Google, As Well As Advertisers, Benefit from Independent Adtech, Antitrust Emails Show 

Advertisers using Google’s buy-side adtech, who have been limited to buying open web inventory via Google’s supply-side platform and exchange, AdX, may have been at a disadvantage, newly released court docs reveal.

Google owns tech representing both the buy and sell side of the programmatic market, a competitive advantage that is currently the subject of the U.S. Department of Justice’s adtech antitrust trial.

But, Google executives worried internally that trying to work in the interests of both the buy and sell side ultimately limited inventory advertisers had access to, since they would have benefitted from bidding on non-Google-owned sell-side tech, new evidence presented by the DOJ reveals.

Five sources across the buy and sell side told ADWEEK that working only with AdX can limit the breadth and quality of inventory buyers can access, though the dynamics today are slightly different than the sometimes decades-old evidence the DOJ draws from.

Artificially handicapping the buy side

Google Ads, Google’s ad network for smaller advertisers that is sometimes also called Google Display Network or GDN, has for years been (mostly) limited to bidding on AdX when accessing open web display inventory, rather than letting buyers bid on rival SSPs, which would give them access to a wider range of inventory and potentially more competitive prices.

“From GDN’s perspective, GDN is completely disadvantaged against buy-side competition,” a 2012 document reads. “In the auction ecosystem, we appear to be running a buyside-subsidizes-sellside model: we are artificially handicapping our buyside (GDN) to boost the attractiveness of our sellside (AdX).”

The argument here is that the only reason to limit Google Ads buyers to AdX is because it makes AdX more desirable to publishers, as Google Ads is a source of unique demand. But, that sell-side advantage doesn’t translate to the buy-side clients of Google ads.

“This greatly weakens GDN’s position in the market — why would an advertiser buy thru (sic) GDN when they could do the same retargeting on Criteo on same inventory plus more inventory,” the document continues, (emphasis in original).

This concern that Google Ads’ buyers could be harmed by limiting their scope to AdX—and not having access to rival SSPs—bubbled up again in a 2013 document and a 2015 email from former Google exec Eisar Lipkovitz, previously covered by ADWEEK.

(Google Ads buyers could technically bid on other exchanges for the narrower retargeting use case via a program called AwBid, but this program was capped internally to make up a minority of ad spend, according to DOJ evidence).

Using only AdX also lowered Google’s revenues

Internal emails indicate that Google employees thought that Google’s policies biasing spend toward Google’s sell-side adtech undermined their buyers’ success. But it also seemed to undermine Google’s success.

Google does let buyers bid more freely on competing SSPs via DV360, its demand-side platform intended for larger, more sophisticated buyers, than via Google Ads.

But when Google employees ran an experiment within DV360 to see the revenue impact of buyer clients bidding only on AdX, and not bidding on rival exchanges, revenue dropped nearly 48% and impressions served dropped 35%, according to a 2016 email revealed in the Sept. 17 testimony of buy-side exec Nirmal Jayaram. The implication here is that DV360 buyers won fewer transactions when they could only bid through one exchange, therefore making DV360 less money.

Despite the impact on buy-side revenue of limiting bidding to just Google’s SSP, Google later implemented Project Poirot in 2017, which helped tilt DV360’s buying toward AdX, partly in response to the competitive threat posed by header bidding.

By 2019, DV360 was spending 75% of buyers’ budgets on AdX while competitor The Trade Desk was spending approximately 30%-40% of budgets on AdX, according to an internal Google email. This indicates that without Google putting its thumb on the scale, the amount of spend going through Google’s sell-side pipes would be much less.

Inventory sacrifices

AdX includes a wider swath of inventory—including many low-quality websites with few users—than your average SSP, said one buyer source who requested anonymity to discuss sensitive industry relations.

Partly, this is because publishers get onboarded onto AdX via being a part of Google’s ad server, which takes less work for a publisher to set up than to integrate with a pure-play SSP like Magnite or PubMatic, the buyer said.

“It’s easier to monetize through AdX [as opposed to a rival SSP] if you’re a site owner,” said Ana Milicevic, co-founder of programmatic consultancy Sparrow Advisors.

Google’s AdX charges take rates of around 20%, higher than most of its SSP competitors, according to previous testimonies in the DOJ case. One publishing source, who also requested anonymity to discuss sensitive industry relations, said they switched private deals to non-AdX SSPs that charged a lower percentage revenue share for publishers.

Buyers confined to AdX might miss out on some of the inventory publishers only make available to rival SSPs that cut a lower-percentage rev share. However, two publisher sources said it would be unlikely for any publisher to completely cut AdX out of large swaths of inventory because of the large amount of demand it brings.

The 2024 context

It’s worth noting that much of the DOJ’s evidence against Google, including the emails cited here, is from more than a decade ago when the programmatic ecosystem was less mature. Today, in a more commoditized market, most major publishers work with most of the major SSPs.

A DSP source, speaking anonymously to discuss sensitive industry relations, said that non-Google SSPs have advantages in mobile app, CTV and general video inventory compared to AdX.

“If you were building a DSP and, for some reason, could only integrate with one exchange, AdX would be the best choice,” the DSP source said.

Still, many buyers have a preferred SSP they like to work with, and it’s not always AdX, a second publishing source said.

“If you’re a buyer, you rather have more information [that comes with working with more partners] than less,” the first publisher said.