“It’s impossible to negotiate with Google,” confesses the former News Corp executive

“It’s the computer that figures it out.”

It’s U.S. District Court Judge Leonie M. Brinkema, 80, who succinctly explains how an ad exchange handles the frequency limits of a programmatic ad campaign. Heady stuff, but at least until Day 2 of the Justice Department’s antitrust case against Google, Judge Brinkema’s questions and statements, such as Monday’s question about whether an ad auction works like Sotheby’s, were direct and to the point. She appeared to easily navigate the jargon and complexities of the advertising market — a market she could fundamentally alter at the end of this ordeal.

After the first day focused on publishers and the competition, the second day of the test was not favorable with the ad technology of Google publishers. Stephanie Layser, who oversaw the programmatic business at News Corp and now works at Amazon Web Services, described Google’s publisher ad server, formerly known as DFP, as “slow and clunky” from the witness stand. Eisar Lipkovitz, Google’s former vice president of engineering for display and video ads, who left the company in 2019 after nearly 15 years, described the team working on DFP as “lazy and slow to innovate” in a video filing that was played in the courtroom.

Everyone’s idea? To illustrate, despite industry complaints about the technology, Google’s ad server holds a huge percentage of market share. Layser testified that when News Corp tried to find another ad server in 2017, it determined that losing Google advertisers could have cost the publisher at least $9 million in ad revenue that year alone.

• AdX, Google’s ad exchange that is exclusive to Google’s ad server, accounted for 52.7 percent of News Corp’s programmatic revenue in 2016, or about $43.9 million, she said.

It was “impossible to negotiate with Google,” Layser said.

Jay Friedman, CEO of marketing agency Goodway Group, told the court that his agency tried to negotiate with Google the AdX take rate, which it said was higher than the competition but offered the same quality of advertisers. It was denied, he said.

Friedman spent much of his testimony explaining the differences between walled gardens and the open Internet, as well as why advertisers view display advertising and social media advertising differently. Its distinction, he said: A Ramada Inn and a Ritz-Carlton are both hotels, but they serve different purposes.

As Marketing Brew previously noted, the DOJ and Google have competing definitions of what constitutes an online ad.

• As Layser explained, publishers like the Wall Street Journal can’t sell their ads on servers built for platforms like TikTok, even if Google sees that platform as competition.

At one point, Judge Brinkema asked Layser if publishers “wanted access to the highest demand of advertisers but didn’t want to go through the ‘system’ to get it,” to which Layser replied “yes.”

Lipkovitz, whose deposition was last heard on Tuesday, said he raised questions about Google’s exclusivity agreements and noted that Google has limited publishers’ ability to set price controls under AdX.

“I don’t think you win customers’ trust by telling them what they can’t do,” he said.

Lipkovitz was also asked about Project Poirot, a Google initiative that the DOJ alleged reduced bids sent by Google’s DSP to rival exchanges so that its own exchange would win. Lipkovitz testified that this was the purpose of the project, “not a side effect”.

Side note: An internal Google document Lipkovitz read mentions a “drain the swamp” strategy, apparently referring to “SSPs that don’t actually add value,” Lipkovitz said. Many in the courtroom laughed out loud.

And when he tried to address those issues, Lipkovitz said his questions went unanswered.

“The car won,” he said.