Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 1 of 40
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF WASHINGTON
`
`
`
`Plaintiff,
`
`
`v.
`
`
`
`ROBINSON COMMUNCATIONS, INC.,
`
`
`
`
`GOOGLE, LLC and
`FACEBOOK, INC.
`
`
`
`
`
`
`
`
`
`CIVIL ACTION NO. _________________
`
`
`JURY TRIAL DEMANDED
`
`
`Defendants.
`
`
`
`COMPLAINT
`
`
`
`“[T]he basis of our governments being the opinion of the people, the very first
`
`1.
`
`object should be to keep that right; and were it left to me to decide whether we should have a
`
`government without newspapers, or newspapers without a government, I should not hesitate a
`
`moment to prefer the latter.” Thomas Jefferson, Letter to Edward Carrington, Paris, Jan. 16, 1787,
`
`PrC (DLC), Published in PTJ, 11:48-50.
`
`2.
`
`The U.S. House Judiciary Committee, Subcommittee on Antitrust, Commercial,
`
`and Administrative Law, recently concluded its antitrust investigation into the digital advertising
`
`market with a 450-page report entitled “Investigation of Competition in Digital Markets: Majority
`
`Staff Report and Recommendations” (“House Judiciary Report”) on October 6, 2020. See also
`
`Hearing, Stacking the Tech: Has Google Harmed Competition in Online Advertising?, U.S. Senate
`
`Judiciary Committee, Antitrust, Competition Policy, and Consumer Rights Subcommittee (Sept.
`
`15, 2020).
`
`{00222429-2}
`
`
`
`
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 2 of 40
`
`
`
`3.
`
`As set forth in the House Judiciary Report, Defendants’ anticompetitive and
`
`monopolistic practices have had a profound effect upon our country’s free and diverse press,
`
`particularly the newspaper industry. Since 2006, newspaper advertising revenue, which is critical
`
`for funding high-quality journalism, fell by over 50%. Newspaper advertising has declined from
`
`$49 billion in 2006 to $16.5 billion in 2017. As a result of these falling revenues, the existence of
`
`the newspaper industry is threatened. Nearly 30,000 newspaper jobs disappeared—a 60% industry-
`
`wide decline—from 1990 to 2016, according to the Bureau of Labor Statistics. And almost 20%
`
`of all newspapers have closed in the past 15 years, and “countless others have become shells—or
`
`‘ghosts’—of themselves,” according to the recent report by the University of North Carolina. The
`
`reduction in revenues to newspapers across the country, including Plaintiff, were directly caused
`
`by Defendants’ conduct as set forth herein and went directly into Google’s coffers:
`
`See David Chavern, Written Statement, Online Platforms and Market Power, Part 1: The Free
`
`and Diverse Press, Committee on the Judiciary Subcommittee on Antitrust, Commercial and
`
`Administrative Law, United States House of Representatives (June 11, 2019).
`
`
`
`{00222429-2}
`
`
`
`2
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 3 of 40
`
`
`
`4.
`
`These hearings launched antitrust complaints filed by the Federal Trade
`
`Commission, the U.S. Department of Justice, and more than 40 State Attorneys General (the
`
`“States Attorneys General”) against Google, LLC and Facebook, Inc. See U.S. et al. v. Google
`
`LLC, U.S. District Court for the District of Columbia (Case 1:20-cv-03010) (Doc. 1-1) (filed
`
`10/20/20) (“DOJ v. Google case”); State of Texas et al. v. Google LLC, U.S. District Court for the
`
`Eastern District of Texas, Sherman Division (Case 4:20-cv-00957) (Doc. 1) (filed 12/16/20) (“AGs
`
`v. Google case”); State of New York et al. v. Facebook, Inc., U.S. District Court for the District
`
`of Columbia (Case 1:20-cv-03589-JEB) (Doc. 70) (filed 12/09/20) (“AGs v. Facebook case”);
`
`FTC v. Facebook, Inc., U.S. District Court for the District of Columbia (Case 1:20-cv-03590-JEB)
`
`(Doc. 3) (filed 12/09/20) (“FTC v. Facebook case”).1
`
`5.
`
`The allegations set forth herein are taken from the public record in the proceedings
`
`referenced above. If proven to be true, and as alleged herein, Google and Facebook have
`
`monopolized the digital advertising market thereby strangling a primary source of revenue for
`
`newspapers across the country. This antitrust action is brought to seek all remedies afforded under
`
`law.
`
`PARTIES
`
`6.
`
`Plaintiff Robinson Communications, Inc. is a Washington corporation, with a
`
`principal office at 32220 7th Avenue SW, Federal Way, Washington, 98023-5523. For nearly 70
`
`years, the Robinson family has owned and operated several newspapers and publications,
`
`including White Center News, Federal Way News, the Des Moines News, Highline Times, West
`
`
`1
`While the court in the FTC v. Facebook case granted a motion to dismiss the case for a pleading defect, the
`FTC recently voted to refile the case against Facebook.
`{00222429-2}
`
`3
`
`
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 4 of 40
`
`
`
`Seattle Herald, Ballard News Tribune, the Robinson Newspapers, Westside Weekly, Westside
`
`Seattle and the SeaTac News.
`
`7.
`
`Plaintiff’s newspapers are locally owned, operated, and written. Many have served
`
`their local communities for decades, telling the stories of their people, places, struggles, and joys.
`
`They provide an important function of reporting and publishing news to the citizens of
`
`Washington. In many instances, Plaintiff’s papers are a major source of news for the Washington
`
`citizens they serve and are a primary source of community news and commentary.
`
`8.
`
`Plaintiff has also digitally published its stories, articles, information and content on
`
`the internet and worldwide web at the following domains:
`
`◼ westsideseattle.com
`◼ ballardnewstribune.com
`◼ westseattleherald.com
`◼ highlinetimes.com
`◼ seatacnews.com
`◼ desmoinesnews.com
`◼ federalwaynews.com
`◼ monroemonitor.com
`
`
`
`9.
`
`At all times material herein, Plaintiff sold and/or attempted to sell digital
`
`advertisements on the aforementioned domains and competed with Google and Facebook in the
`
`relevant digital advertising markets.
`
`10.
`
`At one time, Plaintiff had over 400 employees and a circulation of well over
`
`100,000, printing three editions each week. As a result of the conduct alleged herein, however, in
`
`April of 2021, Plaintiff was forced to cease all print editions of its newspapers.
`
`{00222429-2}
`
`
`
`4
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 5 of 40
`
`
`
`11.
`
`As a direct result of Defendants’ antitrust violations described herein, and as set
`
`forth in more detail below, newspapers in Washington, including Plaintiff’s newspapers, together
`
`with newspapers throughout this country, are currently under a very real threat to their existence.
`
`Without redress, these newspapers, and hence the citizens of Washington, may well end up in a
`
`“news desert” as described below.
`
`12.
`
`Defendant GOOGLE LLC (“Google”) is a limited liability company organized and
`
`existing under the laws of the State of Delaware, and is headquartered in Mountain View,
`
`California. Google is an online advertising technology company providing internet-related
`
`products, including various online advertising technologies, directly and through subsidiaries and
`
`business units it owns and controls. Google is owned by Alphabet Inc., a publicly traded company
`
`incorporated and existing under the laws of the State of Delaware and headquartered in Mountain
`
`View, California.2
`
`13.
`
`Defendant FACEBOOK, INC. (“Facebook”) is a Delaware corporation with its
`
`principal office or place of business situated in Menlo Park, California. At all times relevant to this
`
`Complaint, Facebook has operated
`
`its social-networking service
`
`through
`
`its website,
`
`www.facebook.com, and mobile applications that connect users with Friends on Facebook.3
`
`NATURE OF THIS ACTION
`
`14.
`
`Plaintiff, and other newspapers across the country, compete for revenue in the
`
`digital advertising market. Google monopolizes the market to such extent that it threatens the
`
`extinction of local newspapers across the country. There is no longer a competitive market in which
`
`newspapers can fairly compete for online advertising revenue. Google has vertically integrated
`
`
`2 See DOJ v. Google case at ¶ 18; AGs v. Google case at ¶ 21.
`3 See AGs v. Facebook case at ¶ 21; Complaint, U.S. et al. v. Facebook Inc., United States District Court for the
`District of Columbia (Case 1:19-cv-02184-TJK) (Doc. 1 at ¶ 2) (filed 07/24/19).
`{00222429-2}
`5
`
`
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 6 of 40
`
`
`
`itself, through hundreds of mergers and acquisitions, to enable dominion over all sellers, buyers,
`
`and middlemen in the marketplace. It has absorbed the market internally and consumed most of
`
`the revenue. Google’s unlawful anticompetitive conduct is directly stripping newspapers across
`
`the country, including Plaintiff, of their primary revenue source.
`
`15.
`
`The freedom of the press is not at stake; the press itself is at stake. Plaintiff has
`
`suffered an antitrust injury under Sections 1 and 2 of the Sherman Act. 15 U.S.C. § 2.
`
`16.
`
`Google and Facebook, archrivals in the digital advertising market, conspired to
`
`further their worldwide dominance of the digital advertising market in a secret agreement
`
`codenamed “Jedi Blue.” The two archrivals, who are sometimes referenced as operating a duopoly
`
`in the market, unlawfully conspired to manipulate online auctions which generate digital
`
`advertising revenue. Facebook and Google agreed to avoid competing with another in or around
`
`September 2018. The quid pro quo was as follows—Facebook would largely forego its foray into
`
`header bidding and would instead bid through Google’s ad server. In exchange, Google agreed to
`
`give Facebook preferential treatment in its auctions.
`
`17.
`
`This agreement closed a growing threat to Google’s primacy and further cemented
`
`its stranglehold on the marketplace. These actions are illegal and directly caused newspapers
`
`across the country, including Plaintiff, enormous financial harm in the form of loss of revenue
`
`sources. This is a per se violation of Section 1 of the Sherman Act, which declares “[e]very . . .
`
`conspiracy, in restraint of trade or commerce among the several States” to be illegal. 15 U.S.C. §
`
`1.
`
`18.
`
`The Clayton Act, 15 U.S.C § 12, et seq., operates in conjunction with the Sherman
`
`Act to create private causes of action for violations of federal antitrust laws. See Blue Shield of
`
`{00222429-2}
`
`
`
`6
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 7 of 40
`
`
`
`Va. v. McCready, 457 U.S. 465, 471, 102 S. Ct. 2540, 2544 (1982); Pfizer, Inc. v. Gov’t of India,
`
`434 U.S. 308, 311-13, 98 S. Ct. 584, 586-88 (1978).
`
`19.
`
`There is a direct causal connection between these antitrust violations and the harm
`
`to competition on the merits and to Plaintiff. The harm was intentional and intended. The harm is
`
`of a type that Congress sought to redress in providing a private remedy for violations of the
`
`antitrust laws. The loss of revenue streams can be directly tied to the antitrust conduct of
`
`Defendants. Plaintiff is the direct victim of the alleged antitrust injury as a competitor in the digital
`
`advertising market. Damages can be quantified and apportioned among those directly and
`
`indirectly harmed.
`
`20.
`
`In this Complaint, Plaintiff does not allege a breach of any contract, nor a dispute
`
`regarding the performance of a contractual term, with Defendants. Plaintiff alleges two distinct
`
`antitrust causes of action asserting that (a) Google unlawfully exercised monopoly power of the
`
`digital advertising market (both search advertising and display advertising), which is a Sherman
`
`Act § 2 violation and (b) Google and Facebook unlawfully conspired to engage in anticompetitive
`
`conduct which is a per se Sherman Act § 1 violation (including the sealed Jedi Blue agreement).
`
`Nothing herein should be construed to allege a breach of, nor arise out of, any terms of use
`
`governing any contractual agreement between Plaintiff and Defendants.
`
`JURISDICTION AND VENUE
`
`21.
`
`This Court has subject matter jurisdiction over this action under 28 U.S.C. §§ 1331
`
`and 1337; Section 2 of the Sherman Act, 15 U.S.C. § 2, et seq.; and Sections 3, 4, and 16 of the
`
`Clayton Act, 15 U.S.C. §§ 14, 15, and 26, because Plaintiff alleges violations of federal law.
`
`22.
`
`This Court also has jurisdiction over this action under statutory authority of 28
`
`U.S.C. § 1332 in that Plaintiff is a citizen of Washington and, upon information and belief, all
`
`{00222429-2}
`
`
`
`7
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 8 of 40
`
`
`
`Defendants are citizens of states other than Washington and the amount in controversy well
`
`exceeds $75,000.00 exclusive of interest and costs.
`
`23.
`
`Venue and jurisdiction are proper in this District pursuant to 15 U.S.C. § 22 because
`
`Defendants transact business in this District.
`
`a) At all times material herein, Google engaged in regular, practical, everyday
`
`business of a substantial character in this District. Upon information and belief,
`
`Google is the largest provider of digital advertising in this District, and Google
`
`regularly directs commercial activity to this District by targeting and supplying
`
`consumers within this District with directed advertisements. Google operates
`
`its products within this District on a regular and everyday basis, which are used
`
`by thousands and thousands of consumers within this District each day. These
`
`products include Google Search, Chrome, YouTube, Gmail, Android, Google
`
`Maps, Google Drive, and Google Play Store. Google is ubiquitous across the
`
`digital economy in this District. Its contacts with this District are regular and
`
`continuous; they are not isolated and sporadic. Google also derives substantial
`
`revenue from the operation and use of its products within this District.
`
`b) Facebook is the largest social networking platform in this District. Each day,
`
`thousands and thousands of consumers within this District access Facebook and
`
`its family of products, including Facebook Blue, Instagram, Messenger, and
`
`WhatsApp. Facebook also regularly directs commercial activity to this District
`
`by serving directed and targeted advertisements to consumers within this
`
`District. Facebook derives substantial revenue from its commercial activities in
`
`{00222429-2}
`
`
`
`8
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 9 of 40
`
`
`
`this District. Its contacts in this District are regular, constant, and of a
`
`substantial character. Facebook’s activities are not isolated or sporadic.
`
`24.
`
`Venue is also proper in this District pursuant to 28 U.S.C. § 1391(b) in that a
`
`substantial part of the events or omissions giving rise to this action occurred in this judicial district.
`
`25.
`
`This Court also has personal jurisdiction over each of these Defendants in that, at
`
`all times material herein, they transacted business in Washington; contracted to supply services or
`
`things in Washington; and/or committed acts and/or omissions in or outside Washington which
`
`caused tortious injury to Plaintiff.
`
`26.
`
`Defendants’ conduct as alleged herein has had a substantial effect on interstate and
`
`intrastate commerce. At all material times, Google and Facebook participated in the conduct set
`
`forth herein in a continuous and uninterrupted flow of commerce across state and national lines
`
`and throughout the United States.
`
`
`
`FACTUAL ALLEGATIONS
`
`A.
`
`27.
`
`The Importance of a Free and Diverse Press and the Decline of Local
`Newspapers
`
`
`A free and diverse press is essential to a vibrant democracy. Whether exposing
`
`corruption in government, informing citizens, or holding power to account, independent
`
`journalism sustains our democracy by facilitating public discourse.
`
`28.
`
`Newspapers have played a key role in our democracy since its founding.
`
`‘“Journalism is said to be the first rough draft of history. . . . The Federalist Papers were first
`
`published in newspapers in New York in 1787-88 to promote the ratification of the United States
`
`Constitution. The fact that policy debates today are informed by the public forum offered by
`
`{00222429-2}
`
`
`
`9
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 10 of 40
`
`
`
`newspapers in the past is a reminder that the media have been intertwined with and integral to
`
`democracy since the founding.”’4
`
`29.
`
`“The liberty of the press ought not to be restrained.” Alexander Hamilton, THE
`
`FEDERALIST PAPERS: NO. 84 (1791).
`
`Congress has declared:
`
`30.
`
`In the public interest of maintaining a newspaper press editorially and reportorially
`independent and competitive in all parts of the United States, it is hereby declared
`to be the public policy of the United States to preserve the publication of
`newspapers in any city, community, or metropolitan area where a joint operating
`arrangement has been heretofore entered into because of economic distress or is
`hereafter effected in accordance with the provisions of this chapter.
`
`15 U.S.C. § 1801, et seq.
`
`
`31.
`
`In 1995, Microsoft CEO Bill Gates circulated an internal memorandum to executive
`
`staff which concluded: “The Internet is a tidal wave. It changes the rules. It is an incredible
`
`opportunity as well as incredible challenge[.]”5 As a result, newspapers have seen a steady decline
`
`in circulation.6 According to the Pew Research Center, U.S. newspaper circulation fell in 2018 to
`
`its lowest level since 1940, the first year with available data.7
`
`
`4 Sandra Feder, Stanford Report, Interview with James Hamilton, Hearst Professor of Communication at Stanford
`University’s
`School
`of Humanities
`and
`Sciences,
`Feb.
`27,
`2020
`(citation
`omitted):
`https://news.stanford.edu/2020/02/27/journalism-and-democracy/.
`5 https://www.justice.gov/sites/default/files/atr/legacy/2006/03/03/20.pdf. Microsoft proceeded
`to monopolize
`internet access resulting in a consent decree with the U.S. Department of Justice to resolve antitrust claims. United
`States v. Microsoft Corp., 231 F. Supp. 2d 144, 149 (D.D.C. 2002).
`6 Penelope Muse Abernathy, News Deserts and Ghost Newspapers: Will Local News Survive?, The Center for
`Innovation and Sustainability in Local Media, Hussman School of Journalism and Media, University of North Carolina
`at Chapel Hill (2020) (2020_News_Deserts_and_Ghost_Newspapers.pdf (usnewsdeserts.com).
`7 Pew Research Center is a nonpartisan fact tank that informs the public about the issues, attitudes, and trends shaping
`the world. It does not take policy positions. The Center conducts public opinion polling, demographic research, content
`analysis, and other data-driven social science research. It studies U.S. politics and policy; journalism and media;
`internet, science, and technology; religion and public life; Hispanic trends; global attitudes and trends; and U.S. social
`demographics and trends. All of the Center’s reports are available at www.pewresearch.org. Pew Research Center is
`a subsidiary of The Pew Charitable Trusts, its primary funder.
`{00222429-2}
`10
`
`
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 11 of 40
`
`
`
`32.
`
`Since 2006, newspaper advertising revenue, which is critical for funding high-
`
`quality journalism, has fallen by over 50%. Despite significant growth in online traffic among the
`
`nation’s leading newspapers, print and digital newsrooms across the country are laying off
`
`reporters or folding altogether. As a result, communities throughout the United States are
`
`increasingly going without sources for local news. The emergence of platform gatekeepers—and
`
`the market power wielded by Google and Facebook—has contributed to the decline of trustworthy
`
`sources of news.
`
`33.
`
`Since 2006, the news industry has been in economic freefall, primarily due to a
`
`massive decrease in advertising revenue caused by Defendants’ anticompetitive and unlawful
`
`conduct. Both print and broadcast news organizations rely heavily on advertising revenue to
`
`support their operations, and as the market has shifted to digital platforms, news organizations
`
`have seen the value of their advertising space plummet steeply. For newspapers, advertising has
`
`declined from $49 billion in 2006 to $16.5 billion in 2017. National and local news sources alike
`
`have felt this decrease.
`
`34.
`
`As a result of falling revenues, newspapers are steadily losing the ability to
`
`financially support their newsrooms, which are costly to maintain but provide immense value to
`
`their communities. A robust local newsroom requires the financial freedom to support in-depth,
`
`sometimes years-long reporting, as well as the ability to hire and retain journalists with expertise
`
`in fundamentally local issues, such as coverage of state government.
`
`35.
`
`Budget cuts have also led to a dramatic number of newsroom job losses. This
`
`decline has been primarily driven by a reduction in newspaper employees, who have seen
`
`employment fall by half over a recent 8-year period, from 71,000 in 2008 to 35,000 in 2019. In
`
`2019 alone, 7,800 media industry employees were laid off. The Bureau of Labor Statistics
`
`{00222429-2}
`
`
`
`11
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 12 of 40
`
`
`
`estimates that the total employment of reporters, correspondents, and broadcast news analysts will
`
`continue to decline by about 11% between 2019 and 2029.
`
`36.
`
`Researchers at the University of North Carolina School of Media and Journalism
`
`found that the United States has lost nearly 1,800 newspapers since 2004 either to closure or
`
`merger, 70% of which were in metropolitan areas. As a result, the majority of counties in America
`
`no longer have more than one publisher of local news, and 200 are without any paper.
`
`37.
`
`According to a recent article published by the University of North Carolina, many
`
`citizens across the country now live in a “news desert” as a result of these closures and layoffs:
`
`
`
`38.
`
`In order to survive in the digital marketplace, newspapers were forced to transition
`
`revenue sources from traditional print advertisements to digital advertising. Unfortunately, the
`
`illegal monopolization of digital advertising by Google, along with private agreements with
`
`Facebook, have prevented them from competing on the merits in the digital advertising market.
`
`39.
`
`Local journalism is essential for healthy communities, competitive marketplaces,
`
`and a thriving democracy. Unfortunately, the local news industry is being decimated in the digital
`
`age. This is due both to the rapid proliferation of online news content as well as unfair market
`
`practices by some of the world’s largest technology companies that reuse local news’ content, data,
`
`{00222429-2}
`
`
`
`12
`
`
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 13 of 40
`
`
`
`customers, and advertisers. Report, Local Journalism: America’s Most Trusted News Sources
`
`Threatened, U.S. Senate Committee on Commerce, Science, and Transportation (Oct. 2020).
`
`B.
`
`Digital Advertising Market
`
`40.
`
`There are two principal forms of digital advertising: search advertising and display
`
`advertising.
`
`41.
`
`“Search advertising” refers to digital ads on desktop or mobile search engines, such
`
`as the Google.com homepage, displayed via “search ad tech” alongside search engine results.
`
`Search advertising is often bought and sold via real-time bidding (RTB) auctions among
`
`advertisers, where advertisers set the price they are willing to pay for a specific keyword in a query.
`
`42.
`
`“Display advertising” refers to the delivery of digital ad content to ad space on
`
`websites and mobile apps, which is referred to as “inventory.” Within display advertising, there
`
`are two separate “ad tech” market platforms: first-party and third-party.
`
`43.
`
`“First-party display ad tech platforms” sell ad space on their own platforms directly
`
`to advertisers. For example, Facebook sells ad space on its platform to advertisers. Google sells
`
`display ads on its own properties such as YouTube.
`
`44.
`
`“Third-party display ad tech platforms” are run by intermediary vendors and
`
`facilitate the transaction between third-party advertisers and third-party publishers. Here,
`
`specialized software automates the buying and selling of digital ads through an ad exchange.
`
`
`
`
`
`
`
`
`
`
`
`{00222429-2}
`
`
`
`13
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 14 of 40
`
`
`
`C.
`
`The Third-Party Ad Tech Suite
`
`45.
`
`
`Sell-side software includes publisher ad servers. The primary function of a
`
`publisher ad server is to fill ad space on a publisher’s website that is personalized to the interests
`
`of a specific website viewer. Sell-side software also includes ad networks, which aggregate ad
`
`inventory from many different publishers and divide that inventory based on user characteristics—
`
`such as age or location. Ad networks sell the pool of inventory through ad exchanges or demand-
`
`side platforms (DSPs).
`
`46.
`
`Buy-side software includes advertiser ad servers, that is, software that stores,
`
`maintains, and delivers digital ads to the available inventory. Advertiser ad servers facilitate the
`
`programmatic process that makes instantaneous decisions about which advertisements to display
`
`on which websites to which users and displays the ad on that site. Ad servers collect and report
`
`data, such as ad impressions and clicks, for advertisers to monitor ad performance and track
`
`conversion metrics. Buy-side software also includes demand-side platforms, software that allows
`
`advertisers to buy advertising inventory from a range of publishers. Demand-side platforms use
`
`data to create targeted ad audiences and engage in purchasing and bidding.
`
`47.
`
`Approximately 86% of online display advertising space in the United States is
`
`bought and sold in real-time on electronic trading venues, which the industry calls “advertising
`
`{00222429-2}
`
`
`
`14
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 15 of 40
`
`
`
`exchanges.”8 Ad exchanges refer to the ad trafficking system that connects advertisers looking to
`
`buy inventory with publishers selling inventory. Sales on ad exchanges occur primarily through:
`
`(a) open real-time bidding auctions; (b) closed real-time bidding auctions; or (c) programmatic
`
`direct deals. The ad tech suite also includes analytics tools that allow advertisers and publishers
`
`to measure ad campaign efficiency, including consumers’ interactions with an ad. Similarly, data
`
`management platforms aggregate and store consumer data from various sources and process the
`
`data for analysis. Advertisers and publishers use data management platforms to track, partition,
`
`and target consumer audiences across websites.
`
`48.
`
`The ad exchange connects advertisers looking to buy inventory with publishers
`
`selling inventory. With intermediaries that route buy and sell orders, the structure of the digital
`
`advertising market is similar to the structure of electronically traded financial markets. In digital
`
`advertising, a single company, Google, simultaneously operates the leading trading venue, as well
`
`as the leading intermediaries that buyers and sellers go through to trade. At the same time, Google
`
`itself is one of the largest sellers of ad space globally. Google monopolizes advertising markets by
`
`engaging in conduct that lawmakers prohibit in other electronic trading markets: Google’s ad
`
`exchange shares superior trading information and speed with the Google-owned intermediaries,
`
`Google steers buy and sell orders to its own exchange and websites (for example, Google Search
`
`and YouTube), and Google abuses its access to inside information.9
`
`49.
`
`The digital advertising market is highly concentrated, with Google and Facebook
`
`controlling the majority of the online advertising market in the United States, capturing nearly all
`
`of its growth in recent years.
`
`
`8 Dina Srinivasan, Why Google Dominates Advertising Markets: Competition Policy Should Lean on the Principles of
`Financial Market Regulation, 24 Stan. Tech. L. Rev. 55, 58 (2020).
`9 Id.
`{00222429-2}
`
`15
`
`
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 16 of 40
`
`
`
`50.
`
`Over the last decade, the digital advertising market has experienced double-digit
`
`year-over-year growth. The market, however, has become increasingly concentrated since the
`
`advent of programmatic trading. In 2017, Business Insider reported that Google and Facebook
`
`accounted for 99% of year-over-year growth in U.S. digital advertising revenue. Today, advertisers
`
`and publishers alike have few options when deciding how to buy and sell online ad space.
`
`51.
`
`This concentration likely exists in part due to high barriers to entry. Google and
`
`Facebook both have a significant lead in the market due to their significant collection of behavioral
`
`data online, which can be used in targeted advertising. Additionally, Google and Facebook do not
`
`provide access to this unique data in open data exchanges. Advertisers’ only access to this
`
`information is indirect—through engagement with Google and Facebook’s ad tech suite.
`
`52.
`
`This significant level of concentration in the online advertising market—commonly
`
`referred to as the digital ad duopoly—has harmed the quality and availability of journalism. As a
`
`result of this dominance, there has been a significant decline in advertising revenue to news
`
`publishers, undermining publishers’ ability to deliver valuable reporting and ‘“siphon[ing] revenue
`
`away from news organizations.”’ House Judiciary Report, p. 70 (citation omitted).
`
`53.
`
`There is a clear correlation between layoffs and buyouts in the newspaper industry
`
`with the growth in market share for the duopoly—Google and Facebook. The internet distribution
`
`systems distort the flow of economic value derived from good reporting. The effects of this
`
`revenue decline are most severe at the local level, where the decimation of local news sources is
`
`giving rise to local news deserts.
`
`D.
`
`54.
`
`Google’s Digital Advertising Market Monopoly
`
`All roads lead through Google. See Fiona Scott Morton & David Dinielli, Roadmap
`
`for a Digital Advertising Monopolization Case Against Google (May 2020); Fiona Scott Morton
`
`{00222429-2}
`
`
`
`16
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 17 of 40
`
`
`
`& David Dinielli, Roadmap for a Monopolization Case Against Google Regarding the Search
`
`Market (June 2020). These two papers together show how Google monopolized general search
`
`and used that dominance as a springboard to build and maintain dominance in the digital display
`
`advertising market as well.
`
`55.
`
`Google was launched in 1998 as a general online search engine. Founded by Larry
`
`Page and Sergey Brin, the corporation got its start by serving users web results in response to
`
`online queries. Google’s key innovation was its PageRank algorithm, which ranked the relevance
`
`of a webpage by assessing how many other webpages linked to it. In contrast with the technology
`
`used by rival search engines, PageRank enabled Google to improve the quality of its search results
`
`even as the web rapidly grew. While Google had entered a crowded field, by 2000 it had become
`
`the world’s largest search engine. Later that year Google launched AdWords, an online advertising
`
`service that let businesses purchase keywords advertising to appear on Google’s search results
`
`page—an offering that would evolve to become the heart of Google’s business model.
`
`56.
`
`Today, Google is ubiquitous across the digital economy, serving as the
`
`infrastructure for core products and services online. It has grown and maintained its search engine
`
`dominance, such that “Googling” something is now synonymous with online search itself. The
`
`company is now also the largest provider of digital advertising, a leading web browser, a dominant
`
`mobile operating system, and a major provider of digital mapping, email, cloud computing, and
`
`voice assistant services, alongside dozens of other offerings. Nine of Google’s products—
`
`Android, Chrome, Gmail, Google Search, Google Drive, Google Maps, Google Photos, Google
`
`Play Store, and YouTube—have more than a billion users each.
`
`{00222429-2}
`
`
`
`17
`
`

`

`Case 2:21-cv-01247 Document 1 Filed 09/13/21 Page 18 of 40
`
`
`
`57.
`
`Google established its position through acquisition, buying up successful
`
`technologies that other businesses had developed. In a span of 20 years, Google purchased well
`
`over 260 companies.
`
`58.
`
`Google is now one of the world’s largest corporations. For 2019, Google reported
`
`total revenues of $160.7 bi