The ongoing antitrust trial between the Justice Department and Google has revealed significant internal discussions within the tech giant regarding its longstanding practice of charging publishers a 20% fee for ad transactions. This fee, which has been a cornerstone of Google’s ad business for years, is now being scrutinized by the DOJ as a sign of the company’s alleged monopoly over online advertising.
The trial, which began last week, aims to determine whether Google used its dominant position in the market to unfairly charge higher fees, placing an undue burden on publishers. Testimony from former Google executives has highlighted growing internal discomfort with the high rate, even as the company continued to charge it.
Internal concerns over Google’s practices
The revelation that Google charging publishers 20% for ad transactions was a matter of concern among its own executives has drawn attention. Emails presented during the trial revealed that Google executives privately acknowledged that the 20% fee was “not long-term defensible.” In 2018, former Google ad executive Jonathan Bellack admitted that the fee was significantly higher than market rates.
Despite this internal awareness, the fee persisted, largely because of Google’s control over a massive advertiser base. Google executives, including Chris LaSala, pointed out that the company’s access to this demand through its AdX exchange made it difficult for publishers to avoid using the platform, giving Google the leverage to maintain its high rates.
The Justice Department uses Google’s internal communications and testimonies to argue that the company designed its ad practices to maintain a monopoly. The DOJ claims Google charged publishers high fees due to its dominant market position. This control left publishers with little choice but to comply.
Brian O’Kelley, founder of AppNexus, testified that Google’s 20% take rate was “dramatically higher than competitors.” The DOJ is using his testimony and internal Google emails to argue that Google deliberately tied its publisher ad server and ad exchange. This, they claim, helped the company maintain its dominance in the market.
According to the DOJ, Google’s market control prevented real pricing competition. While other ad exchanges charged lower fees, the company’s ability to link its tools with its large advertiser base made it difficult for publishers to seek alternatives. This alleged lack of competition, the DOJ argues, is a clear sign of Google’s monopoly over the online ad industry.
Google’s defense over habits of charging publishers
In response to the DOJ’s accusations, Google has maintained that its fees are transparent and in line with industry standards. The company has argued that publishers keep the majority of ad revenue, with Google charging only a small percentage for the use of its tools.
A Google spokesperson defended the company’s practices, stating, “Publishers keep the vast majority of the revenue when they use Google’s advertising technology, and our fees are transparent and in line with industry rates.” Google highlights that publishers retain about 70% of the revenue, even when they use its tools to both buy and sell ads.
Despite Google’s defense, internal documents presented at trial show that executives within the company were aware of growing dissatisfaction among publishers regarding the 20% fee. LaSala, in a 2019 email, noted the “continued call from buyers and publishers for transparency,” acknowledging that the fee might not be “reasonable long term.”
As the trial continues, the DOJ is expected to present more evidence of Google charging publishers excessively through its ad practices. The government will argue that Google’s behavior was anti-competitive and harmed both publishers and consumers by inflating costs and stifling market competition.
The trial will also see testimony from key Google executives, including YouTube CEO Neal Mohan, who was involved in Google’s ad business during the period in question. The tech giant will have the opportunity to counter the DOJ’s claims and argue that its practices benefit the entire online ad ecosystem.