Google Ad Tech Judge 'Concerned' By DOJ's Breakup Timing
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AI-made summary
During closing arguments in the remedies phase of the U.S
Department of Justice's monopolization case against Google, U.S
District Judge Leonie M
Brinkema questioned the practicality and timing of breaking up Google's advertising technology business, particularly given the likelihood of an appeal
The DOJ seeks divestiture of Google's AdX exchange and open-sourcing of its ad auction mechanism, arguing behavioral remedies are insufficient
Google contends that divestiture is unprecedented for anticompetitive tying and advocates for behavioral fixes instead
Judge Brinkema will decide whether structural or behavioral remedies are appropriate, with a decision expected next year.
A Virginia federal judge expressed concern during oral arguments Friday that breaking up Google's advertising placement technology business could take too long to help the market in the face of the company's anticipated appeal of the monopolization ruling won by the U.S. Department of Justice.
Google has pushed back on a proposal to divest its AdX exchange, saying Friday that no court has ever ordered divestiture for anticompetitive tying. The company also noted that divestiture in a conduct case should be a remedy of last resort. (Photo by Klaudia Radecka/NurPhoto via AP)
With the DOJ pushing for the divestiture of Google's AdX exchange, which connects ad servers for website publishers with advertisers, U.S. District Judge Leonie M. Brinkema's only substantial question during the remedies phase's closing arguments was on what good it would do to order a breakup that would take years to implement and would likely be disrupted by Google's appeal.
"I am concerned about the timing of all this," she said from the bench.
Time, Judge Brinkema told DOJ attorney Matthew R. Huppert, "is of the essence" in the rapidly changing ad tech space. She wanted to know how quickly any remedy could go into effect, and if any fixes could be enacted while Google goes to the Fourth Circuit to challenge her ruling holding that the company illegally monopolized two of three targeted markets pairing website publishers looking to sell ads space with advertisers looking to place ads.
Google, Judge Brinkema said, has put its own behavioral remedies proposals on the table that could go into effect quickly.
Both sides have offered similar behavioral fixes. But the DOJ argues those remedies don't go far enough on their own, as they don't address Google's core advantages and leave in place its monopolies that continue to harm publishers and limits ads revenue. Those shortfalls open the court to playing the role of constant overseer, and they come up short on customer concerns that Google cannot be trusted not to find new ways to advantage itself and the ads running through its own servers over ads from rivals.
In addition to an AdX divestiture, the DOJ's main structural request is the forced open-sourcing of the auction mechanism behind ad placement on Google's publisher-side server, DoubleClick for Publishers. If those and other fixes aren't enough to rejuvenate the market, the DOJ wants the "contingent" divestiture of the rest of DFP.
The DOJ and its state attorneys general partners contend that Google's warnings that any breakup would take years are overblown. Huppert responded to the judge by pointing to the department's proposal for Google to divest from AdX within 15 months of the entry of final judgment.
"You don't have to wait to the very end of those timelines," Huppert said. Instead, restoring competition "can happen relatively quickly."
Fellow DOJ attorney Julia Tarver Wood came back to the timing question in rebuttal arguments, contending that imposing behavioral-only fixes — here giving Google's customers more choice over how their ads work and barring it from gaming the ads placement auctions process to favor ads running through its own servers — would be "inherently backward looking." In looking only at past conduct, she said limits on Google couldn't predict all the ways it might try to find ways around those restrictions.
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Structural fixes, on the other hand, "are future-proof," Wood said, taking away Google's ability to get creative. Fifteen months after judgment, "these markets will be free," she said.
When Judge Brinkema responded by noting that the DOJ has not yet found a divestiture buyer, Wood said it would be inappropriate to do so at such an early stage before the details of the divestiture have been set. She said separately that the parties can perform their due diligence on the sale while the appeal plays out.
Judge Brinkema continued to push back, pointing to the "fairly significant changes" that Google says it could implement in a year or less. The longest of the behavioral fixes, a Google attorney said Friday, would take 15 months.
The judge further raised concerns about a company like Microsoft buying up the divested business, and she asserted that the divestiture at this point is at "a fairly abstract level." Her order, she said, must be "concrete."
Judge Brinkema's April liability ruling focused on Google requiring customers to use DFP in order to get full AdX functionality, in what she deemed to be an anticompetitive "tying." She rejected claims that the mergers that gave the company its dominance were anticompetitive, and she dismissed a separate count of monopolizing the servers used by advertisers.
Judge Brinkema's was the second government-won liability ruling against Google, following a D.C. federal judge's September finding over its search monopoly that rejected the DOJ's most sweeping remedies proposals in favor of a mandate to prop up search engine rivals with data and syndicated search results.
European Union antitrust enforcers have also suggested a breakup as part of an enforcement action against Google's ad tech business, which has also drawn litigation from another coalition of state enforcers and from an array of private plaintiffs. Judge Brinkema on Friday pointed to the other U.S. lawsuits targeting Google's ad tech business as the likely force stopping the company from cutting a deal with the DOJ. With the threat of damages over its head backstopped by her liability order, the judge said Google is in "an impossible position."
In pushing for divestiture Friday, Huppert and Wood said the DOJ is agnostic about what that breakup would look like. The form of the divestiture, Huppert said, "is not what matters here."
It would be enough, they said, if Judge Brinkema bases it on the proposal Google engineers mulled internally. That proposal formed the heart of the DOJ's assertions during the 11-day bench trial that began in September that a breakup of Google's core infrastructure is not the gargantuan, years-long task the company claims.
"These engineers thought that it was doable. They did not say it would break the internet," Wood said.
Huppert also warned against allowing Google to "carve out an exemption" to structural relief by simply contending a breakup would be too difficult. Technical complexity should not convey "some kind of immunity," he said.
A key sticking point is over exactly how far Judge Brinkema can go. The DOJ argues that courts are supportive of breakups — and have even punted a company out of a market entirely — over anticompetitive conduct, and not just in merger cases. And Wood noted that unlike in the search case, where Google's monopoly was found to have been acquired legally, here the judge found that Google amassed its monopolies anticompetitively. That means, Wood argued, that it doesn't matter that the judge rejected claims about the transactions that founded Google's ad tech business.
But Google attorney Karen L. Dunn of Dunn Isaacson Rhee LLP said Friday that no court has ever ordered divestiture for anticompetitive tying, and that the DOJ's examples are from merger suits. She also accused the DOJ of repeatedly using selective quotations from testimony and case law.
Divestiture in a conduct case, Dunn said, should be a remedy of last resort. Instead, she said courts are required to see first if less drastic remedies can adequately restore competition, especially to avoid breaking up monopolies that were lawfully formed instead of created because of anticompetitive conduct. She argued that the DOJ's remedies are not sufficiently based on the underlying liability findings, and a breakup would likely hurt functionality on which customers rely.
The department's proposals would also force Google to divest parts of its ad business for things like apps and video that have nothing to do with the open web display ads at the heart of the case, Dunn said.
"When it comes to divestiture, there is only uncertainty and doubt," said Dunn, who assailed the DOJ for not clearly identifying possible buyers. She also argued that open web display ads are already on a steep downward trajectory that a divestiture would risk accelerating. She continued to argue that any divestiture would take years, calling it "one of the largest technical projects in history," and that though Google's internal proposals were far less drastic, they would still take years.
Dunn maintained that the behavioral fixes will be enough to create competition that will drive down prices, pointing to the repeated testimony vouching for Google's proposals to give customers more choice over how their ads placement will work.
"Plaintiffs cannot meet their burden when all of their witnesses [are] testifying to the benefits of behavioral remedies," Dunn said.
She said Google's fixes would stop any future anticompetitive conduct, to be guaranteed by a monitoring trustee for whom the company has proposed "extremely broad powers," including the ability to interview any employee and peek into any source code. And Dunn asserted that the distrust of Google raised by customers during trial is no barrier to the power of an injunction.
"Of course, Google is going to be accountable to an injunction," she said, asserting that the company expects "enforcement from the court."
Judge Brinkema let Dunn give both her main presentation and her rebuttal arguments without substantial questions. The judge closed out the three-hour proceedings by saying she'll be starting with a decision on whether structural relief is required, or if behavioral fixes alone will be sufficient. Either way, she signaled that like her search remedies counterpart, further tweaks may be necessary to hammer out the details of her final mandate.
And Judge Brinkema said she'll try to turn out her decision as soon as possible, but that she couldn't say when. "Probably next year," she said.
The government is represented by Gerard J. Mene of the U.S. Attorney's Office for the Eastern District of Virginia, and Julia Tarver Wood, Matthew R. Huppert, Milosz Gudzowski, Matthew E. Gold, Alvin H. Chu, Jeffrey G. Vernon, Nicholas S. Cheolas, Amanda M. Strick, Craig L. Briskin, David A. Geiger, Andrew L. Kline, Arshia Najafi, G. Charles Nierlich, Andrew Schupanitz, David M. Teslicko Jr. and Michael E. Wolin of the DOJ's Antitrust Division.
The states are represented by their respective attorneys general.
Google is represented by Karen L. Dunn, Jeannie S. Rhee, William A. Isaacson, Jessica E. Phillips, Erin J. Morgan, Martha L. Goodman, Amy J. Mauser, Erica Spevack and Bryon P. Becker of Dunn Isaacson Rhee LLP, Eric Mahr, Andrew J. Ewalt, Julie S. Elmer, Justina Sessions, Lauren B. Kaplin, Claire Leonard, Sara Salem and Tyler Garrett of Freshfields LLP, Daniel S. Bitton, Bradley Justus and David R. Pearl of Axinn Veltrop & Harkrider LLP, and Craig C. Reilly of the Law Office of Craig C. Reilly.
The case is U.S. et al. v. Google LLC, case number 1:23-cv-00108, in the U.S. District Court for the Eastern District of Virginia.
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