Antitrust Law Daily Google executive put on defensive at Senate subcommittee hearing on online advertising
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Tuesday, September 15, 2020

Google executive put on defensive at Senate subcommittee hearing on online advertising

By Jeffrey May, J.D.

Senators on both sides of the aisle express concerns over Google’s alleged dominance in ad tech ecosystem.

Publishers have many choices in how they can monetize their content, Donald Harrison, Google’s President of Global Partnerships and Corporate Development, told members of the Senate antitrust subcommittee at a hearing today on competition in the online advertising market. Most publishers use between four and seven publisher tools to sell their advertising, he added.

Harrison spent much of his time during the hearing defending the company’s position and practices in the market. In his testimony, Harrison noted that advertising prices in the U.S. have fallen more than 40% since 2010 and that these lower prices flow directly to American businesses and consumers. But Senator Richard Blumenthal (D., Conn.) said that Harrison was given the thankless task of "defending the indefensible."

Senator Mike Lee (R., Utah), chairman of the antitrust subcommittee, kicked off the hearing—titled "Stacking the Tech: Has Google Harmed Competition in Online Advertising?"—suggesting that the hearing would discuss what may be "the seminal antitrust case of the 21st century." Lee warned that, if online advertising is monopolized and constrained by opaque pricing and exclusionary conditions, everyone loses.

Both Lee and Senator Josh Hawley (R., Mo.) suggested that Google is displaying its market dominance by forcing publishers to adopt content moderation policies or other policies in order to monetize their content through Google. Hawley pointed to a U.K. competition authority study that found that Google had high market shares across the four layers of the ad stack.

Harrison took issue with the U.K. agency’s findings. He also said that the agency’s report found that competitors, such as Amazon, Twitter, and Snap, were able to succeed in this market. In light of the disagreement, Hawley asked that the company provide the subcommittee with its own figures on market share.

"You control the entire ad stack," said Hawley. "You control the exchange; you control the buying and the selling."

Senator Ted Cruz (R., Fla.) called Google the "800-pound Gorilla" in the markets for buying and selling ads online.

Amy Klobuchar (D., Minn.), the subcommittee ranking member, said that the hearing was not being held because Google was successful or big; however, she also drove home the U.K. competition authority’s market share statistics. "Google has dominant market share positions in every market in the ad tech ecosystem ... with particularly high market shares of at least 80 percent in both the publisher ad server and advertiser ad server markets," Klobuchar said. She added that this market share was gained from acquisitions that were not challenged by antitrust enforcers. Harrison responded that the acquisitions were not premised on an anticompetitive intent.

Threat of regulation. Noting that digital advertising exchanges have been compared to electronic trading in the financial markets, which is regulated, Klobuchar suggested that digital advertising exchanges may need to be regulated.

"You look for regulation in a market where you see market failure," Harrison responded. "I do not see market failure in online advertising."

"There is market failure for these content producers who aren’t able to get advertising any more because they’re going over to you, but they’re still trying to provide the content," said Klobuchar. "To me that’s a failure of sorts, like a big failure for them."

Klobuchar also warned that "the law can't be blinded by Google's success or its past innovations if the company in its zeal to achieve greater success crosses the line into anticompetitive behavior."

Companies: Alphabet Inc.; Google LLC

MainStory: TopStory Advertising Antitrust GCNNews

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