Google’s ad monopoly is harming journalism with sky-high fees for news publishers, antitrust trial hears

Google’s perceived monopoly on online display advertising is hurting news organizations’ ability to invest in journalism, a senior publishing executive told a U.S. federal court.

Matthew Wheatland, Chief Digital Officer at DailyMail.com, said the tech giant is “squeezing” advertising revenue from publishers and limiting investment in journalism.

Mr. Wheatland testified on the eighth day of an antimonopoly trial brought by the U.S. Department of Justice (DOJ) against Google.

Government lawyers accuse the tech giant of seeking to dominate display advertising on websites, including those of news publishers.

It is alleged that Google has engaged in monopolistic behavior and anti-competitive practices by locking customers into using its products, crushing potential competitors, stifling innovation, and depriving the publishing industry of hundreds of millions of dollars in revenue.

The case is being heard without a jury by Judge Leonie Brinkema in Alexandria, Virginia, just outside Washington, DC, and is expected to last several weeks.

She could ultimately decide that Google has a monopoly and force the company to sell some of its advertising business.

During 90 minutes of testimony, Mr. Wheatland told the court: “We are a news publisher that produces content that we think Americans will find important and interesting. The revenue we generate is generated by display advertising served through Google.

“By suppressing prices for publishers, Google is driving down publisher revenues. That means we’re not investing in journalism in the way we otherwise could.”

The case revolves around the advertisements that appear on a web page when a user opens it, specifically the rectangular blocks at the top and right.

Every day, billions of these ads are bought and sold in automated, instant auctions that take just milliseconds. This process is known as “programmatic display advertising.”

Justice Department lawyers accuse Google of rigging the auctions to favor its own products.

There are three different tools used in selling advertising.

The first is an “ad server” used by publishers to sell space on their websites.

Advertisers use an ‘advertising network’ to purchase the space.

And in between is an ‘Ad exchange’, which functions a bit like a stock exchange, bringing publishers and advertisers together.

All three parts of the process are powered by Google products, allowing the company to charge higher rates, the court heard.

Overall, the company keeps 36 cents on every dollar of every ad it processes.

The AdX exchange alone charges a 20 percent commission, which is significantly higher than much smaller competing exchanges, the court heard.

Mr Wheatland told the court that DailyMail.com had ‘considered’ switching away from Google’s ad server (known as DFP), which is used by 90 per cent of publishers.

However, the company had calculated that this would mean losing 28 percent of its programmatic display advertising revenue.

That’s because DFP is linked to the AdX exchange, which in turn is linked to Google Ads.

Google Ads was previously described in court as “the largest group of advertisers in the world.”

Mr Wheatland said: ‘We can’t move the ad servers because we would lose that revenue. It’s not financially viable.

“We still use DFP because losing AdX would be financially detrimental to us.”

According to Mr Wheatland, 40 to 60 percent of DailyMail.com’s programmatic advertising runs through AdX, with the next largest exchange accounting for only “6 or 7 percent.”

While the AdX fee is 20 percent, other exchanges charged around 10 percent and one charged as little as 7 percent, he said.

The court was shown an internal DailyMail.com email from February 2020 regarding Unified Pricing Rules (UPR), a complex new system introduced by Google in 2019.

The email said the AdX exchange earned “X3” of DailyMail.com inventory under UPR, but “we don’t see much change in turnover.”

Mr Wheatland told the court: ‘(Our) revenues didn’t increase, but they did get more stock at lower prices.’

He said that ‘publishers were unhappy’ with UPR.

While Mr Wheatland was being questioned, lawyers for Google told the court that DailyMail.com is also a major publisher on TikTok, Facebook and Instagram.

They also showed a May 2019 blog post from Google in which DailyMail.com had approved a quote with positive feedback about UPR.

Earlier, Dr. Rosa M. Abrantes-Metz, an antitrust expert, told the court that in 2011 Google had carried out a “killer acquisition” of a rival called AdMeld, which posed a “competitive threat” to DFP.

She said the 20 percent fee charged by Google’s AdX exchange is “too high” and “acts like a ‘tax.'”

She said: ‘The advertisers and publishers both paid the extra tax, so they were both disadvantaged.

‘Advertisers pay too much, publishers get too little, and AdX in the middle takes an extra cut.’

Because publishers “received less money, there is a high likelihood that consumers of those ads and the products associated with them were harmed,” she added.