Justice Department pushes for divestiture of Google's online ad monopoly

ALEXANDRIA, Va. (CN) — The U.S. Department of Justice and Google laid out opposing visions for how to restore competition to the online advertising marketplace in proposals filed late Monday.

Google was convicted in April of operating part of its ad tech business as a monopoly. The remedy phase of the antitrust case is set to begin in September before U.S. District Judge Leonie Brinkema, a Bill Clinton appointee who will decide what sort of punishment fits the tech giant’s crime.

Government attorneys make no secret of it: They want divestiture. Google attorneys, on the other hand, say divestiture is “logistically unworkable.” Here is the rundown:

Government: Divestiture is appropriate

The Department of Justice seeks a “mix of structural, behavioral and administrative remedies,” attorneys say. But divestiture is foremost on the list. Specifically, they are targeting the AdX exchange, a digital marketplace for purchasing and selling online ads.

“AdX is a critical instrument of Google’s anticompetitive scheme,” government attorneys charge in court filings. Google unlawfully acquired monopoly power in the ad exchange market, and that power is among the “fruits of its statutory violation” that must be taken away, they write.

The government’s attorneys propose that this divestiture occur “as soon as possible and be overseen by a divestiture trustee, appointed by the court, who would solicit potential buyers." Once the divestiture is completed, the court should enjoin Google from operating an ad exchange for 10 years.

Google also unlawfully acquired and maintained monopoly power in the publisher ad server market. The government proposes that Google assist publishers in transferring data from Google’s Doubleclick for Publishers, or DFP, to another publisher ad server.

Government attorneys also want the court to order Google to divest the remainder of DFP.

Google: Divestiture is unworkable

Divestiture of either AdX or DFP is “not only legally unavailable, but, as Google will establish, logistically unworkable,” attorneys for the tech giant assert.

Google estimated that it would take at least five years, and “likely considerably more time,” to build the equivalent of AdX or DFP to operate outside the company’s infrastructure and sell to a third party.

Beyond that, nobody would want the job. “Witnesses did not testify at trial that rivals are interested in running AdX or DFP," Google attorneys wrote, “much less in expending considerable resources to build AdX or DFP from scratch for their own infrastructure.”

What does Google want to do instead?

Google proposes “conduct remedies” that it contends would address the violations and restore competition.

For example, Google would make “real-time bids for open-web display ads from AdX available to all rival publisher ad servers." The tech giant also proposes removing any Google Ad Manager policies that restrict the sharing of AdX bids with a rival publisher ad server.

The tech giant will also remedy concerns that DFP publishers are unable to diversify revenue away from AdX by changing its ground rules, allowing publishers to set different price floors for different bidders.

Changing Google’s culture

Google has had a “culture of failing to comply with its legal and ethical obligations,” Justice Department attorneys recount. They want mandatory compliance training for Google employees on antitrust laws, attorney-client privilege, and preserving materials for use in investigations, litigation or regulatory filing.

The attorneys also want the court to prohibit Google from retaliating against anyone who cooperated with the government during its investigation. Various publishers and ad executives testified during the trial.

Lawyers for both sides wrote of having a trustee monitor compliance with the court order.

“The broad sweep of these remedies is necessitated by the magnitude of Google’s violations,” government attorneys argue, and “its decade-long campaign of exclusionary conduct.”

But divestiture is a remedy that goes significantly beyond the court’s narrow ruling, said Lee-Anne Mulholland, vice president of regulatory affairs for Google.

“For our part, we are offering a proposal that fully addresses the court’s findings,” she said.

Separately, a federal judge in Washington, D.C. in August found Google acted as a monopolist to dominate online search.