US justice dept says Google saw ad startup AdMeld as threat and bought it | World News

 

After purchasing DoubleClick, maker of the web’s leading ad server, Google employees debated whether to buy a company that made “yield management tools,” which help websites analyze data for ad pricing. Leading yield management companies at the time included AdMeld, PubMatic Inc. and the Rubicon Project. 

In an internal presentation shown in court Monday, Google staff dismissed the technology as “irrelevant,” but said the tools were getting in the way of the search giant’s opportunities to include more website ad inventory on its ad exchange platform. 

Google purchased AdMeld for more than $400 million and, after integrating its technology into the company’s advertising exchange, shut down the product two years later.

The Justice Department and a group of states allege that Google has monopolised the market for advertising technology tools used by websites and advertisers to buy and sell online display ads. Antitrust enforcers are seeking to show that Google bought rival companies to solidify its power in the online ad market. 

In an October 2010 email to a colleague, YouTube CEO Neal Mohan, then a leader at Google’s display advertising division, wrote that the company had “missed the yield manager threat.”

Mohan, who joined the search giant when it bought DoubleClick in 2008, suggested in a message to colleagues that Google should buy one of the leading products by “picking up the one with the most traction and parking it somewhere.”

In court on Monday, Mohan denied that he was suggesting Google buy AdMeld to eliminate a competitor.

“Absolutely not,” he said. AdMeld’s technology “was a gap in our portfolio.”

‘Close that gap’

 

“We needed to close that gap as quickly as possible,” Mohan added.

In the same presentation about whether the company should acquire a yield manager, Google said that buying AdMeld or PubMatic would close “product and service gaps” and was “a pressing need for publishers.” An acquisition would also “ensure fair access to publisher inventory.”

In his testimony, Mohan said that AdMeld was a “complement” to Google’s advertising exchange, AdX, a platform which matched advertisers with websites that wanted to sell space.

“Yield management did something adjacent to, but different than, what AdX did,” he said.

Mohan said that in his view Google’s products were more advanced than yield management tools, likening AdX to streaming video while AdMeld and PubMatic were DVDs aimed at “solving yesterday’s problems.” But many websites were “more cautious” about taking the leap to Google’s products, Mohan said, and were more comfortable adopting tools like AdMeld and Pubmatic, which he described as “baby steps” away from the technology they were used to.

At the same time, Mohan acknowledged that Google’s acquisition of both DoubleClick and eventually AdMeld was done in order to keep the technology giant from “falling behind” on its ad-tech offerings.

“If we lose platform share, we can build the best” advertising platform “in the world but will still be at a severe risk of being disintermediated” by large competitors, Mohan wrote in a March 2009 email to colleagues, referring to companies such as Yahoo Inc. and Microsoft Corp., which were working on building up their own ad offerings. In the same email, he later added that Google needed “tight bundles” in its ad offerings that it could offer both publishers and advertisers in order to stay competitive.

Google employees estimated that AdMeld was worth between $182 million and $355 million. Mohan acknowledged that Google ultimately paid $100 million above what the search giant estimated AdMeld’s value was.

First Published: Sep 17 2024 | 9:15 AM IST