Adtech leaders react to potential breakup of Google's ad business

Alphabet-owned Google is preparing to face a lawsuit from the United States Department of Justice that demands the ad giant divest its Google Ad Manager (GAM) suite, including DoubleClick for Publishers (DFP) and ad exchange ADX. 

Michael Sweeney, the head of marketing at Clearcode, says he is not surprised that the DOJ had sued Google and is taking them to court. He says this is essentially what the DOJ hinted at when it rejected Google's offer to break up its advertising business in July 2022 in response to the DOJ's first antitrust investigation.  

By going to court, Sweeney suggests the DOJ is confident that it will be able to get new legislation passed that will force Google to spin off its advertising business, mainly its adtech platforms for the open web like GAM, DV360, ADX etc.  

“Time will tell what the courts decide, but it's not looking good for Google. The DOJ has a pretty strong case. Breaking up Google's ad business for the open web could level the playing field for adtech companies. Still, the devil will be in the detail regarding which platforms Google will need to spin off and which ones it won't," Sweeney tells Campaign Asia-Pacific.

Meanwhile, Sonal Patel, the managing director for Asia at Quantcast, points out the ad industry has long been aware of the difficulties any adtech owner faces when acting as the distributor, owner, AI logic creator, and the content management party all rolled into one. 

Patel notes the most significant challenge has historically been proving this. She says the black box that Google has in search, adtech pipes like DFP and Doubleclick for Advertiser (DFA), and owned and operated content management from YouTube and search engines gives the ad giant an unfair advantage and dominance that can negatively affect competitors.  

"Naturally, questions arise about the protectionist behaviour of any dominant entity. Maintaining that dominance encroaches upon innovation (as competitors cannot flourish) and antitrust laws, so it's not surprising to see this second lawsuit by the DOJ. It's sadly happened so late in the adtech game where data has been amassed for some time already," Patel tells Campaign Asia-Pacific.

"You only have to look at the companies Google has acquired and weaved into its main dominant business to realise there is maximised utilisation and dominance of their as a model. Think admob, AdWords, DPF, DFA, Invite Media, Admeld, Teracent and more." 

According to Patel, the worst part of Google's dominance in adtech is the negative equity effect on publishers who spend their time building and creating content, only to be rewarded at a fraction of their value because of Google's dominance and adtech system.  

She argues these businesses have suffered immensely because of dwindling revenues due to algorithm management.  

"Let's be clear this is not only Google doing this. However, a huge chest of adtech pipes, tech, AI, data, and content seems to have awakened the DOJ again. It will not surprise me to see Doubleclick become a divestment to appease the DOJ, but the real question is it too late? Only time will tell," Patel says. 

However, Chris Brinkworth, the managing partner, says people forget Google already went through the intense due diligence of gaining authority from all US regulatory bodies to acquire the tools that are part of this conversation. 

He says if he were making a case for Google and defending against this specific suit, he would point out there is a healthy ads market today with competitors like Amazon, Meta, The Trade Desk, Yahoo, Microsoft and even Apple now starting their digital ads business, rather than finding it hard to compete alongside Google. 

For example, Brinkworth says The Trade Desk was built on messaging around 'creating a competitor with Google' and is doing an excellent job of doing that. 

"Google's adtech business has bred and spun out ‘adtech ex-Googlers and industry royalty’ who have gone on to help build not just precious advertising and adtech products in competition to Google. They also have businesses precious to the US economy and solve real-world problems such as Cancer Research and more," Brinkworth tells Campaign Asia-Pacific.

"The only and core caveat on the table is that not only does Google own the plumbing of how, when, where, what and how much advertising costs to deliver ads on the internet, Google also, just like Microsoft Internet Explorer in 1998, own a browser operating system (Chrome) that has a weighty market position. They also own a Mobile OS (Android), the largest search engine and ads business, free email system, Maps, video platform and the largest footprint of analytics tools that demonstrate the success of their work and others." 

Brinkworth adds: "Through all of that footprint, data is collected, tracked, and ads are delivered to a very, very large percentage of the market, including the 'cookies' that Google has the industry hooked on over for the last few years." 

Brinkworth also shares his experience of competing as a 'small start-up' against Google, seeing first-hand the fallout of when Google uses its market position to tremendous effect. 

"The Software-as-a-Service (SaaS) business I cofounded in the USA called TagMan had a strong first-leader position and offering for Tag Management and Attribution. But, when Google launched their ‘Free tag management and attribution solution’ as part of their widespread analytics offering, it cut the legs out from our existing pipeline and all future deals to tremendous effect," explains Brinkworth. 

"Could we continue to grow, pay staff, innovate and get additional funding with no pipeline while competing with Google? Unfortunately, no. Google, in our opinion at the time, also abused their position as owner of the attribution system by only automatically demonstrating the effect of their owned products as successful in attribution. For anything 'non-Google', advertisers and agencies had to 'hand code/ set up' tracking for anything that was not Google, thus showing to the average user, that Google was always delivering the best result." 

He continues: "That is an example of where Alphabet needs to be restrained from leveraging their market power and data scale to stifle innovation and choke out ‘smaller’ players not started by well-funded and well-connected 'ex-Googlers / 'Industry Royalty' etc. This DOJ lawsuit may be a wakeup call for both Apple and Amazon, given their dominant positions on data, infrastructure and operating systems." 

Google has responded to the lawsuit by accusing the DOJ of ignoring 'the enormous competition in the online advertising industry'.

In a blog post, Dan Taylor, vice president of global ads at Google wrote: "The current administration has stressed the value of antitrust enforcement in reducing prices and expanding choice for the American people. We agree. But this lawsuit would have the opposite effect, making it harder for Google to offer efficient advertising tools that benefit publishers, advertisers, and the wider U.S. economy. Antitrust cases shouldn’t penalize companies that offer popular, efficient services, particularly in difficult economic times."