Google monopolized 2 ad tech product markets. Here’s how the ruling defined them.

This week’s Google ad tech verdict shined a spotlight on specific product markets — two of which the company was ruled to have monopolized.

Those two are the open-web display publisher ad server market and the open-web display ad exchange market. The U.S. Justice Department had accused Google of monopolizing a third market — open-web display advertiser ad networks — but failed to prove the existence of such a distinct market, the ruling said.

During, the trial, Google contended that the entire digital ad tech ecosystem should be viewed as a “single, two-sided market.”

However, much of the decision made by Judge Leonie Brinkema came down to how these three markets are defined and whether they are distinct, relevant markets.

We dug into the ruling for how it defined each and what made them distinct (or not):

Publisher ad server market

Publisher ad servers “help publishers manage and monetize their web ad inventory” by “offering a number of unique product features to publishers, such as allocating ad inventory between direct sales and programmatic sales…” and so on, the ruling said.

The ruling made the case that publisher ad servers represent a distinct market, partly for their unique purpose and pricing, and because they aren’t “reasonably interchangeable” with other tools for publishers looking to sell their open-web display inventory.

“For example, the publisher-facing side of an ad network, such as Google AdSense, is not a reasonable alternative for large publishers because an ad network cannot place a variety of advertising demand sources in competition with each other for each impression,” Judge Brinkema wrote.

Even Google’s own market definition expert said that publisher ad servers are “‘components’ of the ad tech stack that ‘serve different purposes’” compared to other ad tech tools, Judge Brinkema wrote.

Ad exchange market

Remember how publisher ad servers weren’t interchangeable with other ad tech tools? The same goes for ad exchanges.

“Ad exchanges play a distinct role in the open-web display ad tech stack by connecting publishers using publisher ad servers with advertisers using programmatic buying tools such as demand-side platforms and ad networks,” Judge Brinkema wrote.

She added: “The ad exchange is the only ad tech tool through which publishers can auction their ad inventory at scale and in real-time to the largest sources of programmatic advertising demand.”

The ruling specifically called out the unique prices that ad exchanges charge publishers: a percentage of the winning bid for each impression, compared to a flat fee by publisher ad servers.

Citing an internal Google study, the ruling stated that “a 25% decrease in the price AdX charged would have limited impact on AdX’s market share, indicating customer stickiness and inelastic demand.”

Advertiser ad network market

The Justice Department successfully proved that ad servers and ad exchanges are distinct, relevant product markets. But it failed to prove that advertiser ad networks are in their own market.

“Ad networks were created to connect publishers’ inventory with advertisers’ ads by aggregating advertisers and publishers within a single, two-sided platform,” Judge Brinkema wrote.

OK, but why is that not a distinct product market?

The Justice Department only wanted to focus on the advertising-facing side of an ad network, which Judge Brinkema wrote would “ignore that ad networks intermediate between two groups, benefit from indirect network effects, and compete for transactions with other two-sided platforms.”

She added that the ad industry typically doesn’t make a distinction between the advertiser and publisher-facing sides of ad networks and that the term “advertiser ad network” was not a term generally used in the industry.

The Justice Department’s market definitions expert testified that he had not heard the term before the trial, according to the ruling.

The Court's decision included the following visualization of the three ways that advertisers purchase ad inventory from the publishers, with the names of relevant Google products abbreviated in parentheses:

Tying DFP andAdX

Phew, OK. To reiterate: The judge ruled that Google held a monopoly over the publisher ad server market and the ad exchange market. But she did not find a distinct market for advertiser d networks, so Google could not be liable for monopolizing a non-existent market.

But the company was also found liable for unlawful tying of its publisher ad server, DoubleClick for Publishers (DFP), and its ad exchange, AdX, in violation of Section 1 of the Sherman Act.

First, let’s back up: Google bought DoubleClick in 2008 to “prevent Microsoft from acquiring ‘the leading ad serving company’ and thus becoming ‘a major competitive threat,’” according to the ruling, citing internal Google communication.

AdX was also included in that acquisition, and the ruling contended that Google introduced policies that encouraged advertisers and publishers to use the ad exchange — including requiring publishers to use DFP as their ad server if they wanted to bid in real time through AdX.

Now, back to why the court ruled this was bad for the open web: “These restrictions, according to Plaintiffs, compelled publishers to use DFP, not because they viewed it as a superior product, but rather due to Google’s exploitation of its control over AdX’s preeminent position in the open-web display ad exchange market.”

The Current is owned and operated by The Trade Desk Inc. An individual from The Trade Desk was among the people included on the trial witness list.