In re Google Dig. Advert. Antitrust Litig.

• Decision Date: 13 September 2022
• Docket Number: 21-md-3010 (PKC),21-cv-6841 (PKC)
• Parties: IN RE: GOOGLE DIGITAL ADVERTISING ANTITRUST LITIGATION THIS DOCUMENT RELATES TO: STATE OF TEXAS By Attorney General Ken Paxton STATE OF ALASKA By Attorney General Treg R. Taylor STATE OF ARKANSAS By Attorney General Leslie Rutledge STATE OF FLORIDA By Attorney General Ashley Moody STATE OF IDAHO By Attorney General Lawrence G. Wasden STATE OF INDIANA By Attorney General Todd Rokita COMMONWEALTH OF KENTUCKY By Attorney General Daniel Cameron STATE OF LOUISIANA By Attorney General Jeff Landry STATE OF MISSISSIPPI By Attorney General Lynn Fitch STATE OF MISSOURI By Attorney General Eric Schmitt STATE OF MONTANA By Attorney General Austin Knudsen STATE OF NEVADA By Attorney General Aaron D. Ford STATE OF NORTH DAKOTA By Attorney General Drew H. Wrigley COMMONWEALTH OF PUERTO RICO By Attorney General Domingo Emanuelli-Hernández STATE OF SOUTH CAROLINA By Attorney General Alan Wilson STATE OF SOUTH DAKOTA By Attorney General Jason R. Ravnsborg and STATE OF UTAH By Attorney General Sean D. Reyes, Plaintiffs, v. GOOGLE LLC, Defendant.
• Court: U.S. District Court — Southern District of New York

IN RE: GOOGLE DIGITAL ADVERTISING ANTITRUST LITIGATION THIS DOCUMENT RELATES TO: STATE OF TEXAS By Attorney General Ken Paxton STATE OF ALASKA By Attorney General Treg R. Taylor STATE OF ARKANSAS By Attorney General Leslie Rutledge STATE OF FLORIDA By Attorney General Ashley Moody STATE OF IDAHO By Attorney General Lawrence G. Wasden STATE OF INDIANA By Attorney General Todd Rokita COMMONWEALTH OF KENTUCKY By Attorney General Daniel Cameron STATE OF LOUISIANA By Attorney General Jeff Landry STATE OF MISSISSIPPI By Attorney General Lynn Fitch STATE OF MISSOURI By Attorney General Eric Schmitt STATE OF MONTANA By Attorney General Austin Knudsen STATE OF NEVADA By Attorney General Aaron D. Ford STATE OF NORTH DAKOTA By Attorney General Drew H. Wrigley COMMONWEALTH OF PUERTO RICO By Attorney General Domingo Emanuelli-Hernández STATE OF SOUTH CAROLINA By Attorney General Alan Wilson STATE OF SOUTH DAKOTA By Attorney General Jason R. Ravnsborg and STATE OF UTAH By Attorney General Sean D. Reyes, Plaintiffs, v. GOOGLE LLC, Defendant.

Nos. 21-md-3010 (PKC), 21-cv-6841 (PKC)

United States District Court, S.D. New York

September 13, 2022

OPINION AND ORDER

P Kevin Castel, Senior United States District Judge

I. OVERVIEW OF THE BUYING AND SELLING OF DISPLAY AND IN-APP ADS......................3

II. PRODUCT AND GEOGRAPHIC MARKETS AND MARKET POWER.........................................5

A. Publisher Ad Servers......................................................................................................................6

B. Ad Exchanges.................................................................................................................................8

C. Ad-Buying Tools for Large Advertisers......................................................................................10

D. Ad-Buying Tools for Small Advertisers......................................................................................11

E. In-App Mediation Tools...............................................................................................................12

F. In-App Networks..........................................................................................................................13

III. PLEADING STANDARD FOR THE SHERMAN ACT CLAIMS...................................................13

IV. COUNT III OF THE COMPLAINT PLAUSIBLY ALLEGES A SECTION 1 TYING CLAIM.....16

V. COUNT IV DOES NOT PLAUSIBLY ALLEGE A SECTION 1 CLAIM BASED ON GOOGLE'S AGREEMENTS WITH FACEBOOK................................................................................................20

A. The States Have Not Plausibly Alleged an Unlawful Agreement Between Google and Facebook to Restrain Facebook's Use of Header Bidding...........................................................................20

1. Header Bidding.........................................................................................................................22

2. The Complaint Does Not Plausibly Allege Collusion Between Google and Facebook to Thwart Header Bidding...........................................................................................................24

B. The States Have Failed to Plausibly Allege an Agreement between Google and Facebook to Limit Competitive Bidding for In-App Ad Inventory..................................................................26

C. The Alleged Restraint on Bidding for In-App Impressions Is Properly Scrutinized Under the Rule of Reason.............................................................................................................................27

D. The States Have Failed to Plausibly Allege a Restraint on Bidding for In-App Impressions under the Rule of Reason.......................................................................................................................30

VI. CERTAIN OF THE STATES' ALLEGATIONS PLAUSIBLY DESCRIBE ANTICOMPETIVE CONDUCT AND STATE CLAIMS FOR MONOPOLIZATION AND ATTEMPTED MONOPOLIZATION UNDER SECTION 2.....................................................................................34

A. Monopolization............................................................................................................................35

B. Attempt to Monopolize................................................................................................................38

C. Monopoly Broth...........................................................................................................................39

D. The Alleged Anticompetitive Conduct Supporting the Monopolization and Attempt to Monopolize Claims......................................................................................................................40

1. Google's Use of Encrypted User IDs Is Not Plausibly Alleged to be Anticompetitive Conduct..................................................................................................................................................40

2. The Complaint Plausibly Alleges Google's Use of Dynamic Allocation Was Anticompetitive Conduct in the Ad Exchange Market......................................................................................44

3. The Complaint Plausibly Alleges that Google's Use of Enhanced Dynamic Allocation Was Anticompetitive Conduct in the Ad Exchange Market...........................................................48

4. The Complaint Plausibly Alleges that Project Bernanke Was Anticompetitive in the Market for Ad-Buying Tools for Small Advertisers and the Bell Variation Was Anticompetitive in the Ad-Server and Ad-Exchange Markets...............................................................................50

5. The Complaint Plausibly Alleges that Dynamic Revenue Sharing Was Anticompetitive Conduct that Harmed Competition in the Ad-Exchange Market............................................55

6. The Complaint Does Not Plausibly Allege that Reserve Price Optimization Was Anticompetitive Conduct........................................................................................................57

7. The Complaint Does Not Plausibly Allege that the Challenged Aspects of Exchange Bidding Were Anticompetitive in Any Market.....................................................................................61

8. The Complaint Plausibly Alleges that Google's Redaction of Auction Data and Limitations on Publisher Line Items Was Anticompetitive Conduct in the Exchange Market and Ad Server Market.....................................................................................................................................66

9. The Complaint Plausibly Alleges that Projects Poirot and Elmo Were Anticompetitive Actions in the Ad-Exchange Market and the Market for Ad-Buying Tools of Large Advertisers.......68

10. The Complaint Does Not Plausibly Allege Anticompetitive Conduct Relating to Mobile Web Page Development...................................................................................................................70

11. The Claim Directed to Google's Proposed Privacy Sandbox Is Not Ripe for Adjudication... 72

12. The Complaint Plausibly Alleges that Google's Unified Pricing Policy Was Anticompetitive Conduct Directed to the Ad-Exchange Market and Ad-Buying Tools for Small and Large Publishers................................................................................................................................74

13. The Facts Underlying the Section 1 Tying Claim Are Anticompetitive Conduct in the Publisher Ad Server Market in Support of the Section 2 Claims............................................77

VII. THE COMPLAINT DOES NOT PLAUSIBLY ALLEGE THAT DYNAMIC ALLOCATION AND DRS HAVE CONTINUING, PRESENT ADVERSE EFFECTS, AND THIS CONDUCT CANNOT BE ENJOINED...................................................................................................................................78

VIII.THE COURT DECLINES TO ADJUDICATE GOOGLE'S LACHES DEFENSE AT THE PLEADING STAGE..........................................................................................................................80 CONCLUSION...........................................................................................................................................87

The advertising industry has kept pace with consumers' near-universal use of websites and mobile apps to obtain news and information. Publishers and advertisers can now participate in a milliseconds-long auction to sell an ad directed to a specific web user based on browsing history and characteristics. Pricing varies based on the consumer's perceived value to the particular advertiser: a seller of motorcycles or sunglasses is generally willing to pay more for ads targeted to likely purchasers. This antitrust action focuses on the multiple roles played by Google LLC ("Google") in the purchase and sale of display ads on commercial websites and ad impressions on mobile apps.

The Attorneys General often states brought an action in the Eastern District of Texas against Google, alleging that Google's digital advertising practices violate sections 1 and 2 of the Sherman Act, as well as the laws of their states. The action was transferred to this Court by the Judicial Panel on Multi-District Litigation for coordinated pre-trial proceedings. Since then, a 702-paragraph Third Amended Complaint ("the Complaint") has been filed in this District on behalf of sixteen states and the Commonwealth of Puerto Rico (collectively, the "States").

The States describe the Complaint as cataloguing a "sweeping variety of anticompetitive conduct." (Mem. in Opp. at l.)^[1] They allege that Google has monopolized or attempted to monopolize various markets related to online display ads (Counts I and II) and...