September 18, 2024 • 32 mins
Ed Zitron is once again joined by Jason Kint, CEO of DCN, for the second episode of Better Offline's coverage of the Department of Justice's second antitrust case against Google, one that alleges that "through Serial Acquisitions and Anticompetitive Auction Manipulation, Google Subverted Competition in Internet Advertising Technologies." This is the second episode of our ongoing coverage of the trial, which Jason will be attending in-person in Washington DC. For more information, visit https://usvgoogleads.com/ and follow Jason at https://x.com/jason_kint
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Also media.
Speaker 2 (00:05):
Hello and welcome to Betrofline. I'm your host ed Ze Trones.
I am joined by Jason Kent, once again, the CEO DCN.
We'll be telling us more about the first week of
(00:27):
the Department of Justice versus Google ads. Jason, thank you
so much for joining.
Speaker 3 (00:31):
Thanks for having me back edm thrilled to be here.
Speaker 2 (00:33):
So what's been happening since we lost spoke? How did
the first week go?
Speaker 1 (00:37):
It's a blur. I mean, it's an impressive operation. I
think we talked about how this district is known as
the Rocket Docket and that's how they got from from
filing a complaint to actual trial in like a year
and a half. So it has that reputation and you
kind of we saw it in action this week. I
mean every day we started at nine am sharp, like
clockwork until six pm with you know, three or four
(01:01):
senior executives testified every day.
Speaker 2 (01:03):
And who's testified so far?
Speaker 3 (01:06):
Three or four ex Google employees. We've heard from.
Speaker 1 (01:10):
We've had CEOs of all the major ad tech companies,
Andrew Casally from Index Exchange see.
Speaker 3 (01:17):
What magnite and Ruba Khan actually it's now called Magnite.
And then well, else do we hear from?
Speaker 1 (01:26):
We heard two different publishers executives, so we kind of
gone down the list. We've had one expert witness, computer
science professor from Carnegie Mellon.
Speaker 2 (01:35):
So and so is this currently the Department of Justices case? Like,
it's them them laying out that's your case.
Speaker 1 (01:42):
Yeah, yeah, this is what they call their case in
chief and they'll take probably about I think two weeks
and then Google have a chance to defend itself.
Speaker 2 (01:49):
So what's the thrust of their argument other than they
have a monopoly.
Speaker 1 (01:52):
Well, let's say you know that there are three different
markets at work here that that they have a monopoly in,
so you you know, some of the back and forth
is still Google trying to break that apart and blur
into one single kind of two side and market they
call it. But but the Justice Department is their complaint
is that again that there's three markets. There's the cell side,
(02:15):
there's the ad exchange, and then there's the buy side.
Google in their opening statement has already tried to make
the into one market that's a two sided market, trying
to lean into a prior Supreme Court decision that involved
American Express. I don't I don't think they'll have much
success there. But once you get past proving that there's
(02:36):
three markets there and that they've got monopoly power in them,
then it's also a tying argument that they've used one
of them, one of those to build up and maintain
market power through through bad conduct to do that.
Speaker 2 (02:52):
So don me if I break me down those three
parts then and then we can get into the A grade.
Speaker 3 (02:58):
Sure. So the the publisher side, the cell side.
Speaker 1 (03:02):
Google has the product that a lot of people still
know as as DFP, which came from their Double Double
Click acquisition. So that's the publisher ad server, and according
to the Just Department's opening statement, they've got like ninety
one percent of the market share for the publisher side.
Speaker 2 (03:22):
And a publisher in this case is like a website
and be like a website the show's Google ads.
Speaker 1 (03:27):
On them exactly, And so that's the server that's it's
kind of the sort I guess what you call the
source of truth. We've always called it, but it's the
it's the ad server that says, hey, I've got this AD,
and then it takes care of deciding who wins it
and ultimately rendering and serving the ad and then actually
dealing with all the accounting.
Speaker 3 (03:48):
And inventory projections, et cetera.
Speaker 1 (03:51):
So that's that's the what's the cell side of the
of this auction market as real time auction market. And
then to go to the other side, you've got on
the buy side. Google has their ad demand that they
have through their ad network that they also have I
think the just Department's arguing they have like eighty some
(04:12):
percent of that market. That's really important because a lot
of the arguments are that you couldn't use other products
and still have access to.
Speaker 3 (04:22):
That Google demand, and so they use that.
Speaker 1 (04:24):
Advertising demand of advertisers that want to spend money in
order to ensure that everyone else stays on their supply chain.
And then in the middle is the ad exchange which
Google is called ad X, and that's the exchange that
acts as the ability to take in bids.
Speaker 3 (04:49):
Of that ad inventory and then clear them.
Speaker 2 (04:51):
And so it's the place where Google sells ads on
Google to Google.
Speaker 1 (04:56):
No, it's the ad X would be the what would
take the cell side, So the publisher ad server, so
all the different websites that are out there across the web,
they would take their inventory and say hey, I've got
this ad impression. I'm requesting somebody to bid on it,
and then Google could handle the bid because of its demand,
(05:17):
but other parties could come into and bid and they
would decide the highest bid.
Speaker 2 (05:23):
So how are they using this as a monopolis? Then?
Where is the other than being on every single transaction?
Are they doing anything else to basically intervene and drive
up price?
Speaker 1 (05:35):
Well, I mean, the couple of the main themes that
are going on throughout the entire week is that that
ad X, which is the exchange, Google takes twenty percent
of the revenue and they've never had to come off
of that price.
Speaker 3 (05:50):
And so.
Speaker 1 (05:53):
Like the CEOs of like index Exchange and these other
exchanges that are out there were testifying and they charge
like half of.
Speaker 3 (06:00):
What Google charges, sometimes even as low as five percent.
Speaker 1 (06:05):
Andrew Casally, the CEO of index Exchange, that they actually
went down to zero and they weren't able to take
away business from Google. So Google is able to keep
that twenty percent and extract monopoly rents. According to one
of their own internal health to give me emails go ahead.
Speaker 2 (06:20):
Forgive my ignorance here. But how do they extra like
is it that just there's a bunch of ad inventory
that Google only has access to.
Speaker 3 (06:28):
It's it's the opposite of it. It's actually it's the.
Speaker 1 (06:32):
That you can only have access to the demand, the
AD spend that Google has if you're using ad X,
so that AD demand won't travel through any other exchange.
Speaker 2 (06:47):
And why is that?
Speaker 1 (06:48):
Is it just because it's a decision by Google and
so yeah, so they made the decision to only allow
their demand to go through ADX.
Speaker 2 (06:57):
So what's stopping people from building their own ad X.
Speaker 1 (07:03):
There's other exchanges out there that try to compete with
with add x, but they're not able to because they
can't get access to all the AD demand and that spend.
It's that critical, and everybody wants to stay on ad X,
and Google has then advantages which we can.
Speaker 3 (07:20):
Go through because of the way the ad X operates.
Speaker 2 (07:23):
That's one of those advantages.
Speaker 3 (07:26):
Then you know that.
Speaker 1 (07:27):
I think the biggest one that was part of the
opening statements is what's now last look they call it.
You know, there was something called first look, which was
really before a real before the auction's really opened up
with header bidding, and first looks kind of just the
simplify It's basically if you put in if a publisher
(07:47):
said Hey, I've got this ad unit and I'm willing
to sell it to anybody, and the floor the lowest
price i'll sell it for is five dollars. Then Google
always had the chance to say I'll take it before
it even goes into the auction. They could say they
had first look, and they could just say I'll take
it for five dollars and a penny basically before they
even put it in the auction. And over time that
(08:09):
transitioned into something called last look, so that when auctions
started to open up because of their privileged position that
Google had, they had something called last look, where after
all the auction took place, they could then look at
the winning bid and decide if they wanted to beat
it by another penny.
Speaker 2 (08:30):
Oh, so they can literally just rig the dice pretty
much as they want.
Speaker 3 (08:35):
Like it. I mean, that's the way it's I mean,
that's the reading in the room.
Speaker 1 (08:39):
And it's interesting because you know, I think one of
the biggest questions always going into this trial was, you know,
it was originally gonna be a jury, now it's a
this judge bring them a was you know, can you
explain these live high speed trading auctions of ad tech,
you know, to the average American, and they're doing a
really good job explained. I think the judge gets it,
(09:01):
the people in the room get it, and you know,
I think Last Look was one of the better examples
where the Justice Department and their opening statement described it
as kind of like a classic silent auction where every
party writes down their bid on the slip of paper.
Speaker 3 (09:17):
It's in a sealed envelope, and you only get to
bid ones.
Speaker 1 (09:22):
And then at the end of the auction, Google gets
to peek into the envelope see what the highest bid
is and say, you know, I'll pay a penny higher.
Speaker 2 (09:28):
For that, And so Google gets the big twice where
everyone else gets to bid ones.
Speaker 1 (09:33):
Essentially, that's essentially what happens, right, and so they get
to pick off wherever they think there's additional value because
of the quality of the impression.
Speaker 2 (09:41):
And this is in the tool that lets you let's
publish a sell adspace, right, Yeah.
Speaker 3 (09:46):
It's basically what it's called an SSP.
Speaker 1 (09:48):
It's the supply side platform that takes their inventory puts
it out for auctions.
Speaker 2 (10:02):
So as as you're finding from my litany of very
simple questions, this stuff is pretty complex. Is the judge
getting it?
Speaker 3 (10:08):
I think she is.
Speaker 2 (10:10):
Yeah.
Speaker 1 (10:10):
I mean they're you know, they're they're coming up with
I think, simple ways to explain it. She's she seems
sharp as attack and she's you know, fair as can be.
I mean, she runs a court room like I've never seen.
But the technical aspects of it, I think they're going
as deep as they really need to. And you know,
they had an expert witness in Carnegie Mellon computer science
(10:34):
professor doctor Robbie and he did a really good job
of of with some visuals of explaining the kind of
the three or four kind of most important ways in
which they were quote unquote rigging or allegedly rigging the auctions.
Speaker 3 (10:50):
And he kind of walked through each of those and
it was it was easy to follow.
Speaker 2 (10:54):
And what was his testimony Exactly what did he get into.
Speaker 1 (10:57):
Well, he walked through that that last look and why
that was so important as an example that we just
talked about. He talked through something called dynamic revenue sharing,
which is a pretty big advantage that Google just gave
itself in addicts also where you know, they the way
(11:19):
he testified was that Google recognized and there's there's tons
of emails that they put up that back this up.
So it's not or maybe past the stage of having
to say their allegations because there was evidence going up
on screens. But what they did was, you know, Google
takes twenty percent, as I mentioned, of the transactions that
go through addicts, and so the other eighty percent goes
(11:42):
to the publisher. So in simple terms, if it's a dollar,
if it's a dollar transaction, Google's going to take twenty cents,
the Publisher's.
Speaker 3 (11:49):
Going to take eighty cents.
Speaker 1 (11:51):
And what they did was they said, you know what,
if we've got this last look and we know that
somebody else is going to win this ad at eighty
one cents, because we're only going to get eighty cents
across to the publisher, why don't we take our revenue
share down off twenty percent to fifteen percent and.
Speaker 3 (12:09):
So then we'll win out and eighty five cents will
go through and will win the bid.
Speaker 1 (12:14):
And so, in Google's own words, in their own email,
they described it as just another way to exploit the
fact that they had last look. So we've got this
last look, why don't we come off of our twenty
percent share if it allows us to win the impression,
and so that's a way to take. You know, it
didn't actually drive that much more revenue through, but what
(12:37):
it did was it gave them a lot more volume
and activity. A lot more of the bids were won
through their exchange rather than the other competitive exchanges that
were out there.
Speaker 3 (12:46):
If that makes sense.
Speaker 2 (12:47):
It does. So you talk about them needing addicts to
like forgive me in for sense to this book. The
demand that they have, that's really their secret source, the
demand that they can source. Why is an Why can't
anyone else get that kind of demand? What is it
that's stopping them?
Speaker 3 (13:04):
Well it starts.
Speaker 1 (13:05):
That's where this is interesting because it kind of starts
with the search trial that they just won last month, right,
and so that remember the the other case over in
DC was that Google has monopoly power over search text
advertising too, and so they've got this platform in which
advertiser going into buy ads in which they've got monopoly power.
Speaker 3 (13:29):
And so trying to convince you know a lot of smaller.
Speaker 1 (13:34):
Business advertisers out there, small market advertisers to go through
another platform is in itself difficult. There's friction there, and
so everybody spends money on Google already, and so they
already come in with that massive advantage, and.
Speaker 2 (13:49):
It's it's more expensive to use other platforms, is it
more burdensome to set up with them?
Speaker 1 (13:54):
You know, we haven't really got into the quality of
the buyside platforms. They seem, you know, to be discribed
as relatively comparable. So it's more a matter of having
one central, you know, interface in which you're buying. So
but it's clearly, you know that money is going to
be coming through from the Google site no matter what,
that's going to go to Google's platforms is going to
go to the wider web. And so they just walk
(14:16):
in with a massive advantage on the demand side. And
so the real, you know, the real challenge is that
that or the issue is that demand should be able
to go to other exchanges, not just to Googles. And
that's where I think Google's trying to set up its
defense is that that they shouldn't have to connect their
demand to other platforms.
Speaker 3 (14:36):
There's no there's no issue with well, we'll get to
the legal piece of it, the.
Speaker 2 (14:39):
Good Yeah, even though that seems a perfectly reasonable thing
to say for anything like this, right connecting. So is
this suggesting that all Google so do all Google properties
run through at X, Like you can't buy advertising on
Google Ads without going through at.
Speaker 1 (14:56):
X, can't buy now, So I'm sorry to Yeah, I
wish I had my visuals we're talking, but you can't
if the advertising demand on the buy side on Google
that has to go through ad X in order to
go to other publishers.
Speaker 3 (15:17):
And so right, yeah, I think that's the same thing
you were saying.
Speaker 2 (15:20):
So, yes, Britty, and that demand is coming from advertisers,
as in people who want to advertise on different platforms,
that's right, But then it goes through ad X and
then Google basically gets the monkey with at the beginning
of the end of it. It's just it feels fairly,
fairly crooked.
Speaker 1 (15:42):
That's the feeling when you're sitting in the room. It
very much does. And there's a lot of, you know,
emails from Google employees where you can tell they feel
like this might be a little crooked, you know.
Speaker 2 (15:51):
So there was the thing The Verge quoted a particular
witness and news corp that seemed quite interesting who said
she felt like they were being held hostage by Google.
Speaker 3 (16:04):
Did you I did? Yeah, she was, she was really
see laser. She no longer is with news courts. She's
actually at Amazon now, which is interesting.
Speaker 1 (16:13):
But she she gave really clear evidence and testimony, and
you know, she she was explaining how there was really
no choice to use any platform but DFP as their
ad server, and therefore with it, it comes with all
these other obligations. And you know, the one thing that
(16:34):
Google did that she seemed to really not like was
there is a point that was important in time where
Google ted to publishers you can no longer have floors
price floors on individual exchanges.
Speaker 3 (16:49):
So yeah, what does that mean?
Speaker 1 (16:51):
Essentially, if you're a publisher, if you're a website and
you're saying, I have this AD that's available, and I
will allow five different exchanges to put forward their highest
bid for it.
Speaker 2 (17:06):
And when you say AD available, you mean like space
on a website too.
Speaker 3 (17:10):
They can add banner on their homepage.
Speaker 1 (17:11):
Yeah, so a banner on their homepage and they're making
it available to let's say five different exchanges. One of
those is ad X, but then let's say also Pobmatic
and Rubicon in exchange, these various SSP's we call them.
Speaker 4 (17:25):
And for a while you could actually set a price
floor essentially the lowest price you were willing to sell
that banner on the homepage, and you could set it
individually based on the exchange.
Speaker 1 (17:38):
So what publishers were often doing was they were putting
a higher price floor for ad X, for Google, for
add X for a number of reasons, you know. And
some of those reasons included wanting to diversify so not
all the revenue and spend was coming from Google because
that could create risk as we see. They also wanted
to manage the quality of the ads because sometimes the
(17:59):
ads is a high quality coming through at X. So
by having a higher price point, it kind of weeded
out some of the garbage. And so there there are
a number of reasons. And at this moment in time,
Google said, you know what, you now need to have
a universal price floor across everyone, and that basically gave
ad X the same, you know, the same advantage, made
sure it had the same price floor as everyone else.
Speaker 2 (18:21):
But how do they maintain a price floor across other platforms,
Like how did they just say if you violate this,
you're off of our ad platform.
Speaker 3 (18:29):
Well, it all it's because again DFP, the ad server
is also Google, so it's the source of truth. Yeah.
Speaker 2 (18:38):
So they so they own the place where ads negotiate,
the place where ads come from, and then the server
that puts the ads on places bing go. That's really
that's good.
Speaker 3 (18:48):
That seems that seems like if you can, if you
can keep it right.
Speaker 2 (18:51):
Yeah, but that might be a problem for them. So
whether on the other really cool like publisher witnesses interesting people.
(19:11):
So on the publisher side for listeners, we're just saying
that's the people putting ads up. Sorry, they're the ones
providing at inventory.
Speaker 1 (19:18):
Yeah, you know, we heard from Gannette was awesome. He
was actually the first witness Gannet, the big newspaper company.
They're head of their ad operations group. That was the
very first witness on Monday. You know, he really set
up the some of the basic foundation of the case. So,
(19:39):
you know, I think it was enough.
Speaker 3 (19:41):
Really from the publisher side.
Speaker 1 (19:42):
Now we're actually deeper in the weeds of the conduct
issues and some of these like you know, the revenue
sharing were going through and some of these other games
that they played. You know, I think the most actually
the most interesting one, if I can digress for a second,
the revenue the dynamic revenue sharing where they would come
off the twenty percent and drop down. They actually came
(20:02):
out with dynamic revenue Sharing two, where they seemed to
realize that, you know, it was hurting their margins coming
down off twenty percent in order to win the transaction,
so they decided they would also go higher than twenty
percent when they had a high enough bid already, and
that would allow them to recoup that margin. And so
(20:23):
they essentially described it as a bank in which they
could as the expert would have said, he described it
as imposing a debt on the publishers, where basically Google
would say, you know what, We're going to go offer
take less than twenty percent revenue share in order to
win and add but then we're going to go ahead
and hold a little debt for you publisher, and we're
going to take that money back later on and pay
(20:44):
ourselves back.
Speaker 2 (20:45):
Wait, so when they came up, so when they reduced
their car to win a bit, they would then take
the remainder of the car that they had lost and
then charge the people they were meant to give money.
So the place where the app was going.
Speaker 1 (20:59):
Yes later but later on, so you know, maybe they
one ad goes through at a fifteen percent revenue share,
that they came down off twenty percent in order to
win that transaction, and then maybe the next time an
AD went through on that site they would.
Speaker 3 (21:14):
Take you know, twenty four percent or whatever it is
in order to pay themselves back.
Speaker 2 (21:18):
How did how the odd my friends, or how the
fuck is that lead? Like? What the that's insane?
Speaker 1 (21:23):
Well, that's what we're going to find out, right, I mean,
imposing a debt on publishers. I wrote that down in
my notebook as soon as he said it, because I
was thinking.
Speaker 3 (21:29):
Yeah, that's what that is. And so if the publisher didn't.
Speaker 1 (21:33):
Know that that debt was being imposed on them, or
if it was unclear or they were being misled, which
seems to be the case often, then you know, that's
significant harm to the publishers. It's it's bit we're talking
billions of dollars if it's a matter of twenty percent
versus eighteen percent, you know, coming down off that number.
Speaker 2 (21:51):
So are there any other harms they've discussed otherwise that
Google's actions of harmed others?
Speaker 1 (21:56):
Well, I mean certainly there's been harm to the other
ad exchange, to the other add tech companies too that haven't.
Speaker 3 (22:02):
Been able to compete because of that monopi power.
Speaker 1 (22:04):
We haven't really seen from the buy side yet in
terms of, you know, how it affects the advertisers.
Speaker 3 (22:12):
We had two different.
Speaker 1 (22:13):
Ad agcy executives testify, you know, it was good, it
was solid, it was kind of foundational. But I want
to really see the just department connect the dots still
on how those harmed advertisers, because it's you know, it's
fairly clear that Google's going to, as its defense, say
you know what, we made a market that yes, we
(22:36):
dominate the buy side the cell side, and we control
the auctions and we do all these funny business games,
but we do it to be more efficient and you know,
and our advertisers are all happy, and so what's the
harm that's I mean, that's clearly where they're going.
Speaker 3 (22:51):
And so I think those dots need to be connected
a bit.
Speaker 2 (22:53):
It feels like they can't really say that that's the
case though, because the way this harms advertises is this
must raise prices or at least manipulate them to benefit Google.
Speaker 1 (23:02):
Yeah, I mean there's there's a boat that and then
you know what we don't know too and I think,
you know, there will be one or two economists that
will probably have testify next week, and I think that's
the part that they'll also land in.
Speaker 2 (23:15):
Has anyone from Google kind of like said anything? Has that?
Have they managed to get anyone to flip on the
Google side?
Speaker 1 (23:21):
There was only only one of the ex employees. I
think all the ex employees were somewhat damaging, but only
one of them that was I think really sympathetic and
the case and uh, he just seemed to have no
love for for the He called it the machine for he.
Speaker 3 (23:40):
Would describe like where he knew things were not right.
Speaker 1 (23:44):
They were they were not doing the right thing as
a company, and his colleagues would agree, and then they
would propose a change, and then it would get denied.
It would come back from the machine and the people
on the other side, he said, that would overrule what
they wanted to do. He never figured out who was
on the other side. He said, he'd kind of comment
(24:07):
on it. I never really knew where that decision was
coming from, but it would come back as a no.
Speaker 3 (24:12):
And so that was I Lipki was yeah, good, good call.
Speaker 2 (24:17):
Yes, Oh yeah, So that's what I'm here for. It's
it's really funny because all of this has been going
on decades. That's what really astonishes me. This isn't even
subtle what's going on. I haven't really dug too deeply
and I know why will into the discovery and actually
have they been providing a bunch of intal So you
(24:38):
said there's a bunch of emails that been in lots
of them.
Speaker 3 (24:41):
There's been a lot, a lot of new documents.
Speaker 1 (24:43):
Yeah, a lot of emails and I'd say about twenty
or thirty are going up on the department site per day.
Speaker 3 (24:50):
And I think I mentioned on our opening session, but
USV Google.
Speaker 1 (24:54):
Ads dot Com has all the exhibits and they're all searchable,
et cetera. They're doing a great job managing that. But
you know, there's a lot of material. And the other
thing that is happening, because we talked about it on
the first show, is they're really landing the bus part
is really landing that there is evidence that we're not seeing.
And so they've asked a number of the ex Google
(25:15):
employees about having their chats automatically deeply lead after twenty
four hours and why they didn't honor the litigation hold
and the judge leaned in several times on that where
she asked questions of the witness and said, why, you know,
when did you get this litigation hold? Why didn't you
preserve your chats? What did you understand? And so I
(25:36):
think that's also going to hang over.
Speaker 3 (25:37):
Them the rest of the trial.
Speaker 2 (25:38):
And has that been a consistent theme because I did, Yeah,
I did see a message with friend of the show,
pravagar Ragavan saying responding to someone and saying, oh wait,
this chat's on the record, which is so bad.
Speaker 3 (25:53):
That's really bad.
Speaker 1 (25:55):
That's really bad. Well, yeah, it's a consistent theme. And
I would get lightly if I were Google. And because
you know, she already said that she was gonna affect
the credibility of every witness, and so you've got Isazar.
We mentioned a guy named Chris Lsala who ran their
publisher operations globally testified this morning Brad Bender a couple
(26:17):
of days ago.
Speaker 3 (26:17):
These are former employees and.
Speaker 1 (26:19):
So you know, even though they weren't I think, really
damaging as witnesses. I think the judge also knows she didn't.
We're not seeing everything probably so and she has to
make that inference.
Speaker 3 (26:31):
And then on top of that.
Speaker 1 (26:33):
I think the first witness every day next week is
also a Google employee. I mean Monday is Monday at
nine am, will be Neil Mohan, who was the CEO
of double Click when they sold it to Google. He
was the he brought the deal in and he continued
to run it for quite some time. And now he's
the CEO of YouTube.
Speaker 3 (26:49):
So so I think there'll be a.
Speaker 1 (26:51):
Really important witness. He's probably one of the guys on
the other side that you know, the machine could.
Speaker 2 (26:58):
So right now, the Department of Justice is making the case.
How long left do we have of that before Google
gets to make their I.
Speaker 1 (27:07):
Would have to imagine at least another week to week
and a half and then Google will have another week
or so probably for their defense and we'll get to
closing arguments by the first week of October.
Speaker 2 (27:20):
Very cool. And how do you think that the Development
of Justice is making the case convincingly?
Speaker 3 (27:26):
I think they are. Yeah.
Speaker 1 (27:27):
I mean Google's strategy in the beginning seemed to be confusion.
It was both to try to confuse the market, that's
not three markets. They've tried to argue that the display
ads are the same as TikTok ads and Facebook ads
and they've lost that. And the opening statement that they did,
(27:49):
which I think it got some reporting on this. It
was Karen Dunn, who's their lead defense attorney from Paul Weitz.
She did the opening statement for half an hour and
she just really tried to sandwich in just she ran
out of time and had.
Speaker 3 (28:02):
To cut on the fly.
Speaker 1 (28:04):
Just a lot of technical terms and a lot of
jargon from the industry. I think they try to confuse
the judge up front. She got some pressed because interesting enough,
she ran out of the room as soon as she
finished at whatever was ten am on Monday, she ran
out of the room to go because she was also
the lead advisor and coach for Kamala Harris for the debate,
(28:27):
and so she literally she opened up on Monday and
she's leading the defense and then she also was helping
to prep Kamala.
Speaker 3 (28:33):
So busy woman.
Speaker 2 (28:36):
Yeah, so, I mean, kind of exciting, but also it
doesn't feel like Google is particularly well prepared for this.
I guess we'll see more in the defense, but it
doesn't seem like that plan is anything other than let's
confuse as much as humanly possible.
Speaker 3 (28:51):
Yeah, I mean, I think I think that is my
read eye it too.
Speaker 1 (28:55):
I think it's a good readout, even though they had
four years, I think because the state ag filed back
in twenty twenty, so they've had time to work through
their defense on this. But I think ultimately it's going
to come down to a legal issue. They're trying to
make the case about something that's called refusal to deal,
which there's some Supreme Court precedent on that they shouldn't
(29:17):
have to provide APIs or do deals with their rivals.
But with the monopoly power that they have, I don't
think that that's really the that's not the case. It's
a tying case where they're saying you can't have our
advertising demand unless you use these.
Speaker 3 (29:34):
Other products where we also have monopoly power, and that's
I think that'll be enough for the just Department to win.
Speaker 2 (29:39):
Also kind of feels like an argument that you could
win much better if it didn't seem like you were
deleting all this stuff.
Speaker 3 (29:47):
That's exactly right, but the last smoke in the room
for sure.
Speaker 2 (29:51):
So well, Jason, thank you so much for joining us
again for this. Where can people find you?
Speaker 1 (29:57):
You can find me on Twitter's probably easiest Jason underscore
Kent KNT and I always look for vback okay.
Speaker 2 (30:04):
And also go to usv Google ads dot com And
if any of this was slightly confusing, they have an
incredible trial resources bit with a glossary of terms with
ad tech explainers, I know, listeners. This is a lot.
It's a lot for me, and I'm steeped in this
crap all the time. But the people running usv Google
who was actually running that, Jason, do you know?
Speaker 1 (30:26):
It's a coalition. But there's a group called check my
Ads that's taking lead on it. And I appreciate the
other mention of it because they're just doing a phenomenal job.
Speaker 2 (30:34):
They really are, and also genuinely a lot of people
I would argue this is undercovered in the tech industry
just because this is the biggest thing happening in tech.
Speaker 1 (30:43):
It is, and there's literally like three hundred billion dollars
of advertising spend you know that goes through through Google.
Speaker 3 (30:49):
So it's what pays for all this journalism.
Speaker 1 (30:51):
I also should mention because it's different than the search
trial that the National Press, New York Times, Washington Post, CNN,
they were all there on the first day, the wire
services were all there, the DC groups like Mlex and
Capital Form were there, but also the industry kind of
advertising trade press at Week, Digital Business Insider, marketing.
Speaker 3 (31:11):
Brew and at exchange you We're all there.
Speaker 1 (31:15):
There must have been thirty reporters there, many of them
were there the whole week, and there were ten cameras.
Speaker 3 (31:20):
I counted outside of the courthouse, and so that actually
was a live attention on it, which is wonderful, which.
Speaker 2 (31:25):
Is great, and I think everyone please go and check
out USB, Google Ads, go check out Jason, and you
can check out my various stuff that you'll hear in
a recorded clip off of this. Thank you for listening, Ei,
Thank you for listening to Better Offline. The editor and
(31:45):
composer of the Better Offline theme song is Metasowski. You
can check out more of his music and audio projects
at Matasowski dot com, m A. T. T OsO w
Ski dot com. You can email me an Easy at
betro line dot com or visit Better Offline dot com
to find more podcast links and of course my newsletter.
I also really recommend you go to chat dot Where's
(32:07):
youread dot at to visit the discord, and go to
our slash Better Offline to check out I'll Reddit. Thank
you so much for listening Better Offline is a production
of cool Zone Media. For more from cool Zone Media,
visit our website cool zonemedia dot com, or check us
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Also media.
Speaker 2 (00:05):
Hello and welcome to Betrofline. I'm your host ed Ze Trones.
I am joined by Jason Kent, once again, the CEO DCN.
We'll be telling us more about the first week of
(00:27):
the Department of Justice versus Google ads. Jason, thank you
so much for joining.
Speaker 3 (00:31):
Thanks for having me back edm thrilled to be here.
Speaker 2 (00:33):
So what's been happening since we lost spoke? How did
the first week go?
Speaker 1 (00:37):
It's a blur. I mean, it's an impressive operation. I
think we talked about how this district is known as
the Rocket Docket and that's how they got from from
filing a complaint to actual trial in like a year
and a half. So it has that reputation and you
kind of we saw it in action this week. I
mean every day we started at nine am sharp, like
clockwork until six pm with you know, three or four
(01:01):
senior executives testified every day.
Speaker 2 (01:03):
And who's testified so far?
Speaker 3 (01:06):
Three or four ex Google employees. We've heard from.
Speaker 1 (01:10):
We've had CEOs of all the major ad tech companies,
Andrew Casally from Index Exchange see.
Speaker 3 (01:17):
What magnite and Ruba Khan actually it's now called Magnite.
And then well, else do we hear from?
Speaker 1 (01:26):
We heard two different publishers executives, so we kind of
gone down the list. We've had one expert witness, computer
science professor from Carnegie Mellon.
Speaker 2 (01:35):
So and so is this currently the Department of Justices case? Like,
it's them them laying out that's your case.
Speaker 1 (01:42):
Yeah, yeah, this is what they call their case in
chief and they'll take probably about I think two weeks
and then Google have a chance to defend itself.
Speaker 2 (01:49):
So what's the thrust of their argument other than they
have a monopoly.
Speaker 1 (01:52):
Well, let's say you know that there are three different
markets at work here that that they have a monopoly in,
so you you know, some of the back and forth
is still Google trying to break that apart and blur
into one single kind of two side and market they
call it. But but the Justice Department is their complaint
is that again that there's three markets. There's the cell side,
(02:15):
there's the ad exchange, and then there's the buy side.
Google in their opening statement has already tried to make
the into one market that's a two sided market, trying
to lean into a prior Supreme Court decision that involved
American Express. I don't I don't think they'll have much
success there. But once you get past proving that there's
(02:36):
three markets there and that they've got monopoly power in them,
then it's also a tying argument that they've used one
of them, one of those to build up and maintain
market power through through bad conduct to do that.
Speaker 2 (02:52):
So don me if I break me down those three
parts then and then we can get into the A grade.
Speaker 3 (02:58):
Sure. So the the publisher side, the cell side.
Speaker 1 (03:02):
Google has the product that a lot of people still
know as as DFP, which came from their Double Double
Click acquisition. So that's the publisher ad server, and according
to the Just Department's opening statement, they've got like ninety
one percent of the market share for the publisher side.
Speaker 2 (03:22):
And a publisher in this case is like a website
and be like a website the show's Google ads.
Speaker 1 (03:27):
On them exactly, And so that's the server that's it's
kind of the sort I guess what you call the
source of truth. We've always called it, but it's the
it's the ad server that says, hey, I've got this AD,
and then it takes care of deciding who wins it
and ultimately rendering and serving the ad and then actually
dealing with all the accounting.
Speaker 3 (03:48):
And inventory projections, et cetera.
Speaker 1 (03:51):
So that's that's the what's the cell side of the
of this auction market as real time auction market. And
then to go to the other side, you've got on
the buy side. Google has their ad demand that they
have through their ad network that they also have I
think the just Department's arguing they have like eighty some
(04:12):
percent of that market. That's really important because a lot
of the arguments are that you couldn't use other products
and still have access to.
Speaker 3 (04:22):
That Google demand, and so they use that.
Speaker 1 (04:24):
Advertising demand of advertisers that want to spend money in
order to ensure that everyone else stays on their supply chain.
And then in the middle is the ad exchange which
Google is called ad X, and that's the exchange that
acts as the ability to take in bids.
Speaker 3 (04:49):
Of that ad inventory and then clear them.
Speaker 2 (04:51):
And so it's the place where Google sells ads on
Google to Google.
Speaker 1 (04:56):
No, it's the ad X would be the what would
take the cell side, So the publisher ad server, so
all the different websites that are out there across the web,
they would take their inventory and say hey, I've got
this ad impression. I'm requesting somebody to bid on it,
and then Google could handle the bid because of its demand,
(05:17):
but other parties could come into and bid and they
would decide the highest bid.
Speaker 2 (05:23):
So how are they using this as a monopolis? Then?
Where is the other than being on every single transaction?
Are they doing anything else to basically intervene and drive
up price?
Speaker 1 (05:35):
Well, I mean, the couple of the main themes that
are going on throughout the entire week is that that
ad X, which is the exchange, Google takes twenty percent
of the revenue and they've never had to come off
of that price.
Speaker 3 (05:50):
And so.
Speaker 1 (05:53):
Like the CEOs of like index Exchange and these other
exchanges that are out there were testifying and they charge
like half of.
Speaker 3 (06:00):
What Google charges, sometimes even as low as five percent.
Speaker 1 (06:05):
Andrew Casally, the CEO of index Exchange, that they actually
went down to zero and they weren't able to take
away business from Google. So Google is able to keep
that twenty percent and extract monopoly rents. According to one
of their own internal health to give me emails go ahead.
Speaker 2 (06:20):
Forgive my ignorance here. But how do they extra like
is it that just there's a bunch of ad inventory
that Google only has access to.
Speaker 3 (06:28):
It's it's the opposite of it. It's actually it's the.
Speaker 1 (06:32):
That you can only have access to the demand, the
AD spend that Google has if you're using ad X,
so that AD demand won't travel through any other exchange.
Speaker 2 (06:47):
And why is that?
Speaker 1 (06:48):
Is it just because it's a decision by Google and
so yeah, so they made the decision to only allow
their demand to go through ADX.
Speaker 2 (06:57):
So what's stopping people from building their own ad X.
Speaker 1 (07:03):
There's other exchanges out there that try to compete with
with add x, but they're not able to because they
can't get access to all the AD demand and that spend.
It's that critical, and everybody wants to stay on ad X,
and Google has then advantages which we can.
Speaker 3 (07:20):
Go through because of the way the ad X operates.
Speaker 2 (07:23):
That's one of those advantages.
Speaker 3 (07:26):
Then you know that.
Speaker 1 (07:27):
I think the biggest one that was part of the
opening statements is what's now last look they call it.
You know, there was something called first look, which was
really before a real before the auction's really opened up
with header bidding, and first looks kind of just the
simplify It's basically if you put in if a publisher
(07:47):
said Hey, I've got this ad unit and I'm willing
to sell it to anybody, and the floor the lowest
price i'll sell it for is five dollars. Then Google
always had the chance to say I'll take it before
it even goes into the auction. They could say they
had first look, and they could just say I'll take
it for five dollars and a penny basically before they
even put it in the auction. And over time that
(08:09):
transitioned into something called last look, so that when auctions
started to open up because of their privileged position that
Google had, they had something called last look, where after
all the auction took place, they could then look at
the winning bid and decide if they wanted to beat
it by another penny.
Speaker 2 (08:30):
Oh, so they can literally just rig the dice pretty
much as they want.
Speaker 3 (08:35):
Like it. I mean, that's the way it's I mean,
that's the reading in the room.
Speaker 1 (08:39):
And it's interesting because you know, I think one of
the biggest questions always going into this trial was, you know,
it was originally gonna be a jury, now it's a
this judge bring them a was you know, can you
explain these live high speed trading auctions of ad tech,
you know, to the average American, and they're doing a
really good job explained. I think the judge gets it,
(09:01):
the people in the room get it, and you know,
I think Last Look was one of the better examples
where the Justice Department and their opening statement described it
as kind of like a classic silent auction where every
party writes down their bid on the slip of paper.
Speaker 3 (09:17):
It's in a sealed envelope, and you only get to
bid ones.
Speaker 1 (09:22):
And then at the end of the auction, Google gets
to peek into the envelope see what the highest bid
is and say, you know, I'll pay a penny higher.
Speaker 2 (09:28):
For that, And so Google gets the big twice where
everyone else gets to bid ones.
Speaker 1 (09:33):
Essentially, that's essentially what happens, right, and so they get
to pick off wherever they think there's additional value because
of the quality of the impression.
Speaker 2 (09:41):
And this is in the tool that lets you let's
publish a sell adspace, right, Yeah.
Speaker 3 (09:46):
It's basically what it's called an SSP.
Speaker 1 (09:48):
It's the supply side platform that takes their inventory puts
it out for auctions.
Speaker 2 (10:02):
So as as you're finding from my litany of very
simple questions, this stuff is pretty complex. Is the judge
getting it?
Speaker 3 (10:08):
I think she is.
Speaker 2 (10:10):
Yeah.
Speaker 1 (10:10):
I mean they're you know, they're they're coming up with
I think, simple ways to explain it. She's she seems
sharp as attack and she's you know, fair as can be.
I mean, she runs a court room like I've never seen.
But the technical aspects of it, I think they're going
as deep as they really need to. And you know,
they had an expert witness in Carnegie Mellon computer science
(10:34):
professor doctor Robbie and he did a really good job
of of with some visuals of explaining the kind of
the three or four kind of most important ways in
which they were quote unquote rigging or allegedly rigging the auctions.
Speaker 3 (10:50):
And he kind of walked through each of those and
it was it was easy to follow.
Speaker 2 (10:54):
And what was his testimony Exactly what did he get into.
Speaker 1 (10:57):
Well, he walked through that that last look and why
that was so important as an example that we just
talked about. He talked through something called dynamic revenue sharing,
which is a pretty big advantage that Google just gave
itself in addicts also where you know, they the way
(11:19):
he testified was that Google recognized and there's there's tons
of emails that they put up that back this up.
So it's not or maybe past the stage of having
to say their allegations because there was evidence going up
on screens. But what they did was, you know, Google
takes twenty percent, as I mentioned, of the transactions that
go through addicts, and so the other eighty percent goes
(11:42):
to the publisher. So in simple terms, if it's a dollar,
if it's a dollar transaction, Google's going to take twenty cents,
the Publisher's.
Speaker 3 (11:49):
Going to take eighty cents.
Speaker 1 (11:51):
And what they did was they said, you know what,
if we've got this last look and we know that
somebody else is going to win this ad at eighty
one cents, because we're only going to get eighty cents
across to the publisher, why don't we take our revenue
share down off twenty percent to fifteen percent and.
Speaker 3 (12:09):
So then we'll win out and eighty five cents will
go through and will win the bid.
Speaker 1 (12:14):
And so, in Google's own words, in their own email,
they described it as just another way to exploit the
fact that they had last look. So we've got this
last look, why don't we come off of our twenty
percent share if it allows us to win the impression,
and so that's a way to take. You know, it
didn't actually drive that much more revenue through, but what
(12:37):
it did was it gave them a lot more volume
and activity. A lot more of the bids were won
through their exchange rather than the other competitive exchanges that
were out there.
Speaker 3 (12:46):
If that makes sense.
Speaker 2 (12:47):
It does. So you talk about them needing addicts to
like forgive me in for sense to this book. The
demand that they have, that's really their secret source, the
demand that they can source. Why is an Why can't
anyone else get that kind of demand? What is it
that's stopping them?
Speaker 3 (13:04):
Well it starts.
Speaker 1 (13:05):
That's where this is interesting because it kind of starts
with the search trial that they just won last month, right,
and so that remember the the other case over in
DC was that Google has monopoly power over search text
advertising too, and so they've got this platform in which
advertiser going into buy ads in which they've got monopoly power.
Speaker 3 (13:29):
And so trying to convince you know a lot of smaller.
Speaker 1 (13:34):
Business advertisers out there, small market advertisers to go through
another platform is in itself difficult. There's friction there, and
so everybody spends money on Google already, and so they
already come in with that massive advantage, and.
Speaker 2 (13:49):
It's it's more expensive to use other platforms, is it
more burdensome to set up with them?
Speaker 1 (13:54):
You know, we haven't really got into the quality of
the buyside platforms. They seem, you know, to be discribed
as relatively comparable. So it's more a matter of having
one central, you know, interface in which you're buying. So
but it's clearly, you know that money is going to
be coming through from the Google site no matter what,
that's going to go to Google's platforms is going to
go to the wider web. And so they just walk
(14:16):
in with a massive advantage on the demand side. And
so the real, you know, the real challenge is that
that or the issue is that demand should be able
to go to other exchanges, not just to Googles. And
that's where I think Google's trying to set up its
defense is that that they shouldn't have to connect their
demand to other platforms.
Speaker 3 (14:36):
There's no there's no issue with well, we'll get to
the legal piece of it, the.
Speaker 2 (14:39):
Good Yeah, even though that seems a perfectly reasonable thing
to say for anything like this, right connecting. So is
this suggesting that all Google so do all Google properties
run through at X, Like you can't buy advertising on
Google Ads without going through at.
Speaker 1 (14:56):
X, can't buy now, So I'm sorry to Yeah, I
wish I had my visuals we're talking, but you can't
if the advertising demand on the buy side on Google
that has to go through ad X in order to
go to other publishers.
Speaker 3 (15:17):
And so right, yeah, I think that's the same thing
you were saying.
Speaker 2 (15:20):
So, yes, Britty, and that demand is coming from advertisers,
as in people who want to advertise on different platforms,
that's right, But then it goes through ad X and
then Google basically gets the monkey with at the beginning
of the end of it. It's just it feels fairly,
fairly crooked.
Speaker 1 (15:42):
That's the feeling when you're sitting in the room. It
very much does. And there's a lot of, you know,
emails from Google employees where you can tell they feel
like this might be a little crooked, you know.
Speaker 2 (15:51):
So there was the thing The Verge quoted a particular
witness and news corp that seemed quite interesting who said
she felt like they were being held hostage by Google.
Speaker 3 (16:04):
Did you I did? Yeah, she was, she was really
see laser. She no longer is with news courts. She's
actually at Amazon now, which is interesting.
Speaker 1 (16:13):
But she she gave really clear evidence and testimony, and
you know, she she was explaining how there was really
no choice to use any platform but DFP as their
ad server, and therefore with it, it comes with all
these other obligations. And you know, the one thing that
(16:34):
Google did that she seemed to really not like was
there is a point that was important in time where
Google ted to publishers you can no longer have floors
price floors on individual exchanges.
Speaker 3 (16:49):
So yeah, what does that mean?
Speaker 1 (16:51):
Essentially, if you're a publisher, if you're a website and
you're saying, I have this AD that's available, and I
will allow five different exchanges to put forward their highest
bid for it.
Speaker 2 (17:06):
And when you say AD available, you mean like space
on a website too.
Speaker 3 (17:10):
They can add banner on their homepage.
Speaker 1 (17:11):
Yeah, so a banner on their homepage and they're making
it available to let's say five different exchanges. One of
those is ad X, but then let's say also Pobmatic
and Rubicon in exchange, these various SSP's we call them.
Speaker 4 (17:25):
And for a while you could actually set a price
floor essentially the lowest price you were willing to sell
that banner on the homepage, and you could set it
individually based on the exchange.
Speaker 1 (17:38):
So what publishers were often doing was they were putting
a higher price floor for ad X, for Google, for
add X for a number of reasons, you know. And
some of those reasons included wanting to diversify so not
all the revenue and spend was coming from Google because
that could create risk as we see. They also wanted
to manage the quality of the ads because sometimes the
(17:59):
ads is a high quality coming through at X. So
by having a higher price point, it kind of weeded
out some of the garbage. And so there there are
a number of reasons. And at this moment in time,
Google said, you know what, you now need to have
a universal price floor across everyone, and that basically gave
ad X the same, you know, the same advantage, made
sure it had the same price floor as everyone else.
Speaker 2 (18:21):
But how do they maintain a price floor across other platforms,
Like how did they just say if you violate this,
you're off of our ad platform.
Speaker 3 (18:29):
Well, it all it's because again DFP, the ad server
is also Google, so it's the source of truth. Yeah.
Speaker 2 (18:38):
So they so they own the place where ads negotiate,
the place where ads come from, and then the server
that puts the ads on places bing go. That's really
that's good.
Speaker 3 (18:48):
That seems that seems like if you can, if you
can keep it right.
Speaker 2 (18:51):
Yeah, but that might be a problem for them. So
whether on the other really cool like publisher witnesses interesting people.
(19:11):
So on the publisher side for listeners, we're just saying
that's the people putting ads up. Sorry, they're the ones
providing at inventory.
Speaker 1 (19:18):
Yeah, you know, we heard from Gannette was awesome. He
was actually the first witness Gannet, the big newspaper company.
They're head of their ad operations group. That was the
very first witness on Monday. You know, he really set
up the some of the basic foundation of the case. So,
(19:39):
you know, I think it was enough.
Speaker 3 (19:41):
Really from the publisher side.
Speaker 1 (19:42):
Now we're actually deeper in the weeds of the conduct
issues and some of these like you know, the revenue
sharing were going through and some of these other games
that they played. You know, I think the most actually
the most interesting one, if I can digress for a second,
the revenue the dynamic revenue sharing where they would come
off the twenty percent and drop down. They actually came
(20:02):
out with dynamic revenue Sharing two, where they seemed to
realize that, you know, it was hurting their margins coming
down off twenty percent in order to win the transaction,
so they decided they would also go higher than twenty
percent when they had a high enough bid already, and
that would allow them to recoup that margin. And so
(20:23):
they essentially described it as a bank in which they
could as the expert would have said, he described it
as imposing a debt on the publishers, where basically Google
would say, you know what, We're going to go offer
take less than twenty percent revenue share in order to
win and add but then we're going to go ahead
and hold a little debt for you publisher, and we're
going to take that money back later on and pay
(20:44):
ourselves back.
Speaker 2 (20:45):
Wait, so when they came up, so when they reduced
their car to win a bit, they would then take
the remainder of the car that they had lost and
then charge the people they were meant to give money.
So the place where the app was going.
Speaker 1 (20:59):
Yes later but later on, so you know, maybe they
one ad goes through at a fifteen percent revenue share,
that they came down off twenty percent in order to
win that transaction, and then maybe the next time an
AD went through on that site they would.
Speaker 3 (21:14):
Take you know, twenty four percent or whatever it is
in order to pay themselves back.
Speaker 2 (21:18):
How did how the odd my friends, or how the
fuck is that lead? Like? What the that's insane?
Speaker 1 (21:23):
Well, that's what we're going to find out, right, I mean,
imposing a debt on publishers. I wrote that down in
my notebook as soon as he said it, because I
was thinking.
Speaker 3 (21:29):
Yeah, that's what that is. And so if the publisher didn't.
Speaker 1 (21:33):
Know that that debt was being imposed on them, or
if it was unclear or they were being misled, which
seems to be the case often, then you know, that's
significant harm to the publishers. It's it's bit we're talking
billions of dollars if it's a matter of twenty percent
versus eighteen percent, you know, coming down off that number.
Speaker 2 (21:51):
So are there any other harms they've discussed otherwise that
Google's actions of harmed others?
Speaker 1 (21:56):
Well, I mean certainly there's been harm to the other
ad exchange, to the other add tech companies too that haven't.
Speaker 3 (22:02):
Been able to compete because of that monopi power.
Speaker 1 (22:04):
We haven't really seen from the buy side yet in
terms of, you know, how it affects the advertisers.
Speaker 3 (22:12):
We had two different.
Speaker 1 (22:13):
Ad agcy executives testify, you know, it was good, it
was solid, it was kind of foundational. But I want
to really see the just department connect the dots still
on how those harmed advertisers, because it's you know, it's
fairly clear that Google's going to, as its defense, say
you know what, we made a market that yes, we
(22:36):
dominate the buy side the cell side, and we control
the auctions and we do all these funny business games,
but we do it to be more efficient and you know,
and our advertisers are all happy, and so what's the
harm that's I mean, that's clearly where they're going.
Speaker 3 (22:51):
And so I think those dots need to be connected
a bit.
Speaker 2 (22:53):
It feels like they can't really say that that's the
case though, because the way this harms advertises is this
must raise prices or at least manipulate them to benefit Google.
Speaker 1 (23:02):
Yeah, I mean there's there's a boat that and then
you know what we don't know too and I think,
you know, there will be one or two economists that
will probably have testify next week, and I think that's
the part that they'll also land in.
Speaker 2 (23:15):
Has anyone from Google kind of like said anything? Has that?
Have they managed to get anyone to flip on the
Google side?
Speaker 1 (23:21):
There was only only one of the ex employees. I
think all the ex employees were somewhat damaging, but only
one of them that was I think really sympathetic and
the case and uh, he just seemed to have no
love for for the He called it the machine for he.
Speaker 3 (23:40):
Would describe like where he knew things were not right.
Speaker 1 (23:44):
They were they were not doing the right thing as
a company, and his colleagues would agree, and then they
would propose a change, and then it would get denied.
It would come back from the machine and the people
on the other side, he said, that would overrule what
they wanted to do. He never figured out who was
on the other side. He said, he'd kind of comment
(24:07):
on it. I never really knew where that decision was
coming from, but it would come back as a no.
Speaker 3 (24:12):
And so that was I Lipki was yeah, good, good call.
Speaker 2 (24:17):
Yes, Oh yeah, So that's what I'm here for. It's
it's really funny because all of this has been going
on decades. That's what really astonishes me. This isn't even
subtle what's going on. I haven't really dug too deeply
and I know why will into the discovery and actually
have they been providing a bunch of intal So you
(24:38):
said there's a bunch of emails that been in lots
of them.
Speaker 3 (24:41):
There's been a lot, a lot of new documents.
Speaker 1 (24:43):
Yeah, a lot of emails and I'd say about twenty
or thirty are going up on the department site per day.
Speaker 3 (24:50):
And I think I mentioned on our opening session, but
USV Google.
Speaker 1 (24:54):
Ads dot Com has all the exhibits and they're all searchable,
et cetera. They're doing a great job managing that. But
you know, there's a lot of material. And the other
thing that is happening, because we talked about it on
the first show, is they're really landing the bus part
is really landing that there is evidence that we're not seeing.
And so they've asked a number of the ex Google
(25:15):
employees about having their chats automatically deeply lead after twenty
four hours and why they didn't honor the litigation hold
and the judge leaned in several times on that where
she asked questions of the witness and said, why, you know,
when did you get this litigation hold? Why didn't you
preserve your chats? What did you understand? And so I
(25:36):
think that's also going to hang over.
Speaker 3 (25:37):
Them the rest of the trial.
Speaker 2 (25:38):
And has that been a consistent theme because I did, Yeah,
I did see a message with friend of the show,
pravagar Ragavan saying responding to someone and saying, oh wait,
this chat's on the record, which is so bad.
Speaker 3 (25:53):
That's really bad.
Speaker 1 (25:55):
That's really bad. Well, yeah, it's a consistent theme. And
I would get lightly if I were Google. And because
you know, she already said that she was gonna affect
the credibility of every witness, and so you've got Isazar.
We mentioned a guy named Chris Lsala who ran their
publisher operations globally testified this morning Brad Bender a couple
(26:17):
of days ago.
Speaker 3 (26:17):
These are former employees and.
Speaker 1 (26:19):
So you know, even though they weren't I think, really
damaging as witnesses. I think the judge also knows she didn't.
We're not seeing everything probably so and she has to
make that inference.
Speaker 3 (26:31):
And then on top of that.
Speaker 1 (26:33):
I think the first witness every day next week is
also a Google employee. I mean Monday is Monday at
nine am, will be Neil Mohan, who was the CEO
of double Click when they sold it to Google. He
was the he brought the deal in and he continued
to run it for quite some time. And now he's
the CEO of YouTube.
Speaker 3 (26:49):
So so I think there'll be a.
Speaker 1 (26:51):
Really important witness. He's probably one of the guys on
the other side that you know, the machine could.
Speaker 2 (26:58):
So right now, the Department of Justice is making the case.
How long left do we have of that before Google
gets to make their I.
Speaker 1 (27:07):
Would have to imagine at least another week to week
and a half and then Google will have another week
or so probably for their defense and we'll get to
closing arguments by the first week of October.
Speaker 2 (27:20):
Very cool. And how do you think that the Development
of Justice is making the case convincingly?
Speaker 3 (27:26):
I think they are. Yeah.
Speaker 1 (27:27):
I mean Google's strategy in the beginning seemed to be confusion.
It was both to try to confuse the market, that's
not three markets. They've tried to argue that the display
ads are the same as TikTok ads and Facebook ads
and they've lost that. And the opening statement that they did,
(27:49):
which I think it got some reporting on this. It
was Karen Dunn, who's their lead defense attorney from Paul Weitz.
She did the opening statement for half an hour and
she just really tried to sandwich in just she ran
out of time and had.
Speaker 3 (28:02):
To cut on the fly.
Speaker 1 (28:04):
Just a lot of technical terms and a lot of
jargon from the industry. I think they try to confuse
the judge up front. She got some pressed because interesting enough,
she ran out of the room as soon as she
finished at whatever was ten am on Monday, she ran
out of the room to go because she was also
the lead advisor and coach for Kamala Harris for the debate,
(28:27):
and so she literally she opened up on Monday and
she's leading the defense and then she also was helping
to prep Kamala.
Speaker 3 (28:33):
So busy woman.
Speaker 2 (28:36):
Yeah, so, I mean, kind of exciting, but also it
doesn't feel like Google is particularly well prepared for this.
I guess we'll see more in the defense, but it
doesn't seem like that plan is anything other than let's
confuse as much as humanly possible.
Speaker 3 (28:51):
Yeah, I mean, I think I think that is my
read eye it too.
Speaker 1 (28:55):
I think it's a good readout, even though they had
four years, I think because the state ag filed back
in twenty twenty, so they've had time to work through
their defense on this. But I think ultimately it's going
to come down to a legal issue. They're trying to
make the case about something that's called refusal to deal,
which there's some Supreme Court precedent on that they shouldn't
(29:17):
have to provide APIs or do deals with their rivals.
But with the monopoly power that they have, I don't
think that that's really the that's not the case. It's
a tying case where they're saying you can't have our
advertising demand unless you use these.
Speaker 3 (29:34):
Other products where we also have monopoly power, and that's
I think that'll be enough for the just Department to win.
Speaker 2 (29:39):
Also kind of feels like an argument that you could
win much better if it didn't seem like you were
deleting all this stuff.
Speaker 3 (29:47):
That's exactly right, but the last smoke in the room
for sure.
Speaker 2 (29:51):
So well, Jason, thank you so much for joining us
again for this. Where can people find you?
Speaker 1 (29:57):
You can find me on Twitter's probably easiest Jason underscore
Kent KNT and I always look for vback okay.
Speaker 2 (30:04):
And also go to usv Google ads dot com And
if any of this was slightly confusing, they have an
incredible trial resources bit with a glossary of terms with
ad tech explainers, I know, listeners. This is a lot.
It's a lot for me, and I'm steeped in this
crap all the time. But the people running usv Google
who was actually running that, Jason, do you know?
Speaker 1 (30:26):
It's a coalition. But there's a group called check my
Ads that's taking lead on it. And I appreciate the
other mention of it because they're just doing a phenomenal job.
Speaker 2 (30:34):
They really are, and also genuinely a lot of people
I would argue this is undercovered in the tech industry
just because this is the biggest thing happening in tech.
Speaker 1 (30:43):
It is, and there's literally like three hundred billion dollars
of advertising spend you know that goes through through Google.
Speaker 3 (30:49):
So it's what pays for all this journalism.
Speaker 1 (30:51):
I also should mention because it's different than the search
trial that the National Press, New York Times, Washington Post, CNN,
they were all there on the first day, the wire
services were all there, the DC groups like Mlex and
Capital Form were there, but also the industry kind of
advertising trade press at Week, Digital Business Insider, marketing.
Speaker 3 (31:11):
Brew and at exchange you We're all there.
Speaker 1 (31:15):
There must have been thirty reporters there, many of them
were there the whole week, and there were ten cameras.
Speaker 3 (31:20):
I counted outside of the courthouse, and so that actually
was a live attention on it, which is wonderful, which.
Speaker 2 (31:25):
Is great, and I think everyone please go and check
out USB, Google Ads, go check out Jason, and you
can check out my various stuff that you'll hear in
a recorded clip off of this. Thank you for listening, Ei,
Thank you for listening to Better Offline. The editor and
(31:45):
composer of the Better Offline theme song is Metasowski. You
can check out more of his music and audio projects
at Matasowski dot com, m A. T. T OsO w
Ski dot com. You can email me an Easy at
betro line dot com or visit Better Offline dot com
to find more podcast links and of course my newsletter.
I also really recommend you go to chat dot Where's
(32:07):
youread dot at to visit the discord, and go to
our slash Better Offline to check out I'll Reddit. Thank
you so much for listening Better Offline is a production
of cool Zone Media. For more from cool Zone Media,
visit our website cool zonemedia dot com, or check us
out on the iHeartRadio app, Apple Podcasts, or wherever you
get your podcasts.
Host
Ed Zitron
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