What you need to know:

• The second day of the Google Antitrust trial featured evidence from the former VP for ad tech at News Corporation, Stephanie Layser who described how hard it is to break away from the Google ecosystem.
• Google "is impossible to avoid," she said, a key point in the case brought by the DoJ.
• News calculated the cost of getting off Google at $9m a year in revenue after which the decision was made to stick with the platform despite it being, in her words, "slow and clunky."
• Her evidence also revealed of 250 publishers she checked with, only three did not use Google.
• Jay Friedman, the CEO of the Goodway Group agency, testified that Google's market power meant he was unable to negotiate more favourable rates, in an echo of one of the key issues that scuppered Google in the recent search monopoly ruling.
• The day began with revelations in court about the scale of Google dominance. Its Ad Manager has a 91 per cent market share, it delivers 13 billion ads a day, and it's used by 8 out of 10 advertisers.

Every newsroom on Earth has asked itself at one time or another whether it can dump Google’s ad server, and the answer is always no.

Yesterday, the second day of Google's ad tech antitrust trial, blew open how that conversation went down at News Corp, and why even the $15 billion giant concluded it was commercially disastrous.

The case is listed to run for four to six weeks. Prosecutors are demanding Google sells off part of its ad tech to flatten the playing field for competition and innovation.

They argue that Google has:

1. Monopolised the ad server market, used by publishers to deliver ads.

2. Monopolised the ad network market through Google Ads.

3. Monopolised the platforms publishers use to sell ads with AdX, and

4. Ties it all together forcing publishers to use them all or lose millions.

Yesterday, the court heard Google bought its way to dominance by acquiring start-up DoubleClick for $3 billion in 2017 and then bullied the market to its whims.

Google denies the allegations.

In today's evidence, internal documents revealed that in 2016, News Corp earned $83.3 million from ads sold through ad tech tools.

More than half came through Google’s ad exchange AdX, and $18.4 million of the ads themselves were sourced through Google Ads.

Despite the numbers, then News Corp VP of ad tech Stephanie Layser said the company decided to look at dumping Google’s ad tech to forge its own path.

For years, she said she had tried to access Google’s data, because The Wall Street Journal wanted to innovate around paywalls and ads.

She derided Google’s ad tech as “20 to 30 years old”, “slow and clunky”, but without the data, News was incapable of building a better monetisation strategy.

So, News’ bean counters began assessing the cost-benefit of dumping Google, and concluded it would mean losing US$9 million-a-year in ad revenue.

Layser told the court that would mean journalists lost their jobs, and internal News Corp innovation would be de-funded, meaning the plan was dropped.

“I felt like they (Google) were holding us hostage,” she told the court. “I’m talking about every feature they shoved down our throats.”

And then when she complained, the court heard Google dismissed her as “emotional” and “unproductive”.

Behind closed doors

The Department of Justice, which has brought the case, has said the trial will lead to secrets hidden behind closed doors being aired, and Layser was not done.

She said that over 14 years and 80 publishers she had worked with, just one did not rely on Google’s ad tech stack. Of another 250 publishers she had asked, the number was three.

She testified that News had looked at running two ad servers, and other strategies, but always concluded that Google was unavoidable somewhere in the chain.

This supports the DoJ’s allegation that publishers cannot avoid using Google because it’s intermingled its tools across the ad ecosystem in a process called tying.

Judge Leonie Brinkema clarified with Layser: “You wanted access to advertiser cash, but didn’t want to go through the DFP (DoubleClick for Publishers) system for that.”

Layser said she had invested years trying to get Google to release data logs so she could optimise revenue but told the judge: “It’s impossible to negotiate with Google.”

Another DoJ allegation is that Google systematically reduced its customer access to analytics, so it alone is able to see a complete picture of ad market dynamics.

Layser said that after two years of begging, Google finally gave her access to log-level data, then “broke the keys” needed to use it, arguing that it breached privacy.

She said she was left “frustrated,” “stuck,” and unable to innovate, and the move hindered “fair competition” and gave publishers no “freedom to switch.”

Locked in but under pressure to grow News’ ad revenues, Layser sought to expand into header bidding, and then to unified pricing rules.

Unified pricing is a single set of rules publishers can set across their ad inventory, e.g. a minimum CPM, to ensure consistent pricing across all exchanges, including Google, while header bidding is a way for publishers to see what ads are available at the right value enabling them to fight for the highest bids in auctions.

Asked the DoJ why she thought Google acted unfairly, Layser replied: “I’m talking about Unified Pricing Rules.

“I’m talking about dynamic allocation. I’m talking about every feature they shoved down our throats over the course of time we were using DFP.”

By the time she left, she said Google had tightened its hold and it was delivering 70 to 80 per cent of all News Corp’s ad revenue.

Sheesh…

Day one of the trial began by revealing the scale of Google’s hold on global advertising.

• Google Ad Manager has a 91 per cent market share.

• It delivers 13 billion ads a day.

• Nine in 10 publishers rely on it.

• As do eight in 10 advertisers.

• Two fifths of global video ads are traded there.

• Google made $31 billion from it in 2021.

• Roughly $12 billion went to publishers, and

• 36 per cent of that was repaid to Google in fees.

Now we can add that 80 per cent of News’ ad revenue relies on it too.

Layser's evidence was followed up with testimony from Jay Friedman, the CEO of the Goodway Group agency, whose evidence described the conflict of interest that arises from Google managing both sides of the transaction – an issue which is also central to the case.

Goodway suggested Google was a difficult company to negotiate with given its market power, noting it was the only company he couldn't negotiate more favourable rates with – in an echo of the issue that sunk Google in its recent search monopoly loss.

Yesterday, Tim Wolfe, VP at USA Today media giant Gannett, told the court that it had fired two-thirds of its 33,000 employees in response to falling ad revenue.

He testified that switching ad servers was like “changing the tyres on a racing car mid-race” because it was so critical to publisher earnings.

Even when cheaper – or free – ad servers approached the company, it was unable to sign up as it would lose out on millions of dollars in ad supply from Google.

It argues that the ad tech market is highly competitive, and unstitching its network will lead to less efficiency, higher prices for advertisers and less revenue for publishers.

Adweek reported: “If Google is forced to sell its publisher ad tech business, it could eventually increase competition in the market.

“However, given the tangled nature of adtech, disrupting the balance between Google’s sell-side tech and publishers’ business models could lead to some wild uncertainties, complications, and chaos in the short-term, according to publishers – particularly around changing the level of demand and incurring publisher costs.

“Even in short-term pain, there’s still winners and losers,” said Scott Messer, founder of consultancy Messer Media.

“The winners are going to be those who have premium offerings and can command the attention of buyers, and the losers are going to be the long tail of the web with relatively undifferentiated supply and lower-quality inventory.”

The trial continues.