“Stacking the Tech”: Google’s Antitrust Hearing

Google executive George Harrison and three other panelists faced off against the Senate Judiciary Subcommittee on Antitrust on Sept. 15 in “Stacking the Tech: Has Google harmed competition in online advertising?”

The first panel consisted solely of Donald Harrison, President of Global Partnerships and Corporate Development at Google. Senators on both sides of the isles took turns aiming at Google and its practices in the market.

Committee Chairman Sen. Mike Lee began the conversation by saying, “online advertising is an incredibly complex business and one that touches every single person on the internet. The technologies involved in connecting advertisers and publishers have evolved rapidly in the last decade, and the expansion of online advertising has facilitated an explosion of online content by allowing even the smallest website owners to monetize the content they produce.”

Ranking Member Sen. Amy Klobuchar’s opening statements echoed similar sentiments to those of Lee.

“On the publisher’s side, Google has privileged access to ad data to inform its bidding strategies, and then it also effectively controls the process, the ad auction process, that gets an advertiser’s ad to be put on a publisher’s site. Google dominates all the markets for services on both sides of the ad tech stack,” said Klobuchar.

Harrison sought to emphasize the positive impact of Google’s growth and practices on the market during his opening statements.

“Online advertising prices in the U.S. have fallen by 40 percent since 2010,” Harrison explained.

Furthermore, Harrison sought to establish that advertising is a small portion of Google’s business and that its share operates in a competitive marketplace.

“The ad tech portion of our business accounts for a small portion of our advertising revenue, and we share the majority of that revenue with publishers. The ad tech space is crowded and competitive. We compete with adobe, amazon, AT & T, Comcast, Facebook, Oracle, and Verizon…,” said Harrison.

Lee began questioning Harrison by inquiring into Google’s recent blocking of the conservative site The Federalist from having monetized content on its platform, which Lee suggested is evidence of market power. Later on, Republican Sens. Josh Hawley and Ted Cruz also offered similar analyses and complaints about Google’s ad practices, specifically concerning The Federalist.

In response to concerns over forced content moderation for advertisers, Harrison attempted to show that Google does not unilaterally bar these websites from having ads.

Harrison said, “they [websites] have three choices: they can choose not to show ads, they can choose to moderate, or they can choose to put their commentary behind a wall and not show advertisements against that.”

While the conversation seemed to steer away from the nature of an antitrust hearing, Hawley brought the conversation back around, saying, “it is as Senator Lee pointed out. It is extraordinary market power that would enable you to do something like this, which would basically allow you to call the tune for a small independent publisher’s construction of their site, to design moderation policies for third-party content that they don’t moderate or use. And yet your able to do this and force them to adopt policies or effectively cut off their revenue streams.”

An often-cited study throughout the hearing was from the UK Competition Market Authority, CMA, which found that Google was a dominant market force. The company’s dominance is in the supply side platform on the advertisers’ side, a demand-side platform, and advertiser ad servers. Harrison continuously disputed the UK’s statistics because he believes the commission’s definitions of market share was too narrow.

“I don’t agree with that at all,” said Harrison. “I think when people search for things, sometimes they use our product, which is a general search engine but more often they use many other types of apps and experiences to find what they are looking for.”

Harrison then offered up evidence from the commercial searches market where he said more often people go to Amazon than they do Google and that 70 percent of commercial queries start with a platform other than Google.

The disagreement over the report from the UK CMA was a constant theme throughout the hearing. Harrison consistently said he disagreed with the analysis conducted by the CMA and that the numbers from the report were not numbers with which Google agreed.

The second panel consisted of industry experts Adam Heimlich Chief Executive Officer at Chalice Custom Algorithms; David Dinielli, Senior Advisor at Beneficial Technology, Omidyar Network; and Carl Szabo, Vice President and General Counsel at Netchoice.

Heimlich lauded the antitrust committee stating, “antitrust investigations have produced clues about Google’s strategy for ad exchanges, it seems google saw the market efficiency of ad exchanges as a threat to Google’s primary business—selling ads.”

Heimlich accused Google of using its market powers to stifle innovation and itself, never innovating and never keeping pace with the other market innovations.

“Whether or not Google competes with other big tech firms is irrelevant to the harm they have caused publishers, measurement companies, platforms and small businesses like mine, and the 50 billion dollar open-web market,” said Heimlich.

Dinielli took a similar stance to that of Heimlich and Klobuchar earlier in the hearing in his claim that he is not aware of any other company or industry with the kind of market power that Google has.

“Through a series of acquisitions and vertical integration Google occupies every layer of this ad tech stack, with market shares as high as 90 percent at the most important functions. From the standpoint of an antitrust lawyer, this is a big red flag,” said Dinielli.

Szabo took the opposing side of the argument, siding with Google. Szabo also claimed the CMA report from the UK was seriously flawed.

“It [the report]… narrowed the definition of the market so small that it produced the outcome that they sought – the dominance of Google.”

In response to how Google’s alleged dominance has affected pricing for advertisers, Dinielli responded to Szabo’s assertion that there is no existence of consumer harm required by the consumer welfare standard in antitrust law.

Once again, turning to evidence from the CMA report from the UK, Dinielli said, “we have heard that prices have gone down, and isn’t that a good thing? Yes, it is, but we don’t know what they would have been absent that conduct.”

The hearing produced exciting debate for the assertion that Google is too dominant in the ad and search market but provided little clarity for any concrete remedies that Congress may provide going forward.

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