History will judge Google as it heads to antitrust decider

The tech giant finds itself under siege, a marauding army at the gates, but win or lose, the era of news and advertising as we know it is ending...

Welcome to new subs this week from CBS, Amazon, Hearst, Nexstar, my friends at Substack, The Washington Post, Forbes, News UK, The Independent, Britain’s regional giant National World, the former UK minister for trade (hey there ??), CMS providers Blox Digital and WordPress, The International News Media Association, Storyful, Australia’s Fetch TV and Seven West Media, as well as Canada’s CBC, Canadian Press, and The Globe and Mail, among others.

More from Canada later, but first, in less than a week, Google faces the third and greatest ever threat to its dominance. Maybe that’s why I have a sudden influx of new subs from agencies and creatives, including Mindshare, Omnicom, The Trade Desk, and M&C Saatchi.

My fingers have literally been itching to get this one out, so let’s go.

You get first access to my posts like this exclusively at my Future Media Substack

Tick, tick, tick… It’s less than a week until Google’s dramatic ad antitrust showdown, and 61 days to the US election.

The convergence of timing, money, politics, power, and justice are so intertwined that they can’t be separated, and how they play out will decide how we view history, and impact everyone.

The trial that begins next week is distinct from the two before, because it focuses on Google’s ad monopoly, but it’s wrong to think of it alone.

Rather, it’s the dramatic Third Act of a systematic, multi-year takedown by the US Government, that has been ever so clever.

Act One saw the Department of Justice go after the weakest link, the Android app store, and Google lost.

Act Two saw the DoJ double down, alleging an illegal monopoly in search and search ads. Google lost again.

Now with the wind in its sails, the DoJ is girded for the main event. Act Three is an assault on Google’s gold, and an attempt to break its death grip on global advertising.

To provide a ready reckoner, Bernie Madoff became synonymous with fraud when his Ponzi scheme conned investors out of $65 billion. Google banks that every 69 days.

If the DoJ succeeds, it will break a magic-money-making-machine that turned Google into one of history’s most valuable companies with the power to move markets.

If the DoJ fails, it will still reveal the inner workings of Google, and how it controls the flow of almost every ad dollar, which will alter the media market forever.

Whatever the result, history will be told, and the future will be set on a new course, influencing tech valuations, ad distribution, and changing the web and mobile for billions.

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At the epicentre of it all is the news industry. yeah yeah, dismiss it all you like as a statement of self-importance, but have you read the entire DoJ complaint?

I have, and it clearly alleges that Google had a playbook to encircle the media, and to use its data and its audiences, to commandeer the global ad market.

Tragically, news media was naive (at best) and complicit (at worst) and welcomed Google’s invading army in.

#1: Google asked for content with a promise to make it discoverable. Publishers chose to overlook copyright, and any usual safeguards, and handed it over.

#2. Google wanted the audience, so it invited publishers to voluntarily use free analytics and tools. Google then hid, hoarded, and stockpiled, what was most valuable.

#3. The real prize was media’s money. Publishers handed over sales and ad autonomy in return for promises of efficiency and savings, and Google banked 90c on the dollar.

That’s what this trial is really about.

Watching the DoJ play its hand has been like watching Yehudi Menuhin pluck a vibrato.

It’s out-played, out-manoeuvred, out-thought, and out-fought, despite having a fraction of the lawyers, resources, and only 3.49 per cent of Google’s budget.

It’s been a goddamn masterclass so far.

Strike one was to take down Google’s app store.

Google elected for a jury trial because it arrogantly believed the public loved it. Huge mistake. A jury took just hours - including a lunchbreak - to unanimously rule it an illegal monopolist.

Strike two was the search antitrust trial.

Google again misread the runes. It believed it could rely on two decades of political inaction and bamboozle the judge. Errr, no. The DoJ and Judge Amit Mehta crushed it.

Strike three seeks to complete the trifecta.

Bruised from its last jury outing, Google proactively paid what it assessed to be the maximum penalty to have the jury dismissed, and a judge trial instead.

It then sought to bamboozle the court by seeking to dismiss the DoJ’s witnesses by claiming its tech is too complex to be judged by ordinary people.

That’s not worked with the judge, and oh my goodness, what a judge. Leonie Brinkema’s last win was to bring down the CIA over black site tortures.

Worse, Google’s already pissed her off, by deleting chats and obfuscating evidence.

This past weekend, I beat millions and bagged four Wembley tickets to the Oasis reunion, but I’d give them all up in a heartbeat for a ring side seat at the Google trial…

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You can read the DoJ’s complaint here, but these are the allegations:

1. Google won its $238 billion ad dominance via what are politely described as incentives.
2. It interlinked a mix of ad, auction, and analytics products, so that no-one could survive without them.
3. Challengers were bullied, bought, or neutralised over decades.
4. It manipulated and inflated ad prices so only it won, and
5. Hid the entire shooting match in opaque data that it charged its victims for.

None of that is very pretty.

Bribes Erm, incentives

The fact that Google pays kickbacks is the biggest open secret of the past two decades, yet the practice has somehow been hidden in open sight.

Juniors on trading floors, right up to global CEOs, have shared their experiences with me in hushed tones, as if it’s unknown, or they are afraid, but it happens.

Google sponsors industry events. It funds plane tickets and hotels for influential execs to attend training courses on tropical islands.

It pays agencies kickbacks, and other incentives, and has cash back deals for those who buy the right ads or sign the right deals.

There are perks like access to inside data…

Google even boasts about them in its own blog.

Friend of Future Media Arielle Garcia of Check My Ads, and ex-privacy lead at UM, told AdWeek. “Google tends to recommend things that benefit themselves more so than advertisers.”

Like, no sh** :)

The DoJ alleges this has diminished publishers by reducing their access to ad dollars.

It’s why publishers can’t sell direct at scale, why agencies can no longer make spend commitments, and why publishing’s share of wallet and sell through are declining.

The DoJ also makes the case that Google’s kickbacks have perverted the ad ecosystem so severely that if allowed to continue, it will be the last player standing.

It pulls back the curtain on the grand con of programmatic, alleges the fixing of auctions, and an attempt to subvert the rise of innovations like real-time bidding…

My shorthand - having been involved since Google first emerged - is:

• Google promised the public it would organise the web’s information.
• It then promised publishers that search would drive eyeballs and revenue, but
• Its actions have been to sacrifice both for shareholder returns.

One scheme paid agencies incentives for meeting YouTube’s internal revenue targets.

“This is a perfect example of how they’re able to pull the strings to direct money wherever they want to,” Garcia said.

In its complaint, the DoJ asks a mic drop question: If the incentives were not paid to make the product better, what were they for?

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Erm, bundling

The Mesopotamian city of Uruk, in modern day Iraq, was the seat of power of the great king Gilgamesh and a hub of global trade.

In 2300 BCE, 10,000 marched on its walls, cut off its supplies, and condemned thousands inside to starvation, dehydration, and disease for months before it fell.

It’s the first historical record of what is now known as a siege.

I’ve studied this 5,000-year-old military stratagem in depth, and the similarities to Google’s actions towards publishing and advertising are uncanny.

You be the judge…

• You march up to the gate.
• You appear first as an ally, winning trust through trade.
• As time passes, you bring more of your people to the gate.
• Once you have scale, you threaten your ally, knowing they will shut the gate.
• Once the target has made itself captive, you sever supply lines.
• You then starve and intimidate them into compliance.

The goal is not to target the people. They are productive and you need them. The aim is for them to turn on their king, and open the gates voluntarily, entering serfdom.

Spice it all up with some destabilising propaganda, and the occasional threat of death, and it commonly works.

Ring any bells?

A similar siege destroyed the Library of Alexandria and set humanity back 1,000 years. Microsoft’s AI chief is busily trying to repeat that global calamity…

Google’s siege tools have names we all know; AdX, AdSense, DoubleClick For Publishers, Google Ad Manager (GAM), DV360...

If you don’t use them, you don’t get paid. And if you use one, you must use them all. Any threats are “bought and buried,” according to the DOJ.

Just one of the millions of pages of evidence is an email from a Googler to what was then Magnite. It says: “Use AdX as your SSP or don’t get access to our demand.”

I remember telling Fairfax’s ad sales team they worked for Google. They looked baffled then. This is what I meant.

Erm, manipulating auctions

Surrounding the industry, starving publishers and agencies, and having them paying 35 per cent of revenue for the privilege, is how Google sustains its 20 per cent growth.

I write a lot about Big Tech’s playbook and hammer home the message that the motive is money. It’s profit over people, money over mission, dollars over sense.

Google owns the buy side, sell side, auctions, supply and demand, and the analytics. The DoJ alleges that it could twiddle its dials to boost prices and earnings.

Publishers have long known in their heart that the gig is rigged, but now the US Government plans to show them how, and just how much.

None more so than in its ad auctions. As the ad market as a whole has grown, and Google revenue has soared, publisher traffic has risen, while revenue has collapsed.

We will hear a lot in the case about how it killed smart contenders and hear the inside story on Jedi Blue.

It’s worked brilliantly for Google.

In the six minutes it’s taken you to read to here, Google has earned US$2,716,895.98, or $7,546 per second.

For publishing, not so much.

In the 17 years since Google launched ads:

• 52 per cent of the world’s journalists have been fired
• ~3,500 once successful publications have shut, and
• One in five of the world’s population have been condemned to a news desert.

I’ll be in Canada this October helping publishers formulate a response after the closure of 500 local newsrooms across 350 communities there.

I assure you the solution won’t be Google’s AI Overviews…

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Let me share a story.

A little while ago, a preppy Google tw** approached me at a global media conference and laughed about how short-termist the publishing executives on stage were.

I assume he misjudged that I was compliant too, only not so much

Leaning in as I know they like, I explained: “Picture in your mind an Olympic athlete at the peak of their fitness and performance… Now lock them in an airtight room.

“If you then systematically remove the oxygen, they start to suffocate. At first, they might gasp, then they begin to pant, and then they panic.

“You and your mates are suffocating the publishing industry. The reason they appear short termist?is because they’re panting to stave off imminent death.

“You give them just enough air to stay alive, but never quite enough to compete. Does that sound about right?”

I should declare clearly here that the second largest cohort of subscribers to this newsletter are from Google. I wonder if this rings any bells for them?

I suspect I’ll lose some in the coming weeks, but here’s a prediction: A wave of Google whistleblowers will emerge as this unsavoury evidence comes to light.

Finally, the great king Gilgamesh, ruler of that first siege city, is famous many Millennia later because of his epic - and ultimately doomed - quest for immortality.

How weird then that the Google guys are doing the exact same thing… Do we ever learn anything?

See you at the trial…

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