# United States v. Google/Conclusions of Law/Section 3A

Layout 2
    A. Search Advertising Is a Relevant Market, But Google Does Not Have Monopoly Power in It.
       1. Search Advertising Is a Relevant Product Market.
The search advertising market is the broadest proposed advertiser-side market. It includes all advertisements served in response to a query—whether entered on a GSE, an SVP, or a social media platform. Excluded from this market are display ads, retargeted display ads, and non-search ​social media ads (i.e., those that are integrated into a social media feed). What sets search ads apart, U.S. Plaintiffs assert, is the unique level of real-time, expressed intent discernable from a user’s query. If a user types in “portable bluetooth speaker,” the ad platform will recognize the query as one reflecting the user’s interest in buying a portable Bluetooth-enabled speaker and will deliver advertisements from retailers that sell such products. Non-search ads, by contrast, are not delivered in response to a query and therefore are far less effective and precise at determining a user’s intent at the time the ad is delivered. For this reason, U.S. Plaintiffs contend, online advertisers will not significantly substitute away from search to non-search advertisements in response to a small but significant price increase.
Google, on the other hand, argues that it competes within a broader market for digital advertising. It claims that all forms of digital advertising “provide advertisers the ability to connect with potential customers,” and that other ad types identify and respond to user intent as effectively as search ads. GTB at 15–16. It points to advertisers’ regular movement of spend among various ad types as evidence that, within the broader market of digital advertising, ad dollars are fungible and will be spent on the channel with the strongest return on investment, or ROI. Id. Technical differences among search ads and other ad types, Google says, do not overcome this market reality.
As before, the court addresses the parties’ arguments within the framework of the relevant Brown Shoe practical indicia, this time including pricing considerations. Those factors again are: “[1] industry or public recognition of the submarket as a separate economic entity, [2] the product’s peculiar characteristics and uses, [3] unique production facilities, [4] distinct customers, [5] distinct prices, [6] sensitivity to price changes, and [7] specialized vendors.” Brown Shoe, 370 U.S. at 325. Nearly all of these criteria warrant recognizing a search ads product market.
​Peculiar Characteristics and Uses. Search ads are generated in response to a user query. U.S. Plaintiffs assert that such queries are a well-defined and contemporaneous expression of a user’s intent that is unmatched at driving conversions. That is the defining feature of the proffered market. Google disputes the notion that search ads uniquely capture and convert user intent. That construct is outdated, it says. Social media and display ads can be extremely effective in discerning a user’s unexpressed, or latent, intent and driving conversions. Thus, according to Google, what U.S. Plaintiffs say is unique about search ads is readily achievable through other ad channels. The court thinks U.S. Plaintiffs have the better of this argument.
Search ads are a direct expression of a user’s specific motivation or interest at the time it is entered. FOF ¶¶ 167, 169–170. For example, a search ads platform understands the query “Taylor Swift Eras Tour tickets” to mean “I’d like to purchase tickets to see Taylor Swift in concert right now” (or at least “I’m thinking about doing so right now”). That provides ticketing vendors a unique opportunity to connect with a Swiftie who is seeking tickets for a show.
On the other hand, social media, display, and retargeted ads rely on indirect signals to decipher a user’s latent intent and thus are less valuable to advertisers. Such signals include present and past interactions with a webpage, accounts the user follows, videos or photographs the user views, and how the user engages with a post. FOF ¶¶ 201–202, 208–209; e.g., Tr. at 1418:4-8 (Dischler) (“The users’ interest can be signaled in any number of ways, whether it’s visiting a website, whether it’s subscribing to a TikTok channel of a golf influencer[.]”). Consider a TikTok user who regularly watches videos of the Eras Tour. That user is not necessarily conveying an immediate desire to purchase concert tickets, and a ticket vendor who targets that user with a social media ad is less likely to achieve a conversion than if the user had searched for tour tickets on a GSE. Search ads are thus unique in their capacity to connect the consumer and vendor at the very ​moment the consumer is looking to make a purchase. FOF ¶¶ 170–171; cf. United States v. Bazaarvoice, Inc., No. 13-cv-00133 (WHO), 2014 WL 203966, at *24 (N.D. Cal. Jan. 8, 2014) (distinguishing social commerce products from “rating and reviews” online platforms, because social commerce products do not “provide potential consumers with product-specific feedback from other consumers at the point of purchase” and “are often focused on brand advertising rather than driving the sale of individual products”).
The much-discussed golf-shorts example from trial, illustrated below, makes the same point.
A non-free image has been removed from this page.
PSXD10 at 25. The Instagram viewer of a golf-swing video (on the left) might not be in a buying frame of mind—they could just be interested in improving their golf swing. But even if the user were looking to make a purchase, or the video piqued their desire to do so, such interest could be directed to all manner of golf items—shoes, clubs, shirts, tee times, lessons, etc. Tr. at 6890:17–6891:23 (Amaldoss) (discussing PSXD10 at 25). By contrast, the user who enters “golf shorts” into Google is highly likely expressing an interest in buying golf shorts. Id. at 6891:24–6892:12 (Amaldoss) (discussing PSXD10 at 25). Delivering a search ad in response to directly expressed ​intent on Google or Amazon is more likely to result in the sale of golf shorts than a social media ad on Instagram.
Retargeted ads differ from search ads for a similar reason. A retargeted display ad can be served only after the user has visited the advertiser’s platform. FOF ¶¶ 202–203. For instance, a consumer interested in buying a portable Bluetooth speaker will see a retargeted display ad for, say, a Sonos-brand portable speaker, only if they have previously visited the Sonos website. But a search ad for such a product is presented immediately, regardless of whether the user has previously visited the advertiser’s website. The time lag between the user’s originally expressed intent and delivery of the retargeted ad makes such ads less effective. FOF ¶ 203 (describing how retargeting signals rapidly grow stale, even after just one hour).
Another unique characteristic of search ads is that they are not limited by privacy features. A user enters a query and gets a result without intermediation from privacy filters. On the other hand, display and retargeted display ads require individualized user information from cookie tracking and audience profiling, which can be disabled or impeded by platforms or the user. FOF ¶ 204.
At bottom, search ads and non-search ads are not “roughly equivalent”: Search ads better approximate user intent than other ad types, and they do so with immediacy. Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 437 (3d Cir. 1997) (“Interchangeability implies that one product is roughly equivalent to another for the use to which it is put; while there may be some degree of preference for the one over the other, either would work effectively.”) (internal quotation marks and citation omitted).
Industry or Public Recognition. Advertisers recognize search ads as a distinct product market. See Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 612 n.31 (1953) (considering ​as relevant that “[t]he advertising industry and its customers . . . markedly differentiate between advertising in newspapers and in other mass media”). Advertisers have separate teams for search ads and other types of advertising, like display and social media. FOF ¶ 224. They also have separate budgets for those ad channels. Id.
Advertisers uniformly testified that they view search ads as unique because they respond to expressed user intent in real time. FOF ¶¶ 169–171, 218. Or, to put it in marketing terms, paid search is a “bottom funnel” ad channel or a “push” ad. FOF ¶¶ 213, 215, 218. Recall, the “marketing funnel” is a construct used in the advertising industry to generally depict a consumer’s journey from ignorance about a product (at the top of the funnel) to its purchase (at the bottom of the funnel). FOF ¶¶ 213–224. Advertisers attempt to correlate ad types with each stage of that journey based on the advertiser’s goal: promoting product awareness (upper funnel), addressing a consumer’s consideration of a purchase (mid-funnel), or driving sales (lower funnel). Id. Advertisers use the funnel as a framework when determining how to allocate their spending. FOF ¶¶ 221–222. They typically consider search as an ad channel better suited for “lower funnel” objectives than social media or display advertising. FOF ¶¶ 218–220.
Google asserts that the “industry and public recognition” factor weighs against a market for search advertising for two reasons. First, it vigorously contests the relevance of the marketing funnel. Google protests that the funnel is a dated tool with limited application in today’s digital ad market, especially given the explosion of social media advertising. GTB at 18–20; GRCL ¶ 7. It points to industry records that show greater fluidity among different stages of the funnel, and marketers conceiving of non-search ads as bottom-funnel media. GTB at 19–20. Google’s point is that advertisers shift spend to the ad type that they believe will return the greatest ROI, which ​makes search and non-search digital advertisements reasonably interchangeable and renders the marketing funnel obsolete. Id. at 20–23.
It is true that digital advertising has disrupted the traditional marketing funnel construct of a linear consumer journey from product awareness to purchase. But advertisers and even Google still use it, and they continue to view search advertising as unique because of its efficacy in reaching lower-funnel consumers. See Rothery Storage, 792 F.2d at 218 n.4 (“The ‘industry or public recognition of the submarket as a separate economic’ unit matters because we assume that economic actors usually have accurate perceptions of economic realities.”); FTC v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 46 (D.D.C. 1998) (“[T]he determination of the relevant market in the end is a matter of business reality—of how the market is perceived by those who strive for profit in it.”) (cleaned up). Every industry witness testified that the marketing funnel remains a framework through which they make ad spending decisions. FOF ¶ 222. A recent Google online marketing essay does the same. It contains a depiction of the funnel and touts a “full-funnel” marketing strategy. FOF ¶¶ 221, 223 (citing UPX8051 at .005) (extolling two brands that “meet customers where they are. And that means addressing them at every stage of the sales funnel to raise brand awareness, answer questions prepurchase, and nurture people through final decisionmaking”).
Although Google presented marketing strategy documents from various industries that showed some advertisers placing display and social alongside search as bottom-funnel channels, no advertiser viewed search ads as upper funnel. FOF ¶ 218 (based on documents and testimony, 64% of advertisers view display to be higher than search in the funnel, and 0% consider it to be below search). To be sure, there are some products for which social media ads are particularly effective at driving conversions (e.g., cosmetics and apparel), but there are large categories of ​products and services for which social media advertising is far less compelling (e.g., financial services). FOF ¶¶ 219–220.
To further underscore the distinction between search and social media ads, consider a new ad product recently introduced by Google: Demand Gen (or Discovery Ads). It is a feed-based ad platform for YouTube and Gmail, developed to better compete for advertising dollars going to Meta properties and TikTok, among others. Before its launch, Google recognized that it did not have an advertising channel that competed effectively for that highly lucrative ad spend. FOF ¶ 211; UPX29 at 541 (“Google has no direct competitor to Facebook’s ad offering[.]”). And, when describing the audience targeted for Discovery Ads, Google did so with terminology by now familiar to the reader. UPX33 at 145 (describing the social ads buyer as seeking to “create intent” and “find new customers,” as compared to the search ads buyer, who aims to “capture a person’s declared intent”) (2020). Thus, while Google as a firm may fiercely compete with Meta’s feed-based ads offerings, Google search ads do not.
Second, Google claims that U.S. Plaintiffs’ proposed market fails to account for the public’s consideration of different ad channels. Google argues that the market should be defined based on the degree of audience overlap. See GTB at 17–18 (citing Tr. at 4634:24–4635:11 (Whinston) (“The overlap between the audiences is really important for the amount of substitution there will be between ad products.”)). In other words, ads that target the same audiences should be treated as part of the same ad market. Google contends that “Plaintiffs’ ads markets exclude forms of digital advertising that feature a high degree of audience overlap while including those with less overlap.” Id. at 18. For instance, Google users typically do not also use Bing, FOF ¶ 21, but they do frequently use Amazon, FOF ¶ 157; see, e.g., GTB at 17–18, GFOF ¶¶ 1018–1024. So, Google argues, U.S. Plaintiffs are mistaken when they consider search ads on Bing in the same ​market as Google search ads but not ads shown on Amazon or other platforms where there is user overlap.
This argument misses the point. SVP search ads offerings are included in the search ads market. They target their users who express real-time intent with a query. Nor is there anything inconsistent about treating search ads and ads on other platforms, like social media, as distinct products even though they have overlapping audiences. Marketers use them as complements to fulfill their ultimate objective: to drive sales. FOF ¶¶ 221, 225.
Sensitivity to Price Changes. U.S. Plaintiffs argue that advertisers do not substitute away from search ads, even in the face of price hikes. Google says otherwise. It contends that advertisers care more about ROI or return on ad spend (ROAS) than any particular advertising channel, and that they move ad spend across different channels to maximize their ROI. For example, Google points out that advertisers increasingly are using tools like its own Performance Max, which helps advertisers optimize their ad spend to yield the best ROI. GFOF ¶¶ 1009–1013; FOF ¶ 229.
But Google’s focus on ROI misses the forest for the trees. Products are reasonably interchangeable only if “significant” substitution occurs in response to a price increase. See Ohio v. Am. Express Co., 585 U.S. 529, 543–44 (2018). To be sure, advertisers did testify to shifting spend to maximize ROI. But none said that they have “significantly” shifted ad spend away from search ads. In fact, the opposite is true. Advertisers uniformly said that they would not substitute search ads for another ad type absent some campaign-level reason to do so. FOF ¶¶ 230–231; see Staples, 970 F. Supp. at 1074 (courts look to “whether and to what extent purchasers are willing to substitute one for the other”). To the extent that ad dollars are increasingly being spent on other channels, that change reflects the ballooning of the digital advertising market as a whole. ​FOF ¶ 166. There is no evidence that the massive growth of social media ads, for example, has come at the expense of search ads.
The record also shows that to the extent advertisers shift spending, they do so as part of a “full-funnel strategy.” Campaign goals may require a different blend of complementary advertising types to further a firm’s objectives. FOF ¶ 221. For instance, companies may shift ad spend to more upper-funnel strategies when introducing new products to create awareness but move ad spend to lower-funnel strategies if trying to increase seasonal sales of well-known products. FOF ¶¶ 226–227. The fact that advertisers may move money between search and social ads to achieve varying goals does not make them substitutes. See Klein v. Facebook, Inc., 580 F. Supp. 3d 743, 782–83 (N.D. Cal. 2022) (concluding that social ads are a distinct market from other online ads due to industry recognition, in part because, in contrast to search ads, “social advertisements help a company find customers who are not already looking for the company’s products”); FTC v. IQVIA Holdings Inc., No. 23-cv-06188 (ER), 2024 WL 81232, at *17 (S.D.N.Y. Jan. 8, 2024) (“An agency running an advertising campaign will not have an unlimited budget, so it must make decisions about how to allocate the advertising funds it has. But the fact that [search] competes with these channels for advertising dollars in a broader market does not necessarily mean those channels are reasonably interchangeable substitutes that must be included in the relevant product market.”).
The Nike-Meta episode does not help Google, either. In 2020, Nike boycotted advertising on Facebook, cutting all of its social spending on the platform for several months. According to Dr. Israel, Nike reallocated that spend to search and display ads and, when the boycott ended, Nike reverted the money to its social budget. Tr. at 8517:1–8518:13 (Israel) (discussing DXD29 at 83, 86–87). Per Google, this demonstrates reasonable interchangeability. But Dr. Whinston’s ​analysis—which aligns better with Nike’s internal studies—shows otherwise. He convincingly demonstrated that most of the money previously invested into Meta ads was simply reallocated to other social media and display ads. Id. at 10489:10–10495:9 (Whinston) (discussing UPXD106 at 13–14, 16). In fact, Nike’s search ads spend barely increased during the boycott. Id.; see also UPX2076 at 152 (as a percentage of Nike’s overall ad spend, search grew from 48% to 51% and then returned to 50% post-pause, a minor change).
Google further contends that U.S. Plaintiffs’ search ads market fails because U.S. Plaintiffs have presented no econometric modeling on pricing (e.g., a SSNIP test). GTB at 21–23; GCL ¶ 22; see Sysco, 113 F. Supp. 3d at 33–34 (describing a SSNIP test). But as previously discussed, supra Section II.A, such modeling is not required to define a market.
Unique Production Facilities. U.S. Plaintiffs contend that “the uniqueness of production facilities present in the general search services market appl[ies] in the Search Ads market.” UPFOF ¶ 440. That is not quite right. U.S. Plaintiffs’ search advertising market includes search ads on SVPs, so the two proposed markets do not fully overlap. Still, search ads production, regardless of the platform, is characterized by certain common components. A platform must “(1) match Search Ads to consumers’ real-time queries, (2) pull those ads into the relevant auction, (3) determine which ads in the auction will be shown, (4) determine where on the [results page] the shown ads will be positioned, and (5) calculate the price for each ad shown, should it be clicked on.” Id. ¶ 441. Display and social ads are produced differently. FOF ¶¶ 198–199, 204, 206.
​Distinct Customers. This factor does not support a search ads market, as advertisers who purchase search ads also purchase other ad types, including social media and display ads.
Distinct Prices. Search ads and display ads use different pricing models. Search ads are sold using a cost-per-click metric, such that advertisers pay only if a user clicks on a search ad. FOF ¶ 186. Display ads, on the other hand, generally use a cost-per-mille metric (i.e., cost per 1,000 impressions, or views). FOF ¶ 199. This means that advertisers are charged each time a display ad is posted, irrespective of whether a user clicks on the ad.
These different pricing approaches are consistent with the channels’ different purposes. Search ads can be priced per click, as an ad click is in some sense indicative of the ad’s effectiveness in satisfying a user’s expressed intent. The effectiveness of display ads is more difficult to measure, as users click on them with less frequency. FOF ¶¶ 228, 230. The record contains almost no evidence as to pricing of social media ads.
Google argues that distinct pricing alone is “insufficient to confine a market to search ads, particularly in light of the evidence that different types of ads are priced similarly when adjusted for the outcomes advertisers seek to achieve.” GCL ¶ 30. True. But neither U.S. Plaintiffs nor the court have rested solely on distinct pricing in defining a market for search advertising.
Google’s Authorities. Google cites Berlyn v. The Gazette Newspapers, an unpublished Fourth Circuit case, to argue that all digital ads belong in the same relevant market. GTB at 17. There, the plaintiffs attempted to establish a market consisting of “legal and commercial advertising services provided by weekly community newspapers” and a single weekly section in the Washington Post dedicated to local news. 73 F. App’x 576, 582 (4th Cir. 2003). The court rejected that market based on the minimal evidence presented: (1) a single advertising flier touting the efficacy of print ads in local publications relative to radio and TV ads and (2) a Washington ​Post marketing strategy paper discussing radio ads. See id. at 583. The court explained that this evidence, “if anything, . . . tends to show that all of these media outlets are within the same product market, to the extent that they are competing for the same limited pool of advertisers’ dollars.” Id. Beryln is of limited utility here. There can be no genuine comparison between the paucity of record evidence in Beryln versus the mountain of evidence presented in this case. Moreover, this court considered the evidence here in light of the Brown Shoe factors, which is something the Berlyn court did not need to do on a limited evidentiary record.
Google’s other authorities are likewise inapposite. Google cites Hicks v. PGA Tour, Inc. for the proposition that “many courts have rejected antitrust claims reliant on proposed advertising markets limited to a single form of advertising.” GTB at 15–16 (quoting 897 F.3d 1109, 1123 (9th Cir. 2018)). But “Hicks does not apply where,” as here, “a plaintiff has alleged that two types of advertising have fundamentally different purposes.” Klein, 580 F. Supp. 3d at 784. Google also cites to decades-old cases decided at the motion-to-dismiss stage, which rejected Sherman Act claims for failure to adequately allege digital ads markets. See Kinderstart.com LLC v. Google, Inc., No. 06-cv-2057 (JFRS), 2007 WL 831806, at *6 (N.D. Cal. Mar. 16, 2007); Am. Online, Inc. v. GreatDeals.Net, 49 F. Supp. 2d 851, 858 (E.D. Va. 1999); GCL ¶¶ 19, 26. These cases are inapposite for numerous reasons, including that they predate the digital advertising boom and were decided on the pleadings. See GFOF ¶¶ 990–991 (“Digital Advertising is dynamic and growing. . . . Indeed, digital advertising has undergone dramatic change even in just the last few years.”). More recent decisions, however, with the benefit of a factual record, have refused to lump together various forms of digital advertising merely because advertisers spend in different channels. See, e.g., IQVIA, 2024 WL 81232, at *17. ***
​In sum, the Brown Shoe factors counsel in favor of finding a relevant market for search advertising. Neither Google’s counterarguments nor its legal authorities persuade the court otherwise.
All that said, U.S. Plaintiffs’ search ads market is underinclusive in an important way: It excludes certain search advertisements that appear on Amazon known as “product page” ads. Such ads share the defining characteristic of search ads, which is that they are delivered in response to a user query. To illustrate, when an Amazon user queries “coffee,” its results page contains ads like PLAs presented on Google. Such ads are included in U.S. Plaintiffs’ market. When a user then selects a product—through a PLA or an unpaid result—they are taken to a “product page” that also contains advertisements (see below). These “product page” ads look a lot like PLAs, and they respond to the user’s twice-expressed intent (the query and the product selection). See Tr. at 8459:8-24 (Israel) (discussing DXD29 at 108). Yet, they are not included in U.S. Plaintiffs’ search ads market. Id.
A non-free image has been removed from this page.
​DXD29 at 108 (blue boxes depict ads).
These “product page” ads likely generate substantial revenue for Amazon, whose ad business is growing rapidly. See DX231 at .003 (Google record from January 2021 estimating that Amazon’s “US ads business is nearly the size of Google’s US retail ads business today, and is growing at over twice Google’s rate.”). Dr. Israel testified that these product-page ads make up one third of Amazon’s ads overall. Tr. at 8459:16-17 (Israel). Dr. Whinston put Amazon’s search ads revenue at $7.6 billion in 2020, excluding product-page ads revenue. See Fig. 78, Whinston Expert Report, ECF No. 418-1, at 185. Although the record does not reveal precisely how much revenue Amazon generates from product-page ads, U.S. Plaintiffs’ search ads market likely excludes a substantial dollar amount from its market share denominator. This under-inclusivity is not fatal to defining a relevant market for search ads, but it will impact Google’s market share, as described infra Section III.A.2.b.
       2. Google Does Not Have Monopoly Power in the Search Ads Market.
Although the court concludes that there is a relevant market for search ads, the court finds that U.S. Plaintiffs have not proven that Google possesses sufficient power in that market to make out a Section 2 violation. Recall, there are two types of evidence of monopoly power: (1) direct evidence indicating that a firm can substantially raise prices above the competitive level, and (2) indirect (or structural) evidence permitting the court to infer monopoly power “from a firm’s possession of a dominant share of a relevant market that is protected by entry barriers.” Microsoft, 253 F.3d at 51 (citation omitted). U.S. Plaintiffs have not met their burden with either.
          a. Direct Evidence
As direct evidence, U.S. Plaintiffs have offered proof that Google has profitably raised prices on its general search text ads, a subset of its search ads offerings that is distinct from PLAs. ​See infra Section III.B.2. U.S. Plaintiffs urge the court to extrapolate this text ads-specific evidence to infer that Google has monopoly pricing power in the broader search ads market. See UPFOF ¶ 589 (“Text Ads constitute approximately 64% of the Search Ads market; Google’s pricing power in the Text Ads market therefore confers on Google the ability to control price in a significant portion of the Search Ads market, even without regard to any of Google’s other Search Ads products.”). But cf. FOF ¶ 185 (changes to the text ads auction do not directly impact the PLA auction).
The court declines to make such a simplistic extrapolation to sustain a finding of monopoly power. Cf. ThermoLife Int’l LLC v. Neogenis Labs Inc., No. 18-cv-02980 (DWL), 2021 WL 1400818, at *8–10 (D. Ariz. Apr. 14, 2021) (finding that the court could not “infer” power in a broader market based on power in a narrower one because the plaintiff had not alleged the relative size of the submarket in relation to broader market). Text ads comprise 64% of the search ads market defined by U.S. Plaintiffs. Tr. at 4797:7-10 (Whinston). That is a large number, even if overstated by some degree due to U.S. Plaintiffs’ exclusion of Amazon’s product-page ads from the calculation. But Dr. Whinston’s analysis of PLA pricing from 2016 to 2021 demonstrates that while Google has raised text ads prices, PLA prices, which comprise approximately 40% of the search ads market, have been stagnant, only showing nominal growth beginning in 2020. See id. at 4650:2-20 (Whinston) (discussing UPXD102 at 39) (“[W]hat you can see here is PLA prices have been flat or, if anything, a little decreasing, and text ad prices have been going up.”). That prices have remained flat in nearly 40% of the market is inconsistent with the notion that Google has monopoly pricing power in the search ads market as a whole.
Average Annual Cost Per Click (CPC) for US Queries, 2016-2021
A non-free image has been removed from this page.
UPXD102 at 39.
These different pricing trends can be explained by competition (or the lack thereof). Google’s ability to profitably raise text ads prices is surely due in part to the lack of any meaningful competition in that submarket—Microsoft is its only true competitor. See infra Section III.B.2. The competitive conditions for PLAs are very different. Amazon, as discussed, is a major competitor. Dr. Whinston put Amazon’s search ads market share at 19%, a likely underestimate given the exclusion of product-page ads. Fig. 78, Whinston Expert Report, ECF No. 418-1, at 185; Tr. at 8459:16-20 (Israel). Also, many other retailers compete in the PLA space (e.g., Home Depot, Walmart, Target), and though their share is small now, it is likely to grow. See Tr. at 8438:12-20, 8550:2-10 (Israel). These competitive market conditions likely explain why Google’s PLA prices remained largely unchanged from 2016 to 2021.
Google’s lack of pricing power as to PLAs cautions against inferring that Google’s pricing power in search text advertising extends to the broader search ads market.
          b. Indirect Evidence
Nor is the court convinced that indirect evidence establishes monopoly power in the market for search ads.
​“[A] market share below 50% is rarely evidence of monopoly power, a share between 50% and 70% can occasionally show monopoly power, and a share above 70% is usually strong evidence of monopoly power.” Broadway Delivery Corp. v. United Parcel Serv. of Am., Inc., 651 F.2d 122, 129 (2d Cir. 1981). Dr. Whinston calculated Google’s share of the proposed market as 74%, although that is an overestimate given the omission of Amazon’s product-page ads. See Tr. at 4779:7-15 (Whinston) (discussing UPXD102 at 63). Although Google’s market share is some evidence of monopoly power, it is not necessarily “strong evidence.” That said, Google’s share of the search advertising market has been durable, id. (65% market share or more since 2012), despite the market’s enormous growth, id. at 8874:25–8875:13 (Israel). These markers, taken together, tilt somewhat in favor of a finding of monopoly power.
But “because of the possibility of competition from new entrants, looking to current market share alone can be misleading.” Microsoft, 253 F.3d at 54 (internal quotation marks and citations omitted); see also Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d 90, 99 (2d Cir. 1998) (“We cannot be blinded by market share figures and ignore marketplace realities, such as the relative ease of competitive entry.”); Oahu Gas Serv., Inc. v. Pac. Res., Inc., 838 F.2d 360, 366 (9th Cir. 1988) (“A high market share, though it may ordinarily raise an inference of monopoly power, will not do so in a market with low entry barriers or other evidence of a defendant’s inability to control prices or exclude competitors.”) (citation omitted).
U.S. Plaintiffs have not shown that barriers to entry protect Google’s leading share in the search ads market. Microsoft, 253 F.3d at 51. Concededly, the capital cost of developing an ad platform is high. See UPFOF ¶¶ 581–583. But well-resourced market entrants, and demonstrated growth by those entrants, belie a reality of unconstrained dominance. There is, of course, Amazon’s entry and explosive growth in the market. FOF ¶ 196 (Google estimates that Amazon ​has surpassed its revenue in retail advertising and is growing at a faster rate). Other SVPs are more recent market entrants and are looking to grow their search ads business. See Tr. at 8438:12-20 (Israel) (“[W]hat the lesson of commercial verticals has told us is that where there’s money to be made, SVPs pop up and they compete for advertising.”). These are not small firms likely to compete only at the margins. They include mega-retailers looking to aggressively expand their search ads business. Walmart and Target are two examples. Id. at 8549:9–8550:17 (Israel) (describing Walmart’s emergence as a search advertiser); Alberts Dep. Tr. at 40:5-10 (same as to Target). Online travel sites are another. Tr. at 5244:12-17 (Dijk) (describing Booking.com’s emerging search ads offerings). It is not surprising then that Google’s share of the search ads market has steadily eroded since 2017. Id. at 4779:7-15 (Whinston) (discussing UPXD102 at 63) (declining from near 80% in 2017 to 74% in 2020). U.S. Plaintiffs thus have not shown that the barriers to entering the search advertising market are comparable to those that protect Google’s monopoly in general search.
Meta’s experience in search ads does not counsel a different outcome. U.S. Plaintiffs argue that if a massive digital media company like Meta could not enter search ads successfully, no new entrant can be expected to survive. UPFOF ¶ 584 (describing Facebook’s “multiple unsuccessful attempts to enter the Search Ads market”). But U.S. Plaintiffs acknowledge that the reason for this failure had nothing to do with barriers to entry and instead was due to the difficulty of serving search ads on social media platforms. See id. ¶ 585 (“Google recognizes that, due to the nature of Facebook’s product, the social network is ill-suited to offer Search Ads.”) (citing Tr. at 1491:21–1492:2 (Dischler) (“The search feature is just not very important on Facebook for searching for products or services or other commercial things.”)). That social media is a poor fit for search ads ​does not mean that the market is protected by high entry barriers. It just means that the strength of social media advertising lies elsewhere.
In the end, courts “cannot be blinded by market share figures and ignore marketplace realities, such as the relative ease of competitive entry.” Tops Markets, 142 F.3d at 98–99. Here, the court finds that, notwithstanding Google’s leading market share, the recent history of new entrants, the strength of those entrants, and their growth show that barriers to entry are not so high as to compel the conclusion that Google has monopoly power in the market for search advertising. Cf. id. (finding no monopoly power by a retail supermarket in a local area where barriers to entry were low, despite 72% market share). U.S. Plaintiffs therefore have not proven a Section 2 violation in the search ads market.