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Claims 'Simply Wrong': Google

Google 'Abuses' Digital Ad Platform to Monopolize Ad Exchange Market, Says Gannett

Gannett sued Google Tuesday for antitrust violations involving its digital advertising technology, said a complaint (docket 1:23-cv-05177) in U.S. District Court for Southern New York in Manhattan. The lawsuit alleges Google manipulates “real-time bidding,” monopolizes publisher ad serving, “abuses” the Google DoubleClick for Publishers (DFP) ad platform to monopolize the market for ad exchanges, manipulates DFP to “artificially deflate bids from rival exchanges” and eliminates price floors while imposing unified pricing rules.

Online digital advertising is a $200 billion business, but news publications’ ad revenue has dropped by nearly 70% since 2009, said Gannett's complaint. Newspaper newsroom employment has fallen by over half, more than 20% of newspapers have closed, and circulation of daily and weekly newspapers has fallen by 40%, it said. At Gannett, more than 170 publications have been shuttered, the complaint said. For its largest remaining publications, Gannett’s daily circulation fell by 20% from 2020 to 2021.

Publishers aren’t suffering because readers demand less online content; instead, publishers aren’t seeing more ad spending because Google and parent company Alphabet “unlawfully have acquired and maintain monopolies for the advertising technology ('ad tech’) tools that publishers and advertisers use to buy and sell online ad space.”

Google controls how publishers sell their ad slots and forces publishers to sell growing shares of that ad space to Google “at depressed prices,” it said. “The result is dramatically less revenue for publishers and Google’s ad-tech rivals, while Google enjoys exorbitant monopoly profits,” alleges the complaint. It cited the DOJ’s January antitrust lawsuit against Google with 17 U.S. attorneys general seeking a “breakup remedy” and the European Commission’s case against Google filed last week alleging “unlawful abuse of monopoly power in digital advertising.”

Google’s conduct is “doubly deceptive,” alleged the complaint, saying Google “rigs auctions” for publishers’ ad inventory “without their knowledge and entirely beyond their detection.” Its Project Bernanke, designed to bump win rates of its advertiser clients on the Google AdX ad exchange, “ran billions of priced-depressive, third-price auctions in a manner that was undetectable to publishers,” Gannett alleges. Google also enforced other auction mechanics, such as dynamic revenue share, “without publishers’ knowledge and consent, and it has manipulated publishers’ datasets” to ensure publishers “could not monitor or counteract Google’s conduct,” it said.

Among Gannett's numerous allegations that Google made misrepresentations to Gannett to cause the media company “substantial financial injury” are: Google lied that enhanced dynamic allocation didn’t cause Gannett to under deliver on direct deals; that enhanced dynamic allocation didn’t permit Gannett to compete with sponsorships; that monetization on Accelerate Mobile Pages was similar to ads on mobile sites when it has “limited competition for inventory on Gannett’s pages”; and that its Exchange Bidding leads to higher revenue. Gannett enabled Exchange Bidding based on “false promises of greater revenue," but on video inventory, Gannett has had a “substantial increase in CPMs since disabling Exchange Bidding.”

Gannett’s four counts under Sherman Act violation claims are monopolization of the markets for publisher ad servers and for ad exchanges, attempted monopolization of the market for ad exchanges, and unlawful tying. It also claims unlawful deceptive acts or practices in violation of New York’s General Business Law, common-law fraud and unjust enrichment.

The plaintiff seeks an order enjoining Google from continuing to violate the New York law and Sherman Act and “enter relief to restore competition”; enjoin Google from taking additional actions that will further harm competition; award Gannett treble and punitive damages and/or restitution to be determined at trial; and award pre- and post-judgment interest, plus attorneys’ fees and legal costs.

Gannett’s claims “are simply wrong,” emailed Google Ads Vice President Dan Taylor in a statement Thursday. “Publishers have many options to choose from when it comes to using advertising technology to monetize, and in fact, Gannett “uses dozens of competing ad services,” including Google Ad Manager, he said. When publishers choose to use Google tools, “they keep the vast majority of revenue,” he said. “We’ll show the court how our advertising products benefit publishers and help them fund their content online.”

For more than 20 years, Google has “collaborated closely with the news industry and provided billions of dollars to support the creation of quality journalism in the digital age,” said the company. “Through our partnerships, products and programs, Google is one of the world’s biggest financial supporters of journalism,” it said.

Partners aren’t just using Google’s tools, said the company. Industry studies show that “the average large publisher will use six different platforms to sell ads on its website this year, while advertisers and media agencies will use over three platforms to buy ads, on average,” said the company: “Our ad tech fees are transparent, and consistent with industry rates. Even competition regulators have found that our fees are in line with the industry.”

In a study looking at top news publishers that use Google Ad Manager, “we found they keep over 95% of the digital ad revenue on average when they show ads on their content,” said Google. Google’s advertising platforms “don’t take hidden fees,” it said. The company recently introduced “confirming gross revenue,” a tool that gives buyers and publishers “the ability to verify for themselves that hidden fees haven’t been taken from digital advertising transactions,” it said.

In a Wednesday related case statement, Gannett cited Digital Advertising Antitrust Litigation multidistrict litigation, which the Judicial Panel on Multidistrict Litigation transferred to the New York district court in August 2021. In the MDL, the parties are engaged in fact discovery, which closes June 28, 2024, the statement said. On June 6, the court ordered coordinated discovery between the MDL and U.S. v. Google (docket 1:23-cv-00108). The coordinated discovery period runs July 10-Sept. 8. Gannett’s action is related to the MDL because both concern “the same or substantially similar parties, property, transactions, or events,” it said. Gannett, similarly to plaintiffs in the MDL, alleges Google and Alphabet “monopolized and suppressed competition in online display advertising markets, including the markets for publisher ad servers and ad exchanges."