Regulators all over the world are more intensely scrutinizing Google’s sprawling empire and questioning whether its dominance in ad tech, search and mobile operating systems is inhibiting innovation in the wider market. Some now believe Google may voluntarily divest itself of its less lucrative assets like its ad stack in an attempt to convince governments it’s not a monopoly guilty of stifling innovation in online ad targeting and delivery. Alternatively, the U.S. government could force Google’s hand.
Either outcome would result an ad-tech market that looks significantly different than the one we have today.
This is not the first time Big Tech has faced regulatory scrutiny, but industry sources believe a major change to how third parties can access Google’s ad-tech stack is on the horizon. As Attorney General William Barr intensifies his focus on Big Tech’s dominance of certain sectors (and in online media, that means Google), some insiders believe it’s just a case of whether Google will make such changes of its own volition or the government will force it to.
This week, on the same day the Senate Judiciary Committee explored “self-preferencing by digital platforms” in a hearing on Capitol Hill, Sens. Josh Hawley, R-Mo., and Richard Blumenthal, D-Conn., jointly penned a letter to the U.S. Department of Justice calling out Google’s dominance of the search market.
This came soon after the DOJ hosted a conference in the wake of the IAB’s annual leadership meeting at which industry experts and investors were invited to share opinions on Google’s dominance of the sector. In particular, investigators were interested in whether or not the dominance of Big Tech is stifling investors’ willingness to fund startup alternatives in the sector.
The complex maze that is Google’s ad stack
Sources told Adweek that DOJ investigators are particularly interested in how Google’s complex ad stack, historically known as DoubleClick, is intertwined and whether the algorithms underpinning it contain inherent bias.
For instance, questions persist over whether Google’s ad server, commonly known as DFP, favors its ad exchange, AdX, as an inventory supply source for publishers at the expense of third-party supply-side players. Additionally, Google’s 2015 third-party ad serving changes on YouTube, such as restricting access to third-party demand-side platforms, have been the subject of much controversy in recent years.
In her testimony at this week’s Senate hearing, Sally Hubbard, director of enforcement strategy at the Open Markets Institute, said that by purchasing “every spoke of the ecosystem,” Google has affected competition in the market.
“If Google had not bought DoubleClick and then Admob, the leading mobile advertising company, plus a slew of other ad-tech companies, things could have been different,” Hubbard testified, adding that Google’s acquisition of multiple ad-tech tools significantly hindered market competition.
At the same hearing, Gene Kimmelman, senior advisor for Public Knowledge, told senators, “This type of behavior would allow Google to charge higher prices for advertisers than they might in a more competitive market and allow Google to pay less out to publishers for the right to advertise on their content.”
Such pressure has many experts believing Google may sacrifice some of its ad-tech assets, such as its ad exchange or DSP, in an attempt to placate regulators probing how the company manages to lay claim to more than one in three ad dollars spent in the U.S.