Google seeks to avoid ad tech breakup as antitrust trial begins

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By Jody Godoy

ALEXANDRIA, Virginia (Reuters) -Alphabet’s Google is seeking to avoid a forced sale of part of its online advertising business in its latest face-off with U.S. antitrust enforcers that began on Monday in Alexandria, Virginia.

The trial is the government’s next best shot at curbing what a judge has ruled is Google’s monopoly power, after losing a separate bid to make Google sell its Chrome browser earlier this month. Online publishers and rival ad tech developers, some of whom have separately sued Google for damages, will be watching the case closely.

The U.S. Department of Justice and a coalition of states are trying to make Google sell its ad exchange, AdX, where online publishers pay Google a 20% fee to sell ads in auctions that happen instantly when users load websites. The government is also seeking to require Google to make the mechanism that decides the winner of those auctions open source.

Julia Tarver Wood, an attorney with the Justice Department’s antitrust division, said in her opening statement that making Google sell AdX was necessary to restore competition after U.S. District Judge Leonie Brinkema’s ruling that the company illegally tied AdX to its publisher ad server – a platform used by websites to store and manage their digital ad inventory. 

“Leaving Google with the motive and the means to recreate that tie is simply too great a risk,” she said.

Brinkema is presiding over the trial to decide what remedies to impose on the company, which she found holds unlawful monopolies in web advertising technology.

Google attorney Karen Dunn called the DOJ’s proposals “radical and reckless” in her opening statement, saying they would harm competition by taking Google out of the market.

“The DOJ would reserve to itself broad and unparalleled power, control and leverage over a major American technology platform,” she said.

The company has asked Brinkema to take the same cautious approach as a judge in Washington, D.C., who recently rejected most of the DOJ’s proposals in a separate case over Google’s monopoly in online search.

Wood said on Monday that the facts in that case, where Chrome was merely a distribution method for Google’s monopoly and not part of the monopoly itself, bore no resemblance to the ad tech case.  

The cases against Google are part of a larger bipartisan crackdown by the U.S. on big tech firms, which began during President Donald Trump’s first term and includes cases still pending against Meta Platforms, Amazon and Apple.

Google says the DOJ’s proposal is technically unworkable and would lead to prolonged uncertainty for advertisers and publishers.

Google had previously offered to sell AdX, however, during private negotiations to end an EU antitrust investigation, Reuters reported last year. Google’s internal studies on that potential sale may come into evidence at this week’s trial.

Instead of selling AdX, Google has now proposed changing its policies to make it easier for publishers to use and support competing platforms. The DOJ has said such requirements alone are not adequate to restore competition.

Grant Whitmore, an executive at Advance Local, which operates local news outlets in eight states, testified on Monday that Google’s ownership of tools used by advertisers and publishers along with AdX, which sits in the middle, “offers a lot of opportunities for Google to continue to put their thumb on the scale.”

Whitmore said the DOJ’s proposals would eventually restore competition and that Google should be required to sell off its publisher ad server in addition to AdX.

(Reporting by Jody Godoy; Editing by Edmund Klamann)