Google's remedy trial continues as it could reshape future of digital advertising

[Alexandria, Virginia at Sunset]
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Google (NASDAQ:GOOG [https://seekingalpha.com/symbol/GOOG])(NASDAQ:GOOGL [https://seekingalpha.com/symbol/GOOGL]) is undergoing yet another remedy trial in U.S. District Court that could drastically alter the future of the company and digital advertising.

The remedy trial started in late September in Alexandria, Va., about five months after Judge Leonie Brinkema ruled Google had committed antitrust violations through its ad tech arm. The plaintiffs in the case included the U.S. Department of Justice and 17 states.

"With the benefit of a three-week bench trial and extensive post-trial filings, the Court finds that Plaintiffs have failed to prove that there is a relevant market for open-web display advertiser ad networks, but have proven that Google has violated Section 2 of the Sherman Act by willfully acquiring and maintaining monopoly power in the open-web display publisher ad server market and the open-web display ad exchange market, and has unlawfully tied its publisher ad server, DFP, and ad exchange, AdX, in violation of Sections 1 and 2 of the Sherman Act," according to court documents [https://storage.courtlistener.com/recap/gov.uscourts.vaed.533508/gov.uscourts.vaed.533508.1410.0.pdf].

In the remedy phase, the plaintiffs are urging Brinkema to force Google to sell its AdX and separate and provide an open-source license for DFP's auction logic. The DOJ also calls for the divestiture of DFP if other measures fail to "sufficiently restore competition."

However, Columbia University computer science professor Jason Nieh said Google divesting its ad tech systems would be a monumental task and require years of effort.

The process to move Google's source code would be an "undertaking of unprecedented complexity with a high degree of uncertainty and no guarantee of success," Nieh said during the trial on October 2, according to Courthouse News Service [https://courthousenews.com/columbia-university-professor-warns-court-against-plan-to-divest-google-of-ad-tech-programs/].

“I can't say with confidence that it is likely that either divestiture would be concluded in five years,” Nieh said.

This is the second remedy phase Google has had to go through in as many months. In early September, Judge Amit Mehta ruled [https://seekingalpha.com/news/4491426-google-not-required-to-sell-chrome-in-antitrust-remedy-ruling-shares-jump] that Google must open up competition in online search by sharing more data with competitors, and said that the company could not enter exclusive contracts for search but could still pay for search engine inclusion. It followed Mehta's ruling last year that Google held an illegal monopoly in online search and search-tied advertising.

However, the ruling will likely be held up in appeals and could be considered a victory for Google, as the U.S. Department of Justice wanted the judge to force Google to sell Chrome, the world's most popular web browser.

"The ruling, if anything, is a gentle slap on the wrist," said Sara Owens, senior vice president of Analytics & Data Science at AXM. "However, Google's dominant market share of search is not the primary concern in terms of anti-trust behavior ... I think this ruling allows Google to continue their strategic anticompetitive work. By keeping Chrome, they can continue to dominate all sides of digital programmatic media buying and selling. The work they were doing with the 'Privacy Sandbox' was an attempt to monopolize in the guise of 'privacy compliance.'"

There is also a good chance the remedy order never even takes effect.

"The odds are pretty good that the remedy never materializes," Owens said. "Even if it weren't hung up in appeals, 'sharing data with competitors' is vague and difficult to define or track compliance."

Owens believes the biggest threat to Google's search engine is the rise of native-AI companies such as Perplexity and OpenAI.

"For me, the ruling is a bit irrelevant to the future of Google," Owens added. "Traditional search engines such as Google and Bing (MSFT [https://seekingalpha.com/symbol/MSFT]) are being disrupted by generative AI. The search space will fundamentally change, and Google is not the lead or only player there."

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