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

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    C. The Evidence Does Not Support a Market for General Search Advertising.
Finally, the court addresses Plaintiff States’ market for general search advertising. General search advertising is alleged to be a submarket of search advertising that “includes all ads that appear on a GSE results page in response to a user query, which overwhelmingly consists of text ads and product listing ads” but also encompasses local ads and travel ads. Pl. States’ Post-Trial Brief, ECF No. 900 [hereinafter PSTB], at 8. While the court has found that the record establishes both a broader market (search advertising) and a narrower submarket (general search text ads), the Brown Shoe factors do not warrant recognition of a general search ads market.
Peculiar Characteristics and Uses. Plaintiff States’ core argument is that all the differences between GSEs and SVPs already described, supra Section II.B, support a market solely comprised of search ads that appear on GSE SERPs. Specifically, they claim that “[g]eneral search advertising is a relevant market because all ads on a GSE’s results page reach users who are considering the broad range of choices and destinations provided by a GSE.” PSTB at 8. Because of a GSE’s breadth compared to an SVP, Plaintiff States contend that “GSE users are more likely to be in a research or consideration mindset, whereas SVP users are more likely to be in a purchase mindset.” Id. at 9. Users can purchase a product directly on an SVP’s platform, whereas they cannot do so with Google. FOF ¶¶ 144–145, 194. This makes GSEs “attractive to advertisers ​seeking to reach users in the mindset of actively researching a topic without having determined a specific purchase destination.” PSTB at 10.
That all makes intuitive sense, and there is some record evidence to support it. See, e.g., Tr. at 5138:11-14 (Booth) (Home Depot believes that once a user is on their website, it has “a higher likelihood to actually get them to convert”); id. at 3860:20-24 (Lowcock) (“So if a user goes to a retailer’s website, they’ve got a high probability and intent to buy. And if they type something into search, typically they type in the brand and product that they’re specifically looking for. So they know what they’re going to do.”); id. at 6873:7-10 (Amaldoss) (discussing PSX970) (SVPs “are the places people can actually buy the product from . . . because these consumers have a very high purchase probability, and they want to close the sale.”).
But the fact that users of GSEs may sometimes be higher up in the marketing funnel does not mean that general search ads have a particular use that is distinct from search ads on SVPs. It just means that advertisers can purchase general search ads to satisfy broader objectives and on a wider range of topics. Id. at 5391:10-23 (Jerath) (stating “search ads are most suited and effective for bottom funnel goals and to some extent for mid-funnel goals”). That is a difference of degree, not kind.
Industry or Public Recognition. There is little industry recognition of a separate general search ads market. Advertisers testified that text ads are distinct because of their breadth and effectiveness, supra Section III.B.1, but that says nothing about whether they recognize a wider general search advertising market that also includes PLAs and other SERP advertising. Plaintiff States contend that “large, well-known companies like Amazon, Booking.com, and Expedia rely heavily on general search ads to acquire new customers.” PSTB at 15. But Booking.com and Expedia only buy text ads, not PLAs. And Amazon’s actual testimony suggests ​that Amazon views text ads and PLAs not as a single product, but as different ones because it uses bid strategies unique to each ad type. Supra Section III.B.1.
Plaintiff States further argue that SVPs must purchase ads on GSEs using branded keywords (e.g., “Yelp” or “Expedia”) to preempt rivals from doing so and siphoning off users who are potentially interested in their brand, a practice known as “conquesting.” See PSTB 11–12; Pl. States’ Proposed Findings of Fact, ECF No. 902, ¶¶ 36–38 [hereinafter PSFOF]. Because only GSEs accept queries that allow users to navigate directly to external websites, Plaintiff States say, advertisers cannot substitute away from general search ads to SVP ads if they seek to prevent conquesting. PSTB at 12. This all may be true, but it does not support a separate general search ads market. Only text ads, not PLAs, are purchased by keywords and appear similar to organic links on the SERP. FOF ¶ 184. The conquesting concern thus is a feature of the text ads market, not a broader market for general search advertising. FOF ¶ 191.
Finally, Plaintiff States contend that when purchased together, text ads and PLAs allow advertisers to “own the SERP” by taking up treasured real estate on a SERP. PSFOF ¶¶ 10–11. In this way, advertisers consider general search ads as a separate product.
Although Plaintiff States do not put it precisely this way, their argument resembles one for recognition of a “cluster market” that is defined by “a central group of customers for whom ‘only [a particular package of goods and services] will do.’” Whole Foods, 548 F.3d at 1038 (Brown, J.) (quoting Grinnell, 384 U.S. at 574). There is some evidence to support this theory. Some advertisers do in fact purchase both text ads and PLAs to “own the SERP.” FOF ¶ 189. And Plaintiff States point to evidence that Google has touted “owning the SERP” as a marketing strategy. FOF ¶ 190.
​But the court was told little else about such customers. For instance, the record does not disclose how many advertisers have adopted that strategy and how much they spend and contribute to Google’s revenues. Nor has the court been told whether such advertisers view “owning the SERP” as essential to their marketing strategy, including on Bing, such that no other combination of ad products will do. See Whole Foods, 548 F.3d at 1039 (Brown, J.) (recognizing that a core group of customers can define a market because they “need a complete ‘cluster of products,’” the “particular circumstances dictate that the product ‘is the only realistic choice,’ or “they find the product ‘uniquely attractive’”) (citation omitted). Indeed, it is also equally plausible that such advertisers simply view text ads and PLAs as complementary products, rather than as a “clustered” general search ads product. In sum, there is very little evidence of industry recognition of general search ads as a distinct product market.
With respect to public recognition, Plaintiff States point to evidence that GSEs and SVPs—as platforms—are complements (not substitutes) as proof that general search ads and SVP search ads are also not substitutes. PSFOF ¶¶ 15–21. But this argument misses the mark. Users of GSEs and SVPs may view them as complements to gather information, but that does not mean they feel the same way about the advertisements that appear on those platforms. The record does not reflect any public recognition of general search ads as a separate market.
Unique Production Facilities. Although GSEs and SVPs have different means of production for answering a query, there is substantial overlap as to how the platforms serve advertisements. PLAs on both platforms are generated from the ad inventory either available on the platform (SVPs) or through a structured data feed (GSEs). This process does not involve affirmative keywords. FOF ¶¶ 183–184. Admittedly, there is an important difference between the breadth of general search ads on GSEs versus search ads on SVPs. The latter are limited to ​advertising products available for purchase on the website, whereas the former are not so restricted. Still, that distinction alone is not enough to conclude that general search ads are uniquely produced in a way that sets them apart from similar ads on SVPs.
Distinct Customers. Not all firms who advertise on GSEs purchase search ads on SVPs. For example, the decision to sell a product on Amazon means agreeing to share a portion of any purchase completed on Amazon. FOF ¶ 194. Home Depot, for example, does not sell products on Amazon for that reason. FOF ¶ 195. Other firms do not buy ads on SVPs because no SVP corresponds to its product or service. Financial services companies are a good example. This means that a subset of Google’s customers are not SVP search ads buyers, creating a class of customers who purchase only general search ads. But that class is so broad that this factor only marginally supports the proposed market.
Distinct Prices. Plaintiff States argue that SVP search ads and general search ads are priced differently, because when a purchase is made following an SVP search ad, it is done on the SVP, which takes a “cut” of the purchase price. In contrast, general search ads lead consumers directly to the advertiser’s platform, where the advertiser keeps 100% of the purchase price. PSFOF ¶¶ 56–57. This factual distinction is accurate, but the record does not reveal how this difference impacts the pricing of ads on each platform. It is not established, for instance, how retailers think about pricing for search ads on Google versus search ads on Amazon because of this difference.
Instead of advertiser testimony, Plaintiff States point to three pieces of evidence in support of distinct prices, but none are persuasive. First, a slide deck by the ad platform Kenshoo (now Skai) notes that advertisers report the cost-per-click on Amazon to be about five times that on Google. See PSFOF ¶ 60 (citing PSX6 at 037). But that proof is of limited probative value because it compares only PLA ads pricing across platforms, not general search ads pricing (including text ​ads). PSX6 at 037. Second, Plaintiff States note that Dr. Israel testified that when he adjusted various ad prices to fit within a cost-per-mille metric, general search text ads were significantly more expensive than Amazon ads. See PSFOF ¶ 60 (citing Tr. at 8461:23–8462:13 (Israel) (discussing DXD29 at 62)). But this time, the comparison excludes PLAs, which are in the proposed general search ads market along with text ads. Finally, Plaintiff States identify analysis from the clothing retailer North Face (unsupported by designated or trial testimony) showing that North Face calculated its ROI on Google to be a fraction of its ROI on Amazon but nevertheless continued to spend on Google. This, according to Plaintiff States, is evidence that search ads on GSEs and SVPs are not substitutable. PSFOF ¶¶ 64–65. But the weight of this evidence is limited by the particular features of North Face’s product, primarily cold-weather apparel. As stated in the same record, its business is “highly dependent on weather,” and GSEs can supply “triggers” that better identify when a user may be in a cold-weather location. PSX976 at 423–24. The court will not generalize a peculiar use case into a product market.
Sensitivity to Price Changes. Plaintiff States presented no evidence that advertisers lack reasonable substitutes for general search ads (as a market) in the face of rising prices. They point to testimony from Joshua Lowcock, Global Chief Media Officer at IPG, for the proposition that major advertising agencies would not recommend that their clients switch away from general search ads should prices increase. See PSTB at 17; PSFOF ¶ 9 (citing Tr. at 3825:12-24 (Lowcock)). But that testimony was limited to general search text ads and did not encompass PLAs. The same is true of other advertiser testimony the States cite: None of those advertisers purchase PLAs. See PSFOF ¶ 99 (citing testimonies from Booking.com, Expedia, TripAdvisor, Angi, and Yelp). Ultimately, this factor does not support a separate market for general search ads.
​The Brown Shoe factors counsel against recognizing a market for general search advertising. Plaintiff States’ Section 2 claim as to this alleged market fails.