Ad Tech Decision Against Google Rests on Shaky Legal Reasoning

The recent landmark ruling against Google in the Justice Department’s ad tech case has been heralded by many as a straightforward, even laudable, effort to hold Big Tech accountable. But in reality, Judge Leonie Brinkema’s mixed decision—finding that while Google’s acquisitions of DoubleClick and Admeld were not anticompetitive, it engaged in illegal tying and monopolized the ad server and ad exchange markets—is a regrettable misstep. The ruling rests on shaky legal foundations and risks severe knock-on consequences for innovation.

Here are just a few of Judge Brinkema’s mistakes.

First, on the question of whether Google has monopoly power, Judge Brinkema doubled down on the DOJ’s contrived “open web display” advertising market definition. This framing conveniently excludes the massive amount of digital advertising that occurs through closed ecosystems like Amazon and Facebook, mobile apps, and non-display formats like video or native ads. For example, in 2022, a whopping 55 percent of display ad spend was for mobile apps.

To be sure, while there may be some cases where these exclusions make sense, such as a publisher who doesn’t have a mobile app, applying these restrictions broadly without identifying targeted customer groups misrepresents how online advertising generally works in practice.

Second, even if Google did enjoy monopoly power in the ad server and ad exchange markets, the DOJ still needs to show that it engaged in anticompetitive conduct to maintain that power. From the litany of practices DOJ alleged to be anticompetitive, Judge Brinkema zeroed in on one in particular: Google’s decision to restrict real-time access to its ad exchange (AdX) to users of DoubleClick for Publishers (DFP), its ad server offering that allows publishers to place and manage bids.

But here, Judge Brinkema seems to have just gotten the law wrong. Rather than apply the self-preferencing or refusal to deal standards that are utilized in monopolization cases, she relied on a “tying” standard from an entirely different section of the Sherman Act. But it is a poor fit for the facts. Real-time access to AdX is not a separate product merely offered to consumers, but a design decision Google makes about how it interoperates with its ad server competitors.

Third, even if the DOJ is right that Google engaged in anticompetitive “tying” of AdX to DFP, that would not constitute monopolization of the ad exchange market. In fact, Judge Brinkema treats the ad exchange market as a transaction platform—a framing that, contrary to her opinion, arguably should have applied to the ad tech ecosystem as a whole. And, under the Supreme Court’s decision in Amex, this “platform” designation requires her to identify conduct that harmed both sides of the ad exchange market: publishers and advertisers.

Yet, the opinion only makes summary conclusions about Google’s Last Look and First Look policies—which allow publishers to secure better bids through AdX—and its Unified Pricing Rules—which benefit advertisers by preventing publishers from “cheating” with inconsistent bids on multiple ad servers. Judge Brinkema fails to provide any detailed explanation for how these practices harmed both sides of an ad exchange market she herself suggested during the trial was “highly competitive.”

Finally, Judge Brinkema’s decision astonishingly credits none of Google’s many, often common-sense, justifications for its practices. For example, take the restriction on real-time AdX access to DFP. Google has a clear rationale: it does not want rival ad servers free-riding on the technology it has invested heavily in.

Indeed, Google’s ad tech innovation has helped make digital advertising the thriving industry it is today, rather than one hobbled by truly anticompetitive behavior. U.S. display ad spending has surged from $18 billion in 2008 to nearly $137 billion in 2022. That kind of growth belies the notion of a market monopolized by a company acting without any procompetitive justifications for its core business practices.

Judge Brinkema’s decision represents a tremendous victory for the DOJ in its ongoing crusade to effectively destroy one of America’s most innovative companies, all while the administration claims to support American competitiveness and the need to outpace China in the AI race. But rather than being able to spend more time focusing on new revolutionary breakthroughs like its Willow quantum computing chip, Google is one step closer to being forced to divest the ad tech tools it pioneered and which, in many ways, underpinned the internet’s explosive growth over the past two decades. That’s not a win for America.