On Day 4 of the Google advert tech antitrust trial in Virginia, we boarded a time machine that took us again to April 18, 2019.
That was the day Google convened an in-person and livestreamed assembly with publishers in NYC to debate a bundle of latest adjustments to its public sale dynamics, together with the transfer to a first-price public sale, the elimination of final look and the discharge of a brand new product known as unified pricing guidelines (UPR).
The ambiance rapidly turned contentious.
UPR is a characteristic inside Google Advert Supervisor (GAM), “which helps you to centrally management pricing throughout all oblique sources of demand in a handy method,” defined Rahul Srinivasan, then a Google product supervisor for GAM, throughout the presentation he made at that assembly.
Srinivasan was additionally the primary trial witness of the day.
If you phrase it that manner – “handy” – it sounds fairly good. Why wouldn’t publishers need to streamline their ground pricing throughout a number of programmatic demand sources?
However alarm bells have been going off for the publishers within the room – and we all know precisely what was mentioned as a result of Google recorded the assembly. The DOJ obtained a duplicate of the recording and performed a number of clips aloud in open court docket.
Shedding management
The primary snippet of audio was from Stephanie Layser, then the VP of advert tech and operations at Information Corp, addressing Srinivasan.
Layser, who additionally testified herself as a authorities witness earlier this week, instantly introduced up the query of management – or, extra exactly, the lack of it.
Unified Pricing Guidelines simplify how adverts are priced and managed in Google’s advert stack, however in addition they eradicated variable pricing flooring inside Google’s advert server (DFP).
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The issue with this, she mentioned, is that “the management sits on Google’s plate relatively than with managed settings inside publishers.
“Optimizing yield is necessary to publishers,” Layser mentioned, “however management can also be necessary to publishers.”
And so is transparency. A bit of later within the assembly, Jana Meron, then the SVP of programmatic and information technique at Enterprise Insider, spoke as much as say it’s actually tough to get bid worth information inside trade bidding.
“You will have made it subsequent to not possible for any of us to have the ability to determine how we’re going to extend yield with our different companions as an alternative of Google,” Meron mentioned.
Shortly after, Emry Downinghall, then the VP of promoting at academic writer Chegg, expressed comparable considerations to Layser’s.
“Google has been asking us to carry an increasing number of of the public sale throughout the Google pipes and to … belief Google with our advert decisioning technique,” Downinghall mentioned. “And now, all that management – which I believe is the true key phrase – goes to be … lifted from us and we simply sort of must hope Google is performing in our greatest curiosity, and that’s sort of rather a lot to swallow.”
At one other level, Layser requested Srinivasan whether or not there have been plans for Google to combine with any server-to-server or client-side header bidding in order that AdWords (aka Google Advertisements) demand might compete with a writer’s different companions.
“Ninety-percent of all publishers are on DFP and it type of appears like, at this cut-off date, you may make determinations and adjustments to your product as you need in order that Google is accountable for it,” Layser mentioned. “If we wished to change, it doesn’t actually really feel like we might have the ability to entry the entire AdX pool of demand the best way we need to in any of your different opponents.”
To which Srinivasan responded, “That’s truthful suggestions and we are able to get again to you on that.”
After enjoying the clip, DOJ legal professional Julia Tarver Wooden requested Srinivasan whether or not he ever did get again to Layser on her advert server query.
“I don’t consider I did,” he mentioned. Though, to be truthful, he did depart the GAM staff in late 2019 for a unique function throughout the firm as head of product for Google Sheets.
[Click here for a transcript of the recording.]
‘
We thought some publishers could be upset’
However to return even additional in time, it seems from emails cited as proof that Google realized the discharge of UPR could be a bitter tablet for publishers.
In a January 2019 e mail thread that included Srinivasan with the topic line “Re: l P Public sale Comms – Weekly” (as in, a dialogue in regards to the communications technique for transferring to a first-price public sale), Sam Temes, Google’s managing director of world product and gross sales technique, noticed that devising comms about “much more spend shift into AdX will likely be difficult.”
One implication of a first-price public sale, Temes famous, is that DV360 would spend considerably much less on trade bidding stock purchased via third-party exchanges, like Index Change.
Nonetheless, publishers have been largely in favor of transferring from a second-price public sale to a first-price public sale, as a result of it’s fairer and extra clear.
And that, the DOJ argues, is why Google mixed comparatively standard deliberate adjustments – like going to a first-price public sale in GAM, the top of final look and sharing minimal bid to win information – collectively with the discharge of a controversial product like UPR. Google knew UPR would piss off publishers and wanted air cowl.
Legal professional Wooden requested Srinivasan whether or not Google had anticipated that publishers would dislike UPR, to which he responded, “We thought some publishers could be upset.”
UPR appeal offensive
Even so, Google’s legal professionals made an honest argument that eliminating differential ground pricing was really good for the general programmatic ecosystem.
Sure, UPR gave Google a bonus in that it might stop publishers from setting additional excessive ground costs for AdX as a hacky approach to generate extra demand from rival exchanges.
However in keeping with Srinivasan, UPR additionally eliminated unproductive complexity from the public sale. For instance, he mentioned, publishers had arrange a whole lot, and in some circumstances even 1000’s, of buyer-specific guidelines that unintentionally filtered out good bids.
Overly advanced ground pricing isn’t good for the purchase aspect both. Criteo, for instance, was getting a number of calls for a similar stock from completely different exchanges – so many, in reality, that it was having to throttle queries. When patrons throttle queries, they don’t submit as many bids, which implies much less income for publishers.
And Srinivasan additionally made the purpose that the necessity to set ground costs in any respect is much less related in a first-price public sale, the place the very best bid wins.
Even so, Google made concessions after a sequence of extra in-depth, one-on-one conferences about UPR with publishers following the relatively tense assembly in April. Publishers have been allowed to set decrease ground costs for particular advertiser companions. Google additionally created performance in order that publishers might set completely different ground costs for various advert codecs, together with show and in-stream video.
In an August 2019 e mail to Brad Bender, then Google’s VP of product for show and video adverts, Srinivasan shared an replace on Google’s unified public sale adjustments. He wrote that market notion “improved over the past 3 months attributable to continued dialogue with writer companions and the press, and incorporation of some writer suggestions into product adjustments.”
(Bender testified individually on Wednesday. You possibly can learn a recap of his testimony right here.)
Advert tech on the stand
The remainder of the day was a mixture of market definition and advert tech historical past, starting with the second half of Google’s cross-examination of Jed Dederick, CRO of The Commerce Desk.
Dederick’s testimony started on Wednesday afternoon, however was paused for legal professionals to confer (which legal professionals like to do) when the protection tried to enter a doc below seal into proof. They labored out the redactions on Thursday morning, and Dederick was again on the stand after lunch.
Jed Dederick, CRO, The Commerce Desk (take 2)
The cross-exam was a relatively monotonous affair. Google’s legal professionals tried to get Dederick to confess that The Commerce Desk is specializing in the related TV market not as a result of Google foreclosed the chance in show promoting (which is what Dederick mentioned on the stand Wednesday), however as a result of CTV consumption is rising.
Dederick demurred.
The protection then belabored the purpose that “open net show promoting” isn’t a related market. Native, video, in-app – all of that stuff must be included in there, too. Dederick demurred.
(At one level, Choose Leonie Brinkema, who’s presiding over the case, instructed the lawyer to maneuver it alongside. “That is getting tedious and never including very a lot,” Choose Brinkema mentioned.)
Then Google’s legal professional requested a few weird questions associated to The Commerce Desk’s OpenPath device, which permits advertisers to bypass exchanges and entry writer stock straight.
Query 1: Can OpenPath bypass the writer advert server? Dederick demurred.
Query 2: Are you conscious that you should use Prebid with out having an advert server? You guessed it. Dederick demurred. (But additionally, 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 show and video, to request API entry to DFP. They have been denied entry then, in addition to a minimum of a dozen different instances through the years, with out ever being given a cause why.
Properly, right here’s why: In an inner follow-up e mail, Mohan mentioned that handing out API entry to a rival trade would go straight in opposition to the worth proposition of dynamic allocation in AdX.
Throughout Goel’s cross examination, he acknowledged that PubMatic by no means had DFP entry even when it was a part of DoubleClick. The protection maintained that Google doesn’t have an obligation to do enterprise with opponents on favorable phrases.
Someplace between 80% to 90% of PubMatic’s prospects use Google’s DFP advert server.
PubMatic sends roughly 1 trillion bid requests to Google each month, and its win charge is lower than 1%.
Till 2014, AdWords (aka Google Advertisements right this moment) refused to purchase through PubMatic.
Based mostly on inner analysis in 2019, UPR lowered PubMatic’s take charge by between 6% and eight%.
To elucidate the worth of promoting remnant stock programmatically, Goel gave the instance of a writer attempting to capitalize on surprising site visitors from an enormous information day. There’s no time to promote that stock straight, which is the place programmatic is available in. He talked about that the demise of Michael Jackson was PubMatic’s largest site visitors day ever.
To make the purpose that know-how develops quickly and it’s not possible to foretell the way forward for this business, Jeannie Rhee, certainly one of Google’s legal professionals, requested Goel if “a single 12 months in tech may be measured in canine years.” Goel replied, “I don’t have a canine years metric.”
Tom Kershaw, former CTO, Rubicon/Magnite
In keeping with Kershaw, Rubicon was “within the advert server enterprise for about 5 minutes” earlier than it failed.
Kershaw was one of many co-founders of Prebid.org in 2017, and he shared the origin story. Header bidding wasn’t taking off as a result of there was no customary approach to implement it. He pitched AppNexus on the thought of open-sourcing its header bidding wrapper so anybody within the business might use it. AppNexus “laughed at me,” Kershaw mentioned, however then obtained again in contact a number of days later to say: “Perhaps this isn’t such a foul concept.”
You’ve gotta lose to win. Satirically, Kershaw mentioned, the flexibility to optimize and bid precisely “means dropping rather a lot” after which analyzing the information to grasp why you misplaced. Exchanges can’t scale in the event that they solely get bid information once they win, as a result of exchanges lose a heck of much more bids than they win.
On the docket
Kershaw solely took the stand a couple of minutes earlier than court docket was adjourned for the day. His testimony continues Friday morning.
Then we’ll hear from Brian Boland, Fb’s former VP of advert tech and former VP of writer options. Jedi Blue, anybody?
And it seems like Chris LaSala, a former Google worker who was managing director of writer platforms between 2018 and 2022, can also be on faucet.
And on Monday, there’s a biggie on the town: Neal Mohan, who, today, is the CEO of YouTube.
Within the meantime, listed here are a number of rabbit holes so that you can fall down:
