Google and Digital Ads

Eakinomics: Google and Digital Ads When the Department of Justice (DOJ) announced an investigation into Google’s practices in the digital ads market, most of us yawned (I’m sure because Eakinomics readers rise before the dawn in anticipation of each edition). After all, Google is a large company. Google is a tech company. Google is a profitable company. In the eyes of this administration’s competition police, that’s more than enough for a presumption of guilt. But as emphasized by AAF’s Josh Levine, policymakers might want to slow their roll. It is true that “Google owns, operates, and participates in the digital ad market on the demand side by purchasing impressions; it participates on the supply side by auctioning search and digital display impressions; it also runs an intermediary between the demand- and supply-side buyers to coordinate transactions on its domain and for third party platforms.” That’s a lot of activity in the market, so the investigation of specific practices should continue to set the Google record straight. But any broad conclusions, desire to regulate, or desire to legislate must confront the fact that “since AT&T ran the first digital banner ad in 1994, the cost of placing and serving digital ads has consistently declined. Ad spending is expected to continue growing, and innovations in ad technology have continued unabated. Such growth and innovation would likely not occur in a monopolized market, in which one firm uses its dominant position to extract rents from participants, stifle innovation, and raise barriers to entry.” Moreover, there is a sense here that the DOJ is simply moving the goalposts. After all, its central thesis is that Google’s acquisitions were intended to stifle competition. Unfortunately, it is 2023. “In 2007, Google acquired publisher ad server DoubleClick, a merger approved 4-1 by the Federal Trade Commission (FTC), which undergirds Google’s publisher-side ad services. In 2009, 2010, and 2011, Google acquired three firms that augmented its mobile ad technology, its demand-side services, and its supply-side services, respectively.” That’s right, the key acquisitions all took place over a decade ago and were approved by regulators at the time. Read the paper for more of the nuance (and, as a bonus, a fabulous appendix on how the digital ads market works). But avoid a rush to premature judgment.