In recent months, the department has been posing increasingly detailed questions—to Google’s rivals and executives inside the company itself—about how Google’s third-party advertising business interacts with publishers and advertisers, the people say. That digital business was built largely on the company’s 2008 acquisition of the ad-technology firm DoubleClick.
Many of the questions center around two moves that Google has made in recent years that publishers and rivals say have helped consolidate its power. The first was Google’s integration of its ad server, the leading tool for websites to put ad space up for sale, with its ad exchange, the industry’s largest digital ad marketplace. The second move was Google’s decision to require advertisers to use its own tools to buy ad space on YouTube.
“They are zooming in on the right topics, and that’s a good thing,” said Michael Nevins, chief marketing officer of Smart AdServer, which makes a rival ad technology to Google’s.
Google’s ad-tech business consists of software used to buy and sell ads on sites across the web. The company owns the dominant tool at every link in the complex chain between online publishers and advertisers, giving it unique power over the monetization of digital content. Many publishers and advertising rivals have charged that it has tied these tools together—and to its owned-and-operated properties like search and YouTube—in anticompetitive ways.
Google, a unit of Alphabet Inc., has argued that the ad-tech industry is competitive and that moves it made to merge products were aimed at creating a better experience for customers.
The probe’s increasing emphasis on ad tech is one reason the department’s antitrust chief, Makan Delrahim, recused himself last week, people familiar with the investigation said. In 2007, Mr. Delrahim advised Google in its efforts to get approval from the Federal Trade Commission to buy DoubleClick.
In addition to probing digital advertising, Justice Department officials are examining other aspects of Google’s business. Some of the companies that have been interviewed are rivals hurt by the dominance of its search and mobile businesses, such as Yelp, Duck Duck Go and Oracle Corp., according to some of the people familiar with the matter.
Wall Street Journal publisher News Corp, a longtime Google critic, was among the publishers contacted by antitrust investigators, along with New York Times Co., Gannett Co., Nexstar Media Group Inc. and Condé Nast Inc., some of the people said. Bloomberg earlier reported on contacts with some of the publishers.
Meanwhile, state attorneys general who are pursuing their own Google investigation met Tuesday with Justice Department officials, a potential step toward closer coordination of the two probes. The state officials sent out a subpoena to Google in the fall that was dominated by questions about the inner workings of its ad-tech products.
Much of the Justice Department’s questioning has focused on the “sell side” of Google’s technology—that is, products like DoubleClick for Publishers, which connects online publishers to Google’s advertising exchange. Virtually all major news publishers use that Google software. DoubleClick for Publishers and the exchange, commonly known as AdX, were rebranded as a single product called Google Ad Manager in 2018.
In the past two months, the department’s outreach to advertising agencies indicates it is also interested in the “buy side,” the people familiar with the matter say. The investigation puts the agencies in a delicate spot, as many of them use Google’s tools and rely on Google as a major advertising client.
The growing regulatory scrutiny has prompted some Google executives to discuss informally whether the company should consider divesting its third-party ad-tech business, according to people familiar with the situation. People close to Google say the company is still responding to informational requests from the Justice Department and hasn’t begun to discuss any potential changes to its business with the department.
Those who want to explore divesting the business note that it has steadily declined in importance to Google overall since the DoubleClick purchase, while units like search and YouTube have soared. In part, this is because the legacy DoubleClick business is focused on display advertising on desktop websites, and desktop web traffic has stopped growing as web users have shifted their time and attention toward mobile devices, the people familiar with the situation said.
“We have no plans to sell or exit this business,” Google spokeswoman Julie Tarallo McAlister said. “We’re deeply committed to providing value to a wide array of publisher and advertiser partners in a highly competitive sector.”
Google’s parent, Alphabet, doesn’t break out financial results for its third-party ad-tech business specifically. The unit is part of Google’s business of servicing its network of website partners, which accounted for $21.5 billion in 2019, about 13% of the company’s overall revenue. That is down from 31% in 2008, the year the DoubleClick deal closed. Google says it passes about 70% of this revenue on to its network partners. Google’s third-party ad business represents a fraction of the revenue of its reported Google Network Members unit, and has weighed on the profits of that segment, according to people familiar with the business.
One difficulty in separating the business is that third-party ad products are closely integrated with other Google technology, said another person familiar with the situation.
The Justice Department and state probes have increased the workload for employees in Google’s ad-platform divisions, who have had to produce a lot of documentation to explain their decisions and business operations to investigators, according to people familiar with the matter.
Attorney General William Barr said in an interview at The Wall Street Journal’s CEO Council in December that he wanted the Justice Department to “fish or cut bait” on its probe into Google and other Big Tech companies by the end of this year.