Inside the landmark Google adtech antitrust trial that could transform the $700 billion global digital ad market

Google executives and lawyers are headed to the Eastern District of Virginia Courthouse on Monday to face a landmark antitrust trial that could result in the breakup of its business.

That outcome would be a boon for Google’s adtech rivals but wouldn’t necessarily provide an instant panacea for the publishers and advertisers that have come to depend on its services.

The case, brought by the US Department of Justice and 17 state attorneys general, alleges that Google used acquisitions and anticompetitive ad auction tactics to build an illegal monopoly of the digital ad market.

The trial is focused on the open web display ad market and the tools that power the ad auctions that happen in the milliseconds it takes for a webpage to load.

Google owns an ad server that publishers use to manage their ad inventory, buying tools that advertisers use to purchase ads, and an ad exchange that connects the two. It owns the most popular of all three technologies, which the DOJ alleges helped the company impede rivals, inflate advertising costs, and reduce revenue for publishers.

The trial is set to last multiple weeks, and Google will likely appeal if the judge doesn’t rule in its favor. That means it could be months before the real ramifications of the case are known.

Still, the case is being closely watched by all members of the online ad ecosystem, which is expected to reach some $691 billion in spending this year. The DOJ and the states are seeking a breakup of Google’s adtech business. Such a move would not only transform the online advertising landscape. It would be the “biggest forced corporate shake-up since Microsoft unbundled the Internet Explorer browser in 2000,” Macquarie media tech analyst Tim Nollen wrote in a recent research note.

B-17 interviewed analysts, legal experts, and adtech insiders to explore how the industry would shape up if Google is declawed. Google on Sunday published a blog post that said it intends to show in court how advertisers and publishers choose to use its adtech because it “simple, affordable, and effective.”

A Google breakup would be a major boost for rival adtech firms like The Trade Desk and Magnite

It’s hard to find an adtech company that isn’t gunning for Google to lose this case.

The DOJ wants the judge to rule that Google needs to separate its publisher adtech — the DoubleClick for Publishers ad server and its Google AdExchange — from its advertiser adtech, namely its Google Ads and Display & Video 360 ad-buying platforms.

The argument goes that by owning the entire adtech stack, Google has access to a huge pool of ad inventory that it can tie to demand on its ad-buying platforms. That setup means most publishers select Google as their ad server, the complaint argues.

Plus, Google has troves of user data from its logged-in users on platforms like Chrome and Gmail. Combined, that gives Google wide visibility across the entire auction process, the ability to refine its bids accordingly, and a way to self-preference its own ad inventory tech, the complaint says.

Many industry experts think that untethering Google’s supply and demand side would level the playing field for competing tech companies with big advertising businesses, such as Meta and Amazon, as well as pureplay adtech firms. That, in turn, could boost innovation in the space, reducing costs for advertisers and increasing revenue for publishers, some experts say.

“[Demand-side platforms] like The Trade Desk, [supply-side platforms] like Magnite and PubMatic, specialist ad tech services like Criteo, and companies supporting alternative IDs and data collaboration like LiveRamp, all should see a better competitive landscape without the heavy hands of Google scooping up so much of the business itself, and for its own purposes (YouTube),” Macquarie’s Nollen wrote in a recent research note.

Separately, a divestiture could encourage more transparency and traceability of data flows within the online ad ecosystem, Elettra Bietti, assistant professor of law and computer science at Northeastern University, told B-17.

“Transparency, in turn, could lead to better regulation of surveillance and behavioral advertising, which is currently a significant concern for privacy advocates,” she added.

A DOJ win isn’t necessarily good news for all publishers and advertisers

Google and its lawyers are expected to argue in court that a breakup of its adtech stack would harm publishers and advertisers and make it more difficult for the company to invest in important research in areas like artificial intelligence.

The barrier to entry to start advertising on Google Ads is incredibly low, which is part of the reason why it has attracted so many small business advertisers.

Mark Jamison, director and professor of the Public Utility Research Center and director of the Digital Markets Initiative at the University of Florida, has said a breakup of Google and the resulting free-for-all from lower quality adtech players could result in higher ad prices and lower quality ads.

“Absent evidence that Google is artificially restricting the quantity or quantity of ads, and that consumers would accept more ads, a breakup of Google’s business will harm small businesses by removing their preferred advertising channel,” he told B-17.

One publisher tech executive, who asked for anonymity to preserve business relationships, said while many in the publishing community are unhappy with some of Google’s historical actions, a breakup might not be the best outcome.

This executive said that if Google sold off its sell-side business, its DV360 ad-buying platform might not have any incentive to continue spending on the open web and instead just direct even more ad dollars to Google’s own platforms. Separately, they said that while a separation of Google’s ad server and its ad exchange would be good for competition in the adtech market, it might drive ad server costs up for publishers.

Google’s ad server is “a loss leader, they make all their money in AdX,” the exec said, referring to Google’s ad exchange that connects buyers and sellers.

Global regulators have Google in their sights, too

Any unraveling of Google’s ad empire would be complex.

A separate adtech company would still likely be worth billions, meaning any potential suitor with enough capital to acquire it would encounter its own competition issues. It’s more likely that it would be spun off into a separate company. But then there’s also the technical challenge of untangling assets that, by design, have become so intertwined.

Either way, experts generally think Google will probably come away from this trial with a bloody nose as regulators are increasingly taking a dim view of its advertising practices. The company recently lost a separate search ads antitrust trial.

Over the pond, the European Union said last year it might look to break up Google’s adtech business. And just last Friday, the UK’s competition watchdog said its investigation into Google’s adtech practices had provisionally found Google had abused its dominant positions in operating its publisher ad server and ad buying tools. In a statement, Google said it disagreed with the CMA’s findings, which it said were based on “flawed interpretations of the ad tech sector.”

“It’s a bad month to be a monopolist,” wrote Arielle Garcia, director of intelligence at adtech watchdog Check My Ads.