On Day Four of the Google ad tech antitrust trial in Virginia, we boarded a time machine that took us back to April 18, 2019.
That was the day Google convened an in-person and livestreamed meeting with publishers in NYC to discuss a bundle of new changes to its auction dynamics, including the move to a first-price auction, the removal of last look and the release of a new product called unified pricing rules (UPR).
The atmosphere quickly turned contentious.
UPR is a feature within Google Ad Manager (GAM), “which lets you centrally control pricing across all indirect sources of demand in a convenient manner,” explained Rahul Srinivasan, then a Google product manager for GAM, during the presentation he made at that meeting.
Srinivasan was also the first trial witness of the day.
When you phrase it that way – “convenient” – it sounds pretty good. Why wouldn’t publishers want to streamline their floor pricing across multiple programmatic demand sources?
But alarm bells were going off for the publishers in the room – and we know exactly what was said because Google recorded the meeting. The DOJ got a copy of the recording and played multiple clips aloud in open court.
Losing control
The first snippet of audio was from Stephanie Layser, then the VP of ad tech and operations at News Corp, addressing Srinivasan.
Layser, who also testified herself as a government witness earlier this week, immediately brought up the question of control – or, more precisely, the loss of it.
Unified Pricing Rules simplify how ads are priced and managed in Google’s ad stack, but they also eliminated variable pricing floors within Google’s ad server (DFP).
The problem with this, she said, is that “the control sits on Google’s plate rather than with controlled settings within publishers.
“Optimizing yield is important to publishers,” Layser said, “but control is also important to publishers.”
And so is transparency. A little later in the meeting, Jana Meron, then the SVP of programmatic and data strategy at Business Insider, spoke up to say it’s really difficult to get bid value data inside exchange bidding.
“You have made it next to impossible for any of us to be able to figure out how we’re going to increase yield with our other partners instead of Google,” Meron said.
Shortly after, Emry Downinghall, then the VP of advertising at educational publisher Chegg, expressed similar concerns to Layser’s.
“Google has been asking us to bring more and more of the auction within the Google pipes and to … trust Google with our ad decisioning strategy,” Downinghall said. “And now, all that control – which I think is the real keyword – is going to be … lifted from us and we just kind of have to hope Google is acting in our best interest, and that’s kind of a lot to swallow.”
At another point, Layser asked Srinivasan whether there were plans for Google to integrate with any server-to-server or client-side header bidding so that AdWords (aka Google Ads) demand could compete with a publisher’s other partners.
“Ninety-percent of all publishers are on DFP and it sort of feels like, at this point in time, you can make determinations and changes to your product as you want so that Google is in control of it,” Layser said. “If we wanted to switch, it doesn’t really feel like we would be able to access the whole AdX pool of demand the way we want to in any of your other competitors.”
To which Srinivasan responded, “That’s fair feedback and we can get back to you on that.”
After playing the clip, DOJ attorney Julia Tarver Wood asked Srinivasan whether he ever did get back to Layser on her ad server question.
“I don’t believe I did,” he said. Although, to be fair, he did leave the GAM team in late 2019 for a different role within the company as head of product for Google Sheets.
[Click here for a transcript of the recording.]
‘
We thought some publishers would be upset’
But to go back even further in time, it appears from emails cited as evidence that Google realized the release of UPR would be a bitter pill for publishers.
In a January 2019 email thread that included Srinivasan with the subject line “Re: l P Auction Comms – Weekly” (as in, a discussion about the communications strategy for moving to a first-price auction), Sam Temes, Google’s managing director of global product and sales strategy, observed that devising comms about “even more spend shift into AdX will be tricky.”
One implication of a first-price auction, Temes noted, is that DV360 would spend significantly less on exchange bidding inventory bought through third-party exchanges, like Index Exchange.
Still, publishers were largely in favor of moving from a second-price auction to a first-price auction, because it’s fairer and more transparent.
And that, the DOJ argues, is why Google combined relatively popular planned changes – like going to a first-price auction in GAM, the end of last look and sharing minimum bid to win data – together with the release of a controversial product like UPR. Google knew UPR would piss off publishers and needed air cover.
Attorney Wood asked Srinivasan whether Google had anticipated that publishers would dislike UPR, to which he responded, “We thought some publishers would be upset.”
UPR charm offensive
Even so, Google’s lawyers made a decent argument that getting rid of differential floor pricing was actually good for the overall programmatic ecosystem.
Yes, UPR gave Google an advantage in that it could prevent publishers from setting extra high floor prices for AdX as a hacky way to generate more demand from rival exchanges.
But according to Srinivasan, UPR also removed unproductive complexity from the auction. For example, he said, publishers had set up hundreds, and in some cases even thousands, of buyer-specific rules that unintentionally filtered out good bids.
Overly complex floor pricing isn’t good for the buy side either. Criteo, for example, was getting multiple calls for the same inventory from different exchanges – so many, in fact, that it was having to throttle queries. When buyers throttle queries, they don’t submit as many bids, which means less revenue for publishers.
And Srinivasan also made the point that the need to set floor prices at all is less relevant in a first-price auction, where the highest bid wins.
Even so, Google made concessions after a series of more in-depth, one-on-one meetings about UPR with publishers following the rather tense meeting in April. Publishers were allowed to set lower floor prices for specific advertiser partners. Google also created functionality so that publishers could set different floor prices for different ad formats, including display and in-stream video.
In an August 2019 email to Brad Bender, then Google’s VP of product for display and video ads, Srinivasan shared an update on Google’s unified auction changes. He wrote that market perception “improved over the last 3 months due to continued dialogue with publisher partners and the press, and incorporation of some publisher feedback into product changes.”
(Bender testified separately on Wednesday. You can read a recap of his testimony here.)
Ad tech on the stand
The rest of the day was a mix of market definition and ad tech history, beginning with the second half of Google’s cross-examination of Jed Dederick, CRO of The Trade Desk.
Dederick’s testimony began on Wednesday afternoon, but was paused for lawyers to confer (which lawyers love to do) when the defense attempted to enter a document under seal into evidence. They worked out the redactions on Thursday morning, and Dederick was back on the stand after lunch.
Jed Dederick, CRO, The Trade Desk (take 2)
The cross-exam was a rather monotonous affair. Google’s lawyers tried to get Dederick to admit that The Trade Desk is focusing on the connected TV market not because Google foreclosed the opportunity in display advertising (which is what Dederick said on the stand Wednesday), but because CTV consumption is growing.
Dederick demurred.
The defense then belabored the point that “open web display advertising” isn’t a relevant market. Native, video, in-app – all of that stuff should be included in there, too. Dederick demurred.
(At one point, Judge Leonie Brinkema, who’s presiding over the case, told the lawyer to move it along. “This is getting tedious and not adding very much,” Judge Brinkema said.)
Then Google’s attorney asked a couple of bizarre questions related to The Trade Desk’s OpenPath tool, which allows advertisers to bypass exchanges and access publisher inventory directly.
Question 1: Can OpenPath bypass the publisher ad server? Dederick demurred.
Question 2: Are you aware that you can use Prebid without having an ad server? You guessed it. Dederick demurred. (But also, huh?)
Rajeev Goel, CEO & co-founder, PubMatic
In January 2009, Rajeev Goel’s brother and co-founder, Amar, emailed Neal Mohan, then Google’s SVP of display and video, to request API access to DFP. They were denied access then, as well as at least a dozen other times over the years, without ever being given a reason why.
Well, here’s why: In an internal follow-up email, Mohan said that handing out API access to a rival exchange would go directly against the value proposition of dynamic allocation in AdX.
During Goel’s cross examination, he acknowledged that PubMatic never had DFP access even when it was part of DoubleClick. The defense maintained that Google doesn’t have an obligation to do business with competitors on favorable terms.
Somewhere between 80% to 90% of PubMatic’s customers use Google’s DFP ad server.
PubMatic sends roughly 1 trillion bid requests to Google every month, and its win rate is less than 1%.
Until 2014, AdWords (aka Google Ads today) refused to buy via PubMatic.
Based on internal research in 2019, UPR lowered PubMatic’s take rate by between 6% and 8%.
To explain the value of selling remnant inventory programmatically, Goel gave the example of a publisher trying to capitalize on unexpected traffic from a big news day. There’s no time to sell that inventory directly, which is where programmatic comes in. He mentioned that the death of Michael Jackson was PubMatic’s biggest traffic day ever.
To make the point that technology develops rapidly and it’s impossible to predict the future of this industry, Jeannie Rhee, one of Google’s lawyers, asked Goel if “a single year in tech can be measured in dog years.” Goel replied, “I don’t have a dog years metric.”
Tom Kershaw, former CTO, Rubicon/Magnite
According to Kershaw, Rubicon was “in the ad server business for about five minutes” before it failed.
Kershaw was one of the co-founders of Prebid.org in 2017, and he shared the origin story. Header bidding wasn’t taking off because there was no standard way to implement it. He pitched AppNexus on the idea of open-sourcing its header bidding wrapper so anyone in the industry could use it. AppNexus “laughed at me,” Kershaw said, but then got back in touch a few days later to say: “Maybe this isn’t such a bad idea.”
You’ve gotta lose to win. Ironically, Kershaw said, the ability to optimize and bid accurately “means losing a lot” and then analyzing the data to understand why you lost. Exchanges can’t scale if they only get bid data when they win, because exchanges lose a heck of a lot more bids than they win.
On the docket
Kershaw only took the stand a few minutes before court was adjourned for the day. His testimony continues Friday morning.
Then we’ll hear from Brian Boland, Facebook’s former VP of ad tech and former VP of publisher solutions. Jedi Blue, anyone?
And it looks like Chris LaSala, a former Google employee who was managing director of publisher platforms between 2018 and 2022, is also on tap.
And on Monday, there’s a biggie in town: Neal Mohan, who, these days, is the CEO of YouTube.
In the meantime, here are a few rabbit holes for you to fall down: