Principal Holdings of the MTD Ruling
The States plausibly alleged:
- That Google engaged in monopolization in violation of section 2 of the Sherman Act in the nationwide markets for (1) publisher ad servers, (2) ad exchanges and (3) ad-buying tools for small advertisers (Count I).
- An attempt-to-monopolize claim under section 2 of the Sherman Act in the nationwide market for ad buying tools for large advertisers and an alternative claim for attempt to monopolize the markets for ad exchanges and ad-buying tools for small advertisers (Count II).
- That Google used its market power in the ad-exchange market to coerce publishers to license its publisher ad server and that this constituted an unlawful tying arrangement in violation of section 2 of the Sherman Act (Count III).
The States failed to plausibly allege:
- That Google’s Network Bidding Agreement with Facebook (“NBA”)—an agreement outlining the terms of Facebook’s participation in Google-run auctions–amounts to collusion or any other restraint of trade in violation of section 1 of the Sherman Act (Count IV).
- Harm to competition from Accelerated Mobile Pages (“AMP”), Reserve Price Optimization (“RPO”), the refusal to share unencrypted user IDs, Exchange Bidding, Dynamic Allocation, or Dynamic Revenue Sharing (“DRS”).
- Facts sufficient to state a monopolization claim based on an alleged course of conduct, referred to by the court as a “monopoly broth claim.”
The court additionally held that:
- The States’ claims concerning Privacy Sandbox—Google’s announced plan to remove third-party tracking abilities on the Chrome web browser—were not ripe because the conduct had only been announced. Privacy Sandbox had not been implemented.
- It would not consider Google’s laches defense at that time. The consideration of laches must await the further development of the factual record.
MTD Ruling Summary
The following summary focuses on the reasoning that informed the court’s decisions as to which claims the States plausibly alleged. For ease of reference, the section titles have been reproduced from the court’s ruling. Summaries of the court’s analysis concerning specific conduct allegations have been identified with bold font.
A. Count III of the Complaint Plausibly Alleges a Section 1 Tying Claim.
The court held that the States plausibly alleged a section 1 claim that publishers were coerced to purchase ad serving services from Google’s DFP in order to access Google’s AdX ad exchange. The court explained that the states successfully alleged two distinct product markets and that access to AdX was conditioned on the purchase of DFP. The court found allegations of this conduct sufficient because Google did not challenge the States’ market definitions and the states plausibly alleged that the products at issue were sold separately before the alleged tie was imposed. The court further held that the states plausibly alleged actual coercion through facts stating that Google began restricting the ability of publishers using a non-Google ad server to receive live, competitive bids from AdX in 2010. The court held this claim sufficiently alleged actual coercion because the complaint established that publishers rely on AdX to access demand from thousands of small advertisers that exclusively use Google’s AdX. The court accepted the States’ allegation that if a publisher decides to forgo AdX demand, that publisher could see revenue decline by as much as 40%. The court held the States further established the coercive nature of the alleged tie by noting that Google held 78% of the ad-serving market when the tie was imposed in 2010, but that percentage jumped to 90% by 2018 after Google began requiring that publishers sign a single contract for AdX and DFP. On these facts, the court held the States plausibly alleged market power in both allegedly tied markets (ad exchanges and ad servers), and the alleged conduct plausibly had substantial anticompetitive effects in both. For these reasons, the court also held that the complaint plausibly alleged a section 2 claim that Google unlawfully tied publisher access to AdX to the requirement that publishers license DFP.
B. Count IV Does Not Plausibly Allege a Section 1 Claim based on Google's Agreements with Facebook.
The court held that the States failed to allege an unlawful, collusive agreement between Google and Facebook to restrain Facebook’s use of header bidding. Header bidding is a programing implementation that allows publishers to circumvent ad servers when an auction to fill an open ad space on a website is initiated. A header bidding auction produces a winning bid that is then submitted to ad serves such as Google’s DFP, thus denying Google full control of the transaction. In late September 2018, Google and Facebook entered into an agreement (the NBA). The States allege the NBA was an “unlawful agreement” in which Facebook agreed to curtail its use of header bidding in return for Google’s commitment to allocate a portion of auction wins to Facebook and to give Facebook certain advantages in publishers’ web display and developers’ in-app ad auctions. The court reasoned the primary question was whether the States had alleged facts that permitted a plausible inference that Facebook curtailed its used of header bidding because of its NBA contract with Google.
The court concluded that the States’ allegations did not plausibly allege joint or concerted action between Google and Facebook to restrict Facebook’s use of header bidding. The court explained that “[t]he terms of the NBA do not expressly or by reasonable implication refer to or restrict Facebook’s use of header bidding.” According to the court, because the States did not plausibly alleged an unlawful agreement between Google and Facebook to reduce Facebook’s use of header bidding, there is no need to decide whether such an agreement should be analyzed as a horizontal or vertical agreement. However, the court noted the vertical nature of the challenged agreement, explaining that under the terms of the NBA, Facebook is a user of Google’s services, thus undermining the ability of the NBA to serve as a basis for a plausible allegation that Facebook was a potential direct competitor to Google in the markets addressed by the NBA. The States’ allegation was not plausible, the court explained, because the States failed to account for “Facebook’s motivation to use its economic clout as an advertiser to drive the hardest bargain it could with Google, and that Google was motivated by the legitimate, pro-competitive desire to obtain as much business as possible from Facebook.” An inference of conspiracy is not supported by acts that “made perfect business sense,” the court stated. Instead, explained the court, such acts “are consistent with a firm seeking to secure the business of a very large potential customer by offering it favorable terms. In the absence of an allegation of predatory pricing or other exclusionary or improper conduct, these actions are entirely consistent with competition.”
The court further held that the States failed to plausibly allege the NBA implied unlawful collusion between Google and Facebook, explaining that none of the evidence cited by the States contained even “a hint that Facebook was offering a commitment to substantially curtail use of header bidding or that Google was insisting on such a commitment.” The court further dismissed the States’ contention that the practical impact of the NBA was to ensure Facebook could not financially support header bidding because of the million-dollar minimum spend requirements imposed by the agreement. The court explained that while it was true that money spent by Facebook under the NBA was money that Facebook would not be able to spend on header bidding, the court noted that the states did not offer any context for the size of Facebook’s annual spending on display ads or in-app impressions. The court thus held that the minimum spend agreement could not plausibly establish the States’ allegations.
Aside from the allegation that Google colluded with Facebook to thwart header bidding, the States also alleged that Google conspired with Facebook to manipulate in-app auctions. The court held that the States also failed to plausibly allege such conduct. Holding that the alleged restraint implicated a rapidly changing technological marketplace, the court explained it was imprudent to expand per se treatment to such conduct. The court subsequently held that the States' in-app conduct allegation is properly scrutinized under the rule of reason. The court determined that the allegedly collusive arrangement was “principally a vertical agreement, with potential horizontal consequences.” As the court viewed the agreement, the NBA’s terms induced Facebook to use Google’s mediation tool and positioned Google to gain an auctioneer’s fee of 5 or 10%. The court was unpersuaded by the States’ focus on the NBA’s win-rate provision, explaining that “the win-rate provision does not on its face predetermine the outcome of any auction,” but ensures that Facebook submits competitive bids, does not constrain Google’s actions as an auction participant, and does not limit the number of auctions in which Google may participate. Considering this, the court held that the “[t]he win-rate provision cannot be reasonably read to require collusive bidding or any other form of distorted bidding by Google or Facebook.” Weighing this analysis, the Court reasoned that the NBA may in fact be a pro-competitive arrangement because it brought Facebook into Google’s auctions as a new competitive bidder for in-app inventory. As the court explained, there is no allegation that Facebook was participating in Google ad auctions prior to the NBA.
The court also rejected the States’ “conclusory” allegation that Google has market power in the in-app mediation tool market, holding the States failed to plausibly allege that Google is able to control prices or exclude competition in that market. The court explained that the States alleged harm to competition in the in-app network market driven by the NBA’s ability to depress prices paid to developers but failed to plausibly explain why lower acquisition costs for impressions would necessarily lead to higher resale prices rather than higher margins for in-app networks.
The court further stated that it was left only with the terms of the NBA to assess the plausibility of the states’ claims because the States did not allege additional facts concerning the existence of any side deals that could serve to indicate the allegedly anticompetitive intent of the NBA. The court thus held that “[b]ecause the States have failed to [allege such facts], their section 1 claim premised on Google’s understandings with Facebook relating to the purchase and sale of in-app impressions fails to state a claim for relief.”
C. Certain of the State’s Allegations Plausibly Describe Anticompetitive Conduct and State Claims for Monopolization and Attempted Monopolization under Section 2
With respect to Count I, the court held that the States plausibly alleged Google has monopoly power in, and engaged in anticompetitive conduct in, the markets for ad exchanges, ad-buying tools for small advertisers, and publisher ad servers. The court thus held that the States plausibly alleged facts that state a claim for monopolization in those markets.
Concerning Count II, the court held that the States plausibly alleged anticompetitive conduct, a specific intent to monopolize, and a dangerous probability of achieving monopoly power in the markets for ad exchanges, ad-buying tools for small advertisers, and ad-buying tools for large advertisers. The court thus held that the States plausibly alleged facts that state a claim for attempted monopolization in those markets.
Assessing the alleged monopolization conduct advanced by the States, the court concluded that even though the States claim Google’s various actions worked together to produce a synergistic anticompetitive effect, the States nonetheless fail to allege facts sufficient to state a claim for “monopoly broth.”The court did, however, look at the specific allegations of anticompetitive conduct both in isolation and as part of a broader pattern of conduct.
Encryption of User IDs
The court determined Google’s encryption of DFP user IDs was not plausibly alleged to be anticompetitive in the market for ad servers. The court accepted the States' factual allegations that Google enjoys an information advantage following the encryption of user IDs but held that it would be improper for a court to force Google to share data with its competitors. The court determined that a claim premised on Google’s user ID encryption conduct was a refusal to deal claim subject to the Trinko/Aspen Skiing test concerning such claims. According to the court, the States’ ID encryption allegation fails that test because the States offered no evidence that Google’s decision not to share unencrypted user IDs required the sacrifice of profits to achieve an anticompetitive goal. The court held that the States failed to describe why it would have been in Google’s economic self-interest to share encrypted user IDs that Google itself generated. The compliant also failed to provide historical context for DFP’s sharing of user IDs that would tend to show that Google’s decision to change course was “irrational but for its anticompetitive effect, as opposed to an immediately profitable business strategy that also presented the perception or reality of enhanced consumer privacy,” the court explained. The States alleged that the promotion of user privacy was merely pretext, but the court held that the complaint does not plausibly allege the stated motivation was pretextual.
With its Dynamic Allocation program, the States alleged that Google used historical bid information to which it had unique access through its ad server to thwart exchange competition and guarantee that transactions were conducted on AdX. The court held that the States plausibly alleged that Google’s use of Dynamic Allocation was anticompetitive conduct in the ad exchange market that allowed Google to control prices and exclude competition.
The court further held that the States did not plausibly allege that Google’s use of Dynamic Allocation was anticompetitive conduct for publisher ad servers or for large- or small-advertiser ad-buying tools. While the complaint noted the dominance of Google’s offerings in those markets, the court held that the complaint did not explain what role Dynamic Allocation played in helping Google achieve or maintain its dominance.
Enhanced Dynamic Allocation (EDA)
The court held that the States plausibly alleged Google’s EDA program caused injury to competition in the ad-exchange market by automatically enrolling publishers into EDA while claiming the program maximized yield, when internally Google viewed EDA as a way for AdX to “cherry-pick” high-revenue impressions. The court held that the alleged effect of excluding rival ad exchanges from access to high-value publisher inventory was sufficient to establish plausible anticompetitive injury. According to the court, the States plausibly alleged that through EDA, AdX did not transact high-value impressions due to a superior product or innovation, but because EDA programmatically prioritized its own access to such inventory.
In contrast, the court held that the complaint did not plausibly allege EDA caused anticompetitive harm in the market for publisher ad servers. Even though EDA may have been untruthful, the court explained, it was not apparent from the complaint why EDA reduced publisher choice in the market for ad servers, or why the implementation of EDA would have coerced or inhibited a publisher from using a non-Google ad server.
The court also held that the States did not plausibly allege EDA harmed competition in the market for ad-buying tools. The court characterized the States’ allegations concerning the markets for ad-buying tools as additional refusal to deal claims and held that facts sufficient to bring such claims were not adequately alleged in the complaint.
Project Bernanke (Bernanke)
The court held that the complaint plausibly alleged that Project Bernanke, a Google program that the States alleged manipulates ad auctions to favor Google products, was anticompetitive in the market for ad-buying tools for small advertisers, and the Bell variation of the program was anticompetitive in the ad-server and ad-exchange markets. According to the court, because the Bernanke Program allegedly allowed Google to increase client advertisers' bids using Google Ads to help those advertisers win impressions on AdX that might have gone to advertisers using non-Google ad-buying tools, the complaint plausibly alleged an anticompetitive effort by Google to advantage Google Ads. The complaint further alleged that non-Google ad-buying tools had no effective way of competing with Bernanke and did not know that the conduct underlying the Bernanke Program was occurring. On those facts, the court held that the complaint plausibly alleged Bernanke was anticompetitive conduct that harmed competition in the market for ad-buying tools used by small advertisers. However, the court found the complaint did not plausibly allege that other aspects of Bernanke were anticompetitive as to the market for publisher ad servers because the States did not explain how Bernanke conduct advanced or maintained Google’s ad-server monopoly. Consequently, the court held that only the Bell variation of Bernanke plausibly harmed competition in the market for publisher ad servers.
The court held that the complaint’s allegations about the Bell iteration of Project Bernanke plausibly alleged harm to competition in the ad-server market. According to the complaint, a publisher that granted special priority to AdX would receive higher revenues from AdX, and a publisher that refused to do so would receive lower revenues. On those facts, the court held that the States plausibly alleged Google coercively used its power in the ad-serving market to reward publishers that granted it a special priority and punished those that did not.
The States also alleged that because Bell inflated bids returned to publishers who gave AdX preferential access, non-Google exchanges were left with fewer, lower-value impressions. As described in the complaint, this outcome was not a consequence of a superior product, but of auction manipulations that channeled high-value impressions to AdX, which thereby deprived other exchanges of the ability to offer those impressions to their users. The court held that such allegations were sufficient to plausibly allege anticompetitive harm in the market for ad-exchanges.
Dynamic Revenue Sharing (DRS)
The States alleged that Google’s DRS program deceptively manipulated the fee that AdX charged publishers. The court held that the complaint did not describe anticompetitive conduct in the market for publisher ad servers, but instead described how Google may have misled publishers about the implementation of DRS. The court held that DRS was not sufficiently alleged as conduct that harmed competition in the ad-server market, or the market for ad-buying tools for either large or small advertisers.
However, the court held the complaint plausibly alleged that by adjusting its fees only after receiving bids and reviewing the bids placed on rival exchanges, Google’s use of DRS plausibly harmed competition in the market for ad exchanges. The States alleged that based on information uniquely available to it through its ad-server monopoly, Google had the ability to alter bids to win impressions that it would have otherwise lost to rival exchanges. On the complaint’s allegations, the court held that the States alleged anticompetitive conduct that permitted AdX to win bids based on price manipulation, as opposed to a superior product or some other legitimate business factor. The court determined that this conduct plausibly had the effect of advancing or maintaining Google’s monopoly in the ad-exchange market.
Reserve Price Optimization (RPO)
The States claimed that Google’s RPO program overrode and increased the bidding floors set by publishers and subsequently foreclosed competition from exchanges and advertisers, which in turn resulted in reduced inventory yield for publishers. The States alleged that publishers could not identify the source for the reduction in yield because Google failed to disclose RPO’s reliance on “inside information.” Absent additional facts, the court held such allegations of anticompetitive harm from RPO in the market for publisher ad servers were opaque and theoretical, and not plausibly alleged.
The court further held that the complaint did not plausibly allege RPO amounted to anticompetitive conduct in the markets for ad-buying tools for large or small advertisers. The States alleged that RPO falsely represented that AdX ran a second-price auction, but that alone did not allege a plausible harm to competition, the court held. The court explained that the States’ allegations described how advertisers may have been misled about how Google organized and operated ad auctions, but the allegations did not describe conduct in the markets for ad-buying tools for large and small advertisers that harmed competition.
The court also found that the complaint failed to plausibly allege RPO constituted anticompetitive conduct in the ad-exchange market. The court found the States’ allegations concerning RPO’s effect on the ad-exchange market conclusory. The court held that asserting “RPO was and is successful in excluding competition in the exchange market,” and that it affected “billions of impressions” transacted on AdX, was not sufficient to state a plausible allegation of harm to competition.
The court held that the complaint’s allegations concerning Exchange Bidding, a Google bid-routing initiative implemented in 2017 in response to the growing popularity of header bidding, did not plausibly allege harm to competition in the ad-exchange market. The court explained that if a non-Google exchange, which presumably would be sophisticated in the nature and operation of ad exchanges, chose to participate in Exchange Bidding, this benefitted publishers, the non-Google ad exchange, and the users of the non-Google ad exchange. If Google inadequately or deceptively described its pricing or any part of its Exchange Bidding process, that may be actionable under a state deceptive practice law, the court stated, but without a plausible explanation of how it harmed competition, such conduct is not actionable under section 2.
As described in the complaint, Exchange Bidding has traits that may be “both more and less appealing to customers than header bidding,” and the complaint did not assert that any participant was improperly compelled to participate in Exchange Bidding. Moreover, the court explained, the complaint did not allege any details about how Google marketed Exchange Bidding to publishers and exchanges, or the terms of any agreements that govern participation in Exchange Bidding. Instead, the court explained, the complaint repeatedly characterized Exchange Bidding as an attempt “to kill header bidding,” but failed to describe the anticompetitive effect, if any, that Exchange Bidding has had on header bidding. Therefore, the court determined that the complaint’s allegations regarding the impact on header bidding were conclusory and failed to state a plausible claim.
Redaction of Auction Data and Line Item Limits
By redacting certain data fields, the complaint alleged that Google prevented publishers from measuring the performance of different exchanges and foreclosed header bidding competition. The court held these actions appeared not to have any legitimate business purpose or benefit to Google other than to harm competition from header bidding. The complaint also asserted that Google purposely limited the number of line items available to publishers to foreclose competition from header bidding, which potentially requires numerous line items to work optimally. In DFP, publishers can set a to-the-penny price for bids that they will accept through header bidding using “line items.” Accordingly, publishers must create separate line items ($4.20, $4.21, $4.22 and so on) to capture a competitive bid precisely. The complaint asserted that the limit on publishers’ line items drove down publishers’ yields and made bids from header-bidding exchanges less competitive. The court held these allegations plausibly alleged that Google used its monopoly power in the ad-server market to impair publisher participation in header bidding. According to the court, the complaint “does not describe activity in the nature of a product innovation or a mere refusal to share information with a competitor, but a measure that thwarts the ability of publisher clients to assess the relative performance of auction results on Exchange Bidding and header bidding.” The court held that such allegations plausibly alleged anticompetitive conduct that harmed competition in the exchange market.
Poirot and Elmo
The complaint alleged that Google’s Poirot program enabled Google to use DV360 to obtain information about rival exchanges and direct spending away from those rivals and toward AdX. The court held that on the question of harm to competition in the market for ad buying tools for large advertisers, the complaint plausibly alleged that Google “locked advertisers into using DV360” and directed ad spend to AdX instead of rival exchanges. That DV360 saw an initial negative revenue impact under Poirot supported the conclusion that Google’s conduct was anticompetitive activity undertaken for the purpose of harming rivals, the court determined. The States alleged that by March 2018, the combined impact of the Poirot and Elmo programs decreased DV360 ad spending on exchanges using header bidding and increased spending on AdX by millions. The court held the States plausibly alleged that Poirot and Elmo harmed competition in the ad-exchange market.
The court held the complaint did not plausibly allege that AMP was launched as an anticompetitive strategy. AMP is a software framework for building mobile webpages with the stated goal of improving page load times, developed by Google. The court held that the complaint’s allegations were both sweeping and vague and noted the States did not allege that Google had monopoly power over the platforms or software used to develop mobile web pages. The court further determined that, “[t]o the extent that Google’s search engine purportedly lowered the search rankings for pages that were not developed with AMP, that allegation is remote from the product markets and claims in this case.” The court further held that the States advanced no allegations about how Google’s search engine ranks search results from non-AMP sites, nor did the States provide details that plausibly explained how search results would direct traffic away from sites that facilitated header bidding.
As described in the complaint, Privacy Sandbox is a collection of proposed actions that Google may or may not implement. For that reason, the court explained, it would be premature to adjudicate whether Google’s hypothetical initiative would be anticompetitive conduct if adopted. The court thus declined to reach the question of whether the complaint plausibly alleged that Privacy Sandbox, if implemented, would be anticompetitive.
UPR (Uniform price floors)
The court held that the complaint plausibly alleged Google’s unified pricing policy was anticompetitive conduct directed to the ad-exchange market and the markets for ad-buying tools for small and large publishers. Beginning in 2019, Google began to require all publishers using its DFP ad server to set uniform price floors for Google’s AdX and all non-Google exchanges. The complaint asserted that unified pricing requires publishers to “set the same price floor for different exchanges and the same price floor for different buyers.” The complaint stated that the ability of publishers to set variable price floors on AdX and Google’s ad-buying tools helped diversify returns and counter the problems caused by, for example, Google’s use of encrypted IDs. The States alleged the inability to set a variable price floor for Google products enhanced the anticompetitive effects of Google’s other auction-related activities. The court held that on these alleged facts, it was plausible that “through its monopoly power in the ad-server market, Google [can] effectively require publishers to set uniform prices that advantaged Google’s own products and har[m] its competitors.”
Google argued that “equal treatment cannot harm competition” and “firms have no obligation to aid their competition in perpetuity.” But the court held that “Google’s reliance on principles of equal treatment and the absence of an obligation to assist competitors misses the mark” because Google’s uniform price floor does not permit publishers to adjust those floors to take account of the higher fees charged by Google for transactions on non-Google ad exchanges. While Google has the right to set non-predatory prices, the court held that Google’s decision to restrict the pricing choices of publishers does not appear to have a legitimate business purpose other than to restrict competition in the ad exchange market. The court thus determined that the complaint plausibly alleged unified price rules restrict competition in the ad-exchange market.
The States alleged that uniform price floors prevent publishers from setting different floors for different ad buyers, thereby suppressing competition between ad-buying tools and coercing publishers into transacting with Google’s ad-buying tools. The complaint alleged that one large publisher concluded that UPR resulted in Google’s ad-buying tools winning three to four times as many ad impressions as they did prior to UPR’s implementation. On these facts, the court held that the complaint plausibly alleged anticompetitive conduct in the market for ad-buying tools used by small advertisers and the market for ad-buying tools used by large advertisers.
D. The Complaint Does Not Plausibly Allege Dynamic Allocation and DRS have Continuing, Present Adverse Effects, and this Conduct Cannot be Enjoined.
The court determined the States failed to allege that Dynamic Allocation or DRS are programs that are likely to recur. The court explained that if a complaint does not allege the defendant’s past conduct is responsible for continuing, adverse effects, the claim for injunctive relief is non-justiciable. The court found the complaint’s allegations about Dynamic Allocation “historical in nature” and held that the States failed to identify continuing adverse effects or imminent harms caused by Dynamic Allocation. As with Dynamic Allocation, the court explained, the complaint did not describe the circumstances of Google’s decision to wind down DRS, nor did it identify continuing adverse effects from the program.
E. The Court Declines to Adjudicate Google’s Laches Defense at the Pleading Stage.
The court held that a state plaintiff bringing suit under section 16 of the Clayton Act does not act in the capacity of a sovereign but as a private enforcer. The court therefore concluded that the doctrine of laches may be applied to the States’ claims. The court also determined that the laches analysis is properly guided by the four-year limitations period of the Clayton Act. However, the court concluded that the circumstances of the case weighed against applying laches to bar the States’ tying claim and its section 2 claim. The court also noted that it afforded weight to the fact that the complaint was brought by states and not private competitors. The court reasoned that discovery is needed to determine whether the States unreasonably delayed in bringing their claims but held that the complaint sufficiently established that the tying claim and EDA claim are not the products of undue delay. The further applicability of laches may be revisited on a more developed record following discovery, the court concluded.
The court also held that other context-specific factors weighed against applying laches at the MTD stage. For example, the court explained that the allegations of Google’s anticompetitive conduct and intent relating to the tying claim and the EDA claim were bolstered by internal Google materials that would not have been known to customers or rivals. The court reasoned that because the complaint describes conduct on the part of Google that lacked transparency, occurred out of the public eye, and had effects that were not immediately obvious or well understood, the alleged facts do not support the idea that the States unreasonably delayed in bringing their case. Specifically, the court explained the complaint does not describe conduct that is comparable to the public roll-out of a new initiative or product line, but rather describes a piecemeal implementation of the product tie, the “scope and effect of which may not have been easily recognized in real time.” Similarly, the court held that the complaint establishes EDA’s implementation was opaque and accompanied by misrepresentations about its intent and effects. Publishers, the court explained, would have been aware of EDA, but would not have been immediately aware of its alleged anticompetitive effects.
Finally, the court held that the presence or extent of any prejudice against Google was also uncertain at this early stage. While the court confirmed that a defendant may be prejudiced if unfair delay precludes it from “effectively adopt[ing] an alternative” strategy, the court determined that Google’s assertion of prejudice was too general. The court also noted that the case cited by Google to support its prejudice claim only found the defendant had been prejudiced by plaintiff’s delay following a bench trial.
For reference, the following is a list of the principal terminology used in the case. Definitions are primarily drawn from the MTD ruling and the complaint.
Ad-buying tool: A product used by advertisers to bid on display ads. The States alleged that the ad-buying tool used by large, sophisticated advertisers has distinct features from those used by small advertisers. Ad-buying tools interface with ad exchanges on behalf of advertisers.
Ad exchange: A product used by publishers to sell display ad impression inventory to advertisers. Ad exchanges conduct automated auctions of publisher inventory. Google’s ad exchange is known as AdX.
Ad server: A server that enables large publishers to manage their inventory of impressions. The ad server interfaces with ad exchanges on behalf of publishers. Google’s ad server for publishers has been known at various times as DFP, and Google Ad Manager (GAM). When a user visits a publisher’s website, the publisher’s ad server sends a “bid request” to the ad buying tools that have a “seat” to bid in the exchange and purchase on behalf of their advertiser clients. This bid request announces the publisher’s available impressions to exchanges, along with information about the impression, including the user’s ID, the ad slot’s size parameters, and any rules concerning pricing.
Bell: Version of Project Bernanke that allowed Google to determine whether a publisher provided AdX with an opportunity to bid on inventory prior to other exchanges. After making that determination, the States alleged the Bell program would inflate the bids returned to publishers that gave AdX preferential access. The States also alleged that Bell penalized publishers who did not grant AdX preferential access by paying them the third-place bid rather than the second-place bid, while using the difference to increase the bids made to publishers who allowed preferential access.
Cookies: Pieces of data created by a web server when a user is browsing a website. These data points are then used by advertisers and their intermediaries to track users and target ads.
Demand side platform (DSP): An ad-buying tool for large advertisers. Google’s DSP is called DV360 and is described by the States as the largest ad-buying tool.
Developers: Producers of apps for mobile devices such as smartphones and tablets.
Dynamic Allocation: A Google auctioneering practice that provided Google with the right to win an impression if it offered a bid that was higher than the historical average bid on rival exchanges.
Dynamic Revenue Sharing (DRS): Google program launched in 2014 that adjusted the fee that AdX charged publishers after looking at the publishers’ floors and determining the minimum value required to win the auction. The States allege that DRS adjusted Google’s exchange fee on an impression-per-impression basis after soliciting bids in the auction and thus seeing the bids submitted by rival exchanges. The States allege this helped Google’s AdX win impressions it would have otherwise lost.
Elmo: Google program that allowed DV360 to discern whether a bid request had been made across multiple exchanges, thus indicating that the bid had likely been placed through header bidding. Under Elmo, DV360 decreased ad spending on exchanges suspected to be using header bidding.
Enhanced Dynamic Allocation (EDA): A program implemented through Google’s DFP ad server that the States alleged gave Google the ability to channel the most high-value inventory of Google’s publisher clients exclusively to AdX, which deprived rival exchanges of scale and liquidity.
Exchange Bidding: Google bid-routing initiative implemented in 2017 in response to the growing popularity of header bidding. Exchange bidding allows publishers to route their inventory to more than one exchange at a time to receive live, competitive bids from non-Google exchanges, as well as AdX.
Google Ads: Google’s small-advertiser buying tool.
Impression: The ad space on a specific webpage at a specific point in time, shown to a specific person. Each time a unique user visits a webpage that includes a display ad space, an impression is generated.
In-app mediation tool: A tool used by developers to manage impression inventory, obtain information about users of the developer’s apps, and conduct auctions. Advertisers do not typically interact directly with the in-app mediation tool. Google’s in-app mediation tool is Google Ad Manager for apps (GAM for apps), which Google promotes as a product for large developers, and AdMob for other developers.
In-app networks: Intermediaries that trade in-app inventory on their own account. Instead of using exchanges to connect developers and advertisers in real-time transactions, in-app networks buy ad inventory from developers and resell it to advertisers. Google’s network is known as the AdMob network.
Line items: In DFP, publishers can set a to-the-penny price for bids that they will accept through header bidding using “line items.” Accordingly, publishers must create separate line items ($4.20, $4.21, $4.22 and so on) to capture a competitive bid precisely. The States alleged that Google purposely limits the number of line items available to publishers in DFP in order to foreclose competition from header bidding.
Network Bidding Agreement (NBA): Google and Facebook agreement from 2018 that set the terms of Facebook’s participation in Google-run auctions. Internally, Google refers to the NBA as “Jedi Blue.” The NBA establishes a program where, depending on the volume of impressions Facebook purchased from publishers, Facebook may receive price concessions off the 10% fee Google charges other networks. Under the agreement, Facebook also receives a timing advantage in the form of a longer bid request timeout. Further, unlike other exchanges and networks that used Exchange Bidding, Facebook is permitted by the NBA to contract with publishers directly. Under the NBA, Google also agreed to notify Facebook as to which impressions were likely targeted to bots rather than humans, which Google does not do for other exchanges or networks. Google also committed to help Facebook identify users to improve match rates, and Google agreed to restrictions on how it would use Facebook’s bid data.
Privacy Sandbox: Announced plan by Google to block third-party access to cookies on Google’s Chrome web browser by the end of 2022. In place of cookies, Google plans to offer publishers and advertisers alternative tracking measures that may be less targeted but more aligned with the privacy interests of web users. The States alleged that under Privacy Sandbox Google will continue to track users as usual through their activity across Google’s web properties, further entrenching Google’s data advantages.
Price floor: The minimum bid an exchange must submit for consideration in an impression auction.
Project Bernanke (Bernanke): Google program that the States alleged manipulates ad auctions to favor Google products. Bernanke allegedly increases Google’s take rate and then uses the additional gains to inflate bids placed by advertisers using Google Ads, thereby helping those advertisers win impressions they would have otherwise lost to advertisers using non-Google buying tools. As alleged in the complaint, Project Bernanke underpays a publisher after a transaction clears on AdX, and then Google retains a portion of the winning bidder’s payment. Thereafter, Google adds the retained payment to a pool of funds used to increase the bids of Google’s advertiser clients using AdX. As described in the complaint, this practice boosts advertisers’ bids on AdX, which helps to ensure that the transaction clears on AdX and not a rival exchange.
Publishers: Website publishers that create the content published to the open internet. Publishers monetize their pages through the sale of impression inventory.
Reserve Price Optimization (RPO): Google program that, unknown to publishers, allegedly overrode and increased the bidding floors set by publishers. The States alleged that advertisers paid increased prices for impressions on AdX as a result.
Software Development Kit (SDK): Software application. In the context of in-app mediation, a SDK must be integrated by a developer into an app. The SDK enables the app to interact with in-app networks to solicit bids and select winners from multiple demand sources.
Timeout: Bid requests convey a “timeout,” which is the amount of time prospective buyers are given to submit their “bid response.” Within this timeframe, often only a fraction of a second, each ad buying tool must process the information contained in the bid request, gather and deploy personal information about the user, determine the appropriate price to bid on behalf of the prospective advertiser, and return a bid response to the exchange. When the timeframe expires, each exchange closes its auction and submits its highest bid to the ad server. The publisher’s ad server then selects which ad to display and presents it to the user.
Uniform price floors (UPR): Beginning in 2019, Google began to require all publishers using its DFP ad server to set uniform price floors for Google’s AdX and all non-Google exchanges. In DFP, publishers now must set the same floor for all the exchanges they call to submit ad auction bids.