DOJ may antitrust Google over YouTube and AdMob next
# 352: Former antitrust chief reveals more cases may follow, how publishers will be protected, and why Big Tech's free run is at an end....
Google’s antitrust battles may not be over with the former head of the Department of Justice’s antitrust unit saying its $36 billion YouTube empire may be next in the crosshairs.
Jonathan Kanter says legal opinions around Big Tech have shifted, meaning the monopoly era is over and “abuses will now be addressed swiftly and decisively”.
In an exclusive chat with Future Media and Monopoly Report podcast host
, Kanter said Google’s search and ad tech losses had set a precedent.“There are legitimate questions about whether there should be more cases, or whether the cases we’ve had should have been broader,” he says.
“Where does YouTube fit in? Where does AdMob fit in? To be more comprehensive - to really address the problem - you need to consider all those ingredients.
“I’m hopeful the legal principles we’ve established will carry over and future attempts to abuse market power will be addressed swiftly and decisively.”
That will send a chill down the spines at Mountain View where the trillionaires are busily creating charts to figure out how to absorb the DoJ’s current break-up demands.
Alphabet banked $350 billion in 2024, up 14 per cent. But now the 58 per cent contribution of its search ads division has been ruled an illegal monopoly.
The DoJ’s also demanded that Chrome, which delivers two thirds of searches, must be split off (or divested in legal speak).
And Google’s $20 billion deal with Apple for mobile search must go as well.
These carve gaping holes in Alphabet’s future earnings profile, and that’s why it’s accelerating YouTube’s growth as a top priority project at the Googleplex.
I’ve just done a deep dive into this strategy, and it’s fascinating. Over the coming days, I’ll break down what’s in YouTube’s accounts that makes it a prime target for the DoJ.
And how what comes next should push open a valuable window of opportunity for publishers seeking a new premium ad opportunity.
But today’s newsletter focuses on part two of Kanter’s podcast interview with Alan.
History will remember him as the guy who exposed Google as a “once, twice, three times a monopolist”.
Among my highlights from the pod are:
How the DoJ plans to punish Google if it tries to pull the rug from under the publishing industry and “leave it for dead”.
How Google will be forced to throw more assets into the Chrome sale to sweeten the deal if a buyer can’t be found.
Why Google will be made to foot the bill to protect publishers and the public from the disruption its break-up will cause, and
How the penalties only look draconian because Kanter’s antitrust predecessors failed to bring Google to trial earlier.
Get ready for an absolute humdinger of an interview, but first, welcome to new subs overnight from the AI ethics team at the UK’s University of Oxford, Australia’s commercial TV network Seven, Canadian media agency Empathy Inc, the AI team at Hewlett Packard in San Francisco, global ad agency Mindshare in Melbourne, top end of town consultants PWC and Accenture, pop culture publisher Vinyl Media in Sydney, Asianet News in Gurgaon, India, and many more.
Now, if you’re finding value from this newsletter, please share it with your friends.
And if you want to reach the 15,000 readers who are deciding the future of AI, media, marketing, tech, and regulation, consider a sponsorship.
And now back to Alan’s fascinating chat with the regulator at the epicentre of the world changing Google break-up, Jonathan Kanter.
Take it away…
Alan launches in by asking Jonathan Kanter why he thinks Google’s mass deletion of evidence in the antitrust cases has had so little media coverage?
I’ve been baffled by this too.
There’s an active court case, and I’ve reported on it in detail. The case alleges that Google trained senior execs to discuss sensitive matters in chat rather than email.
The danger, staff were told, was that emails could be presented as evidence in court, but the chats were deleted automatically every 24 hours.
DoJ lawyer Kenneth Dintzer told the opening day of the search trial that Google “turned history off so they could rewrite it here in this courtroom”.
An investigation by 17 US States found four million messages and 96 per cent of Google CEO Sunar Pichai’s chats were deleted “deliberately and in bad faith”.
It found Google destroyed “90 plus per cent” of the evidence, was “caught red handed” and alleges its decision to ignore court demands to preserve evidence was “wilful”.
It sparked a fierce backlash from the judges at all three Google’s antitrust trials.
One, Judge James Donato, called it “the most serious and disturbing evidence I have ever seen with respect to a party intentionally suppressing relevant evidence.
“This is a frontal assault on the fair administration of justice. I’m going to get to the bottom of who’s responsible. That day is coming.”
Despite thousands of journalists reading this newsletter, there’s been barely a word reported on the case in mainstream media outlets.
Alan asks: What are your thoughts on the evidence spoliation? Those were central in the trials but haven’t had much mention since. Any thoughts why that might be?
Kanter: “I think it speaks for itself, but when you’re in the remedies phase as the defendant (in this case Google), you’re going to ask the court to trust you.
“Then your track record matters. I’ll leave it there.”
Great mic drop to kick off...
Alan moves on. OK, let me ask you this. Did the DOJ game out scenarios before it put together the chessboard of remedies for the Google break-up?
Kanter: “Yeah, quite a bit.
“When we took on the cases against Google the question was: What do we want? What if the dog catches the car? How should we approach a problem like that?
“My view was to start with the law. Too often in antitrust, and prior to our arrival, there’s been this touchy-feely approach. What do economic curves say?
“And that nerdy stuff is interesting, but this was an exercise in law enforcement. If someone breaks the law, they should be held accountable.
“So, we went back to first principles and asked ourselves about the goals of the remedies? What’s the range of the options? How do we implement them? What works and what doesn’t?
“For example, denying the monopolist the fruits of its violation, preventing recurrence, and the need for forward looking remedies to pry open the market.
“We spent a lot of time looking at other regulatory approaches, then did our best to minimise the risk of failure.”
He then pointed out that altering the behaviour of a giant that controls 91 per cent of search and 68 per cent of web browsing in a multi-decade monopoly was complex.
“Cases like the ones we brought are big and expansive, and that means there’s going to be risk (which can destabilise the market),” he continued.
“I believe that risk should be borne by the defendant (Google), the violator of the law, and not the public.
“It’s going to be clunky in some instances because you’re trying to address 15 years of conduct and deeply entrenched monopolies…”
He then urged regulators to move faster against monopolies, flagging his team’s successes against Google had redrawn the legal landscape.
“What I think gets sometimes lost in this conversation is this is why you need more real-time enforcement,” he said.
“If the enforcement authorities had addressed these issues along the way - which they could have - then these (Google break-up) remedies wouldn’t need to be so invasive.
“They’d be a lot easier to implement, and frankly, they’d be a lot more effective if (they were) done in real-time.
“But now we’re here trying to rewire something that has been stitched together over 15 years which could have been done earlier and prevented a lot of damage.
“I think we (as regulators) could do a better job by making sure that we don’t fall into this situation again, by doing more (regulation and enforcement) in real time.”
Interesting stuff.
Alan then moved on to question a change in the way Kanter’s team investigated the cases.
Before the trials began, many had scoffed that the lawyers and judges would have enough knowledge to understand the digital markets, let alone try the market leader.
Alan asked to what degree did the DoJ bring in third party experts to help the regulators understand ad tech and the violations they were enforcing against.
Kanter replied: “This was a very important part of my tenure. In order to understand market realities, you need to look under the hood, so you need a degree of expertise.
“Economists are important to understand how markets function (but) they’re not a substitute for technical and industry experts who actually know how things work.
“For too long the antitrust community has been long on the former and short on the latter.
“What we built was an in-house, and outside fleet, of experts who brought together all those fields of expertise and domain knowledge.
“That meant we could start with market reality and work backwards.”
Three key witnesses in Kanter’s outside fleet were former News Corp ad chief Stephanie Layser, Daily Mail digital lead Matthew Wheatland and ex-Universal McCann ad scion Joshua Lowcock.
Lowcock testified that the world’s largest agency was powerless to not use Google and search ads were “mandatory” even if Google hiked its prices.
Wheatland said: “Google suppressing prices ultimately reduces publisher revenue which means we do not invest in journalism in a way that we otherwise could.”
Layser landed: “Google held us hostage… every feature they shoved down our throats” and when she complained, she was dismissed as “emotional” and “unproductive”.
Steph’s a hero of mine so I was thrilled when she and I got to address a room of media leaders to drop the truth bomb in New York a few weeks ago. Watch it here.
She’s a legend.
Next, Alan moved onto a $2.14 trillion question, asking Kanter how he and his team had thought about the demands Google sells Chrome and its ad tech infrastructure?
And more specifically what if Google said those assets were worth trillions? Who would be able to afford it?
Or what if Google argued they were loss leaders? How would the DoJ put a price tag on that?
They’re great questions.
Kanter said: “If the thing you’re looking to divest is very clearly a loss leader for the monopolist, then ascertaining a value is going to be a lot more difficult.”
Google argues Chrome - and the Chromium code base its built on - do not make any money, but the DoJ proved that it’s the keystone in Google’s $300 billion ad empire.
Kanter continued: “If something’s a loss leader, then the divestment either needs to be broader (more in it) or flanked by behavioural remedies (that make it more valuable).
“Part of the problem with these tech conglomerates is there’s a massive amount of loss leading and cross-subsidisation.
“They drive the revenue to zero, or the profitability to zero, and sometimes even in the negative, and then recoup it somewhere else along the chain where they have profits.
“In the case of advertising, it might be where you have a long tail of advertisers and you can just sort of take the money from there, or other products and services.
“It’s an interesting problem, but again, this is where those market realities come into play and also understanding their business strategy well.”
One Google activity I’m closely tracking is how it’s shifting earnings from supporting publishers and the open web and diverting it to O&O sites, like YouTube.
Alan and I have spent hours talking about this, so he asks Kanter what would happen if Google couldn’t find a buyer for Chrome or its ad tech. Would it be forced to shut them?
Kanter was back with another mic drop. “No, you throw more assets in and make it attractive,” he said.
Errr, OK. So, if Chrome is not attractive enough on its own for publishers to buy it, what else should they ask for? Here are a few ideas off the top of my head.
A pay-per-use guarantee on AI search results?
Total control and income from AI Overviews?
Alphabet stock for its contribution to Gemini’s training?
And what about ad tech?
A minimum CPM forever on display and video?
First refusal on all ads before Google O&O?
Free use of GAM and AdX to assure sell through?
This is going to be fun. Don’t you love a Google auction? No, not the old bad ones, but these new good ones… :)
Alan then asked about the plan to sell AdX and GAM separately, rather than together. What was the reasoning there?
Kanter was careful in his response as it was not decided by his team. “My guess is that it’s designed to avoid massive disruption,” he replied.
“When platform technologies provide a foundation for other businesses, then ripping things out quickly can lead to unintended consequences.
“I would imagine that in structuring something like that, you’d want to avoid doing things in a reckless way that could cause more harm than good.
“But I don’t know for sure exactly, and I don’t want to get out in front of their rationale, but I’m sure it was well-reasoned.”
He then added: “I’d also say that where you start isn’t always where you finish.
“As you start untangling the various different assets, it’s conceivable that the planned remedy might need some adjustments.”
Basically, this is uncharted ground so it will have to be a work in progress.
Alan then dives into another massive question. Google has been gradually reducing its focus on publishers and the open web. Is there now a risk that it accelerates its exit?
This chart that I created from Google’s most recent financials shows how the ad share it’s passing onto publishers, and the open web, is steadily declining.
You don’t need to dive into its Securities and Exchange Commission filings. I’ve done it for you.
Kanter responds: “There is a danger. You don’t want the monopolist to essentially pull the rug out and leave the industry for dead.
“If a monopolist’s created massive dependencies and wants to exit the market, and own the industry through its owned and operated, that’s a problem.
“What you want to do is make sure stuff (in the remedies) works. You need to think about the scope of the asset package (the parts Google has to sell off).
“What are the requirements in terms of interoperability?
“There are a wide range of possibilities, but I think you have to deliberately guard against what it is you just described.”
What I am hearing him explain here is that the DoJ has forensically analysed how Google’s network interconnects to work out which cogs need to be removed.
Taking out Chrome reduces search and data dominance.
Ending the Apple deal spawns search and mobile competition.
Sharing search data will advance AI and accuracy.
It also enables new content discovery innovations.
Making AdX demand free recreates a meritocracy for ads.
Making Google ad data transparent powers new entrants, and so on…
Alan’s next question is about the DoJ’s ingenious remedy to force Google to put half its ad tech revenue into escrow to fund publishers as they transition to a new ad tech environment.
I think this is genius too and covered it six weeks ago while I was in New York explaining the implications to publishers and urging them to pitch for Chrome.
But Alan was worried that this, and limits on Google’s usage of first party data might be viewed as an overreach, and a risk at a future appeal. Could it be a demand too far?
Not for Kanter, who was adamant: “Data is so key. Google built its business on the back of massive amounts of data that was accumulated.
“It would be irresponsible not to consider how it’s used in the context of remedy.”
He continued: “I haven’t seen anything that’s outside the bounds to me. Everything seems frankly well within it.
“I mean, the first party data and the buy side - even if it wasn’t its own relevant market - was highly relevant to the power and the market dynamics, so it’s fair game.”
Now it was time for Alan to move onto whether the antitrust trials had gone far enough. What about Google’s control over mobile, and mobile ads. Would we need more trials to fix competition there?
Kanter said that might need to happen. “The bigger the cases, the harder they are,” he said. “You could throw in everything and the kitchen sink.
“Back when I arrived at the DoJ, ad tech and search were separate cases.
“So, there’s a little bit of historical accident in terms of what was in the search case and what fell into the ad tech case.”
I had noticed this during the trial. Chrome is essential to the ad business, but the divestment proposal is a remedy in the search trial, not the ad tech trial.
Likewise, publishers rely on Google for most of their traffic, yet they got to testify in the ad tech trial.
But Kanter accepted the antitrust work may not yet be done.
“There are legitimate questions to be asked about whether there should be more cases, or whether the cases we’ve had should have been broader,” he told Alan.
“Where does YouTube fit in? Where does AdMob fit in? I can certainly see that.
“To be more comprehensive and to really address the problem, you need to consider all of those ingredients, but I think that’s just where we are.
“I’m hopeful the legal principles we’ve established across the (search and ad tech) cases will carry over.
“And that future attempts to abuse market power will be addressed swiftly and decisively in mind of the record that we’ve established.”
Alan wanted to know if Kanter had any lingering regrets from the case. Both of them are music-lovers.
“Regrets? I have a few, but I did it my way,” Kanter joked.
Breaking Google will be one of the most complicated commercial undertakings ever attempted. Alan wanted to know how the DoJ planned to avoid unintended consequences?
“I think you need to look at these as living breathing things, right,” Kanter responded. “That's why you want a technical committee, and you want flexibility.”
Technical committees were an innovation that emerged from the Microsoft antitrust case a quarter century ago.
The logic was for the court to appoint a team of industry experts to enact the break-up, rather than leaving it to economists or businessfolk who may miss nuances.
The DoJ helpfully details in its expansive remedies document how it intends to choose the technical committee, how it will work, and how long it will take.
To save you time, I explain it all in this short video.
Kanter said the technical committee enabled the regulators to be nimble.
“If you look for the government to come in, restructure the market and then leave, you run a real risk that you get something wrong,” he said.
“And if the monopolist engages in circumvention, or market conditions shift, then you need some degree of flexibility to make changes.”
He said this had the risk of creating tension. For example, Google is a listed company that needs to keep shareholders informed of what changes are happening.
That means that constantly shifting goalposts would be a bad outcome. Kanter said the approach had been to settle on some clear principles, and he listed them.
“You can’t use your assets for bad purposes. You must divest to give others the opportunity to succeed,” he said
“If you state those principles clearly, then if it turns out you forgot a few things, or someone’s abusing it, then you have the flexibility to make adjustments.
“I do think that adjustments should be baked into any structure that’s imposed. It’s just necessary and appropriate.”
So it’s going to be a moving feast, with the technical committee working Google and the DoJ as the tip of the spear. That was an interesting insight.
For his last question, Alan asked how Kanter felt as a US regulator making changes that impacted on billions of people and national economies across the world. You’re not representing the people of Lithuania, so how do you handle that, he asked.
Kanter had this to say.
“As an enforcer at the DoJ I represent the people of the US. I am a lawyer, and my client is the public. Everything we do needs to be in their best interests.
“That was where our analysis would start and end.
“That said, these (Big Tech) companies exist in a global market, and there are enforcers across the world doing things that inevitably affect how markets work.
“That means it’s necessary and responsible for us to factor that in when making our decisions. There are a lot of opportunities to learn from each other.
“When counterparts abroad are undertaking similar tasks, it’s appropriate to understand what’s working, and not, and using it to make our approach better.
“But the decisions we made had to start and finish with what was in the best interest of our public (in America). And that’s how we did it.”
So you did it your way? Alan quipped.
Quick as a flash is Kanter : “Our way.”
What a legend.
Since leaving the DoJ, Jonathan Kanter has been working as a pundit on CNBC, but if the news industry has any sense left it should hire him as its representative.
He has the inside line on Big Tech, and knows where its skeletons are buried, and where it is vulnerable. He’s a powerbroker who Google and Meta fear.
He’s also proven himself to be politically savvy and able to effectively mobilise massive change under both Republican and Democrat-run White Houses.
He’s also shown himself to be a willing warrior for the news industry, telling delegates at the Digital Content Next summit:
“News and journalism are the raw material of our democracy, and the marketplace of ideas is vital to a thriving free society.
“It’s self-evident why we should care about markets that involve the flow of information, to better society through journalism.
“One of the themes we’re seeing in a lot of cases are intermediaries... who are becoming more powerful than the products and services they intermediate.
“Platforms that generate revenue from aggregation rather than production. When platforms can exert massive control, it becomes a real concern.
“We don’t pick winners and losers. Someone will win and someone won’t win.
“We want folks duking it out in a vibrant, full-throated way. A competitive economy provides opportunity, consistent with the values of a free and open democracy.
“But when companies start engaging in moat building to preserve monopolies, those turn from being competition to anticompetitive conduct, that can violate the law.
“Over the years, more people feel affected by monopoly power. More people see their lives worse off because of concentration of power and control.
“People who work hard for a living. Creators, perhaps more than any other, have experienced the harm of monopoly.
“Journalism is one of the most important industries in our country. It’s not just vital to an informed society, it’s vital to a democratic, free society.
“So, if monopolisation is harming journalism…
“If it means that companies can’t invest in original journalism and the kind of reporting and infrastructure that’s necessary…
“…not just on a national level but on a local level…
“…to keep our country free of corruption…
“…to make sure that our political discourse is well informed…
“…to make sure that people can learn about exciting new things…
“…to make sure that we can vote in an informed way.
“It’s hard to imagine something that’s more important or critical to the fabric of our nation.
“If something is affecting in a meaningful, deep way the journalism industry in our country, then yeah, that’s really important.”
That gives me hope.
You can catch part one of Alan’s interview with Jonathan Kanter here. Don’t miss it…
I rely on your subs to fund my work on Future Media. If you find my work valuable, then please consider signing up for a paid subscription.
 | A guest post by
|