and Apple next?

From Lessin's The Briefing, posted Tuesday by The Information ($):

Over my career as a tech reporter, regulators have sued or threatened to sue Google for exerting monopoly power in its ads business so many times it’s hard to keep track.

Today the U.S. Department of Justice and eight states filed the fifth challenge by U.S. officials against the company, building on a case several states filed back in 2020.

This one is a doozy and I don’t recommend wading in unless you are familiar with the intricacies of header bidding and DSPs and a bunch of very technical ad-targeting practices that were a significant and bleeding-edge part of the digital economy back in the day and are now, well, meh. While Google’s display ad business has grown, any publisher that is heavily dependent on it is no longer in business—or won’t be much longer.

But that doesn’t mean this case isn’t important. And I do believe the government and the states have a pretty strong case against Google. Among the business practices highlighted, the one that seems the shadiest is the total lack of transparency Google provides regarding its display ad marketplace. In just one small example, the government alleges that in some cases Google misled publishers about how much an advertiser was willing to pay for ads on their site, pocketing some undisclosed amount for itself.

As one of my colleagues put it to me this morning, that would sort of be like if Goldman Sachs operated the stock exchange. No, thank you...

One thing I’m more certain of is that this isn’t the last challenge to a tech ad business we’ll see from regulators. I’m not even sure it’s the most important. Imagine the company selling ads was also directly selling products that competed with those depicted in the ads (Amazon!). Imagine a hardware company that sold ads was letting itself use far more targeting data to sell its ads than it was allowing its rivals to use (Apple!).

I don’t envy regulators here. They are going to have a busy year.

My take: Lessin is scary smart (see Wikipedia) and this is a beat she knows. If she thinks the Feds have a pretty strong case against Google, they probably do.

7 Comments

  1. Fred Stein said:
    Apple remains a minority platform (except for wearables). Their Ad business is a small fraction of the ad business, even just on-line ads. No case.

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    January 25, 2023
  2. Fred Stein said:
    A quick google search found this from Dec 2022:

    By the numbers: Google and Meta will together capture 48.4% of all U.S. digital ad revenue this year (28.8% for Google and 19.6% for Meta), down from 54.7% at their peak in 2017 (34.7% for Google and 20.0% for Meta), per data from Insider Intelligence.

    The ad placement may be another issue.

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    January 25, 2023
  3. Rodney Avilla said:
    “Imagine a hardware company that sold ads was letting itself use far more targeting data to sell its ads than it was allowing its rivals to use (Apple!).”

    Targeting data is data about you (info they gleam from your emails, the websites you go to, what you buy online, etc) that companies can use to know where to send their ads. Tesla doesn’t want to pay to send you an ad if you have no interest or need in buying a car. They want data (yours and everyone else’s internet activity) to help them target who to send their ads to. Target data.
    I know I’m stating the obvious. So what’s the beef?
    So now, Google can charge more for ads, if they can get a better response rate to their ads. And they do that by using targeting data that they exclusively have. Or so goes the accusation.
    My daughter has worked in digital marketing for several years. I find it interesting what the digital marketing world thinks of google & facebook.

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    January 25, 2023
    • Daniel Epstein said:
      The rules for data Apple uses and allows other to use seem to have confused even the best minds. Apple wants Apps to not track the users over different devices and sites without explicit permission. Apple allows Apps to use the data collected while using the App, device and or website. This distinction includes Apple being able to use the data it collects from its devices etc but not track, share or sell it to others. This still can appear like tracking to some but is not. For instance my Cable Provider Spectrum has an app for Apple TV. I have multiple Apple TV’s so my recent viewing can show up in different locations because the App and Apple ID are linked. Some have claimed Apple doesn’t scrub the info they collect so Apple has an advantage but it really is not the same as the tracking other companies do. When I look at something I want to buy at say B+H here in NY on Google Chrome the ads show up in many more places than the original site I searched. That doesn’t happen when I look at something using Apple Apps, browser, store, website or device.

      2
      January 25, 2023

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