By Ethan Litwin and Keagan Potts
On April 13, 2007, Google’s $3.1 billion acquisition of DoubleClick transformed digital advertising forever. The deal secured Google’s dominance across all three areas of digital advertising: (1) Demand Side Platforms (DSPs), which advertisers use to buy ad space; (2) Ad Servers, which publishers use to manage their inventory and sell ad space; and (3) Advertising Exchanges, where DSPs purchase ad space from Ad Servers. The Federal Trade Commission (FTC) conducted a lengthy review of the transaction before determining in 2008 not to challenge it.[1] Commissioner Pamela Jones Harbour, the lone dissenter on the Commission, issued a stark warning:
But even more troubling is that the combination of Google and DoubleClick will affect the evolution of the entire online advertising market—especially in light of existing network effects, and the tremendous additional network effects the transaction will generate. The majority’s analysis skims too quickly over these points. Network effects deserve greater attention.[2]
The scale and scope of these network effects won by Google became apparent within a year of closing. Google used its newly acquired assets to create a walled garden within digital advertising. Google’s dominance progressively sapped advertising revenue from newspapers, triggering record bankruptcies across the fourth estate. Surviving news organizations transformed their business models, adopting a subscription model that has failed to fully replace their lost advertising revenue and led to smaller staffs and less investigative reporting.[3]
Finally, on April 17, 2025, a federal district judge found what everyone already knew: Google had exploited the network effects it garnered from this acquisition to unlawfully obtain monopoly power in multiple advertising markets and to extract monopoly rents at a massive scale.[4] The court painstakingly detailed how Google had exploited the principal assets it had acquired in the DoubleClick deal—control over DoubleClick’s UserID, which advertisers used to understand more about users; DoubleClick for Publishers (DFP), the leading Ad Server; and AdX, an ad exchange—to systematically exploit its market power to dominate all three areas of digital advertising today. Seemingly by any definition, Google’s acquisition of DoubleClick substantially lessened competition in multiple markets; yet the Court found that the acquisition did not violate the antitrust laws.
The court’s conflicting conclusions expose the analytical weakness at the heart of merger analysis—most notably, an over-reliance on economic pricing models, which creates a blind spot to the exclusionary effects of certain transactions, including from conglomerate effects. Commissioner Harbour saw the threat posed by a merged Google/DoubleClick back in 2008.
The Google AdTech Decision
Judge Leonie Brinkema of the Eastern District of Virginia found that Google had illegally monopolized the markets for ad servers and the market for ad exchanges.[5] Judge Brinkema further found that Google had illegally tied its DFP ad server to its AdX advertising exchange. In the court’s view, Google’s ability to monopolize these markets stemmed from its acquisition of DoubleClick.[6] Post-acquisition, Google immediately implemented technical and policy restrictions to cement its dominance:
- UserID Restrictions: Limited publishers’ access to DoubleClick UserIDs outside of Google’s services.
- AdX/DFP Tie: Prevented publishers from receiving real-time bids from AdX unless they also used DFP.
- “First Look” Policy: AdX could win an auction before other exchanges had an opportunity to bid.
- “Last Look” Policy: AdX could “adjust [bids] in response to the highest bid from a rival ad exchange.”
- “Unified Pricing” Policy: Prohibited publishers from setting higher prices in AdX than in other competing exchanges.[7]
These market restraints created a walled garden with mutually reinforcing power across Google’s advertiser-side, publisher-side, and advertisement exchange services. Judge Brinkema’s decision shows exactly how the combination of several of Google’s complementary services locked customers in. These conglomerate effects allowed Google to leverage its market power between and among these different services, utilizing classic bundling and tying strategies as well as less perceptible preferences that kept consumers within Google’s ecosystem.
Why the Court Rejected DOJ’s Post-Merger Challenge of Google/DoubleClick
Section 7 of the Clayton Act prohibits mergers or acquisitions if “the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”[8] Despite Commissioner Harbour’s prescient analysis, the FTC declined to challenge Google/DoubleClick under Section 7.[9] Fifteen years later, the DOJ similarly chose not to bring a Section 7 claim, despite the fact that the U.S. government is neither subject to the Clayton Act’s 4-year statute of limitations[10] nor the doctrine of laches[11] when bringing claims under Section 7.
Perhaps concerned about the FTC officials’ statements regarding the closure of the Google/DoubleClick investigation in 2008, DOJ challenged the transaction only under Section 2 for illegal monopolization. The Court had no difficulty rejecting the DOJ’s claim.[12] The Court found Google had lacked monopoly power in relevant markets at the time of acquisition—a requirement for Section 2 monopolization claims.
The Conglomerate Merger Blind Spot
Since the early 1980s, U.S. antitrust enforcement has focused on, primarily, (1) horizontal mergers, which result in the elimination of a direct actual or potential competitor to the acquiring firm; and, to a much more limited extent, (2) vertical mergers, which result in the exclusion of a competitor in either an upstream or downstream market.[13] During this time, enforcers have foregone challenges to conglomerate mergers, where companies acquire assets in unrelated markets and leverage them through tying, bundling, or other exclusionary practices.
In digital markets, acquisitions of strong complementary products can create powerful lock-in effects—the “walled garden” from which customers are unwilling or unable to move to competing products. Despite Google’s 2007 claims that “competition is but one click away,”[14] the reality, laid bare in the Court’s opinion, proves different. Once trapped in a walled garden, it is often difficult, if not prohibitively expensive, to leave. Google’s course of conduct upon closing on its acquisition of DoubleClick proves the point. Immediately upon closing, Google leveraged demand for its AdWords service to grow DFP and then leveraged DFP’s supply to grow AdX. In other words, Google’s current dominance of digital advertising resulted not from horizontal monopolization but from its acquisition of complementary assets that it used to create a walled garden.[15]
Remedying Conglomerate Effects in Google AdTech
The Court is now faced with the difficult task of determining the remedies in the Google AdTech case. In anticipation of a September trial on remedies, DOJ requests that Google be ordered to divest AdX and DFP, as well as be prohibited from engaging in certain similar anticompetitive conduct.[16] For its part, Google proposes giving competitors real-time access to AdX data, removing unified pricing rules for open web display ads, and committing to never reintroduce first-look or last-look advantages in open web auctions.[17] In our view, Google’s proposed remedies resolve only the prior behavioral problems, not the distorted market structure that made such anticompetitive behavior possible in the first instance. Only the DOJ’s proposal structural remedies will sufficiently remedy Google’s anticompetitive conduct, and only if suitable buyers are found. Any entity that acquires AdX, for example, must be committed to investing in the exchange, as only a robust, well-capitalized, and truly independent exchange will facilitate meaningful competition in this market. And, in any compelled sale of DFP, the Court must ensure advertisers will be able to access DoubleClick UserIDs, regardless of the platforms those advertisers use.
Looking Forward
The good news is that U.S. enforcers have already pivoted to adopting a more European approach to analyzing the risks created by mergers, including by focusing more on the conglomerate effects created by certain mergers. Indeed, the latest version of the Horizontal Merger Guidelines, published in 2023, formally revives conglomerate effects theory as an essential part of U.S. merger control.[18] This was no mere policy statement: In May 2023, the FTC sued to enjoin Amgen’s $28 billion acquisition of Horizon Therapeutics, alleging that Amgen could, post-transaction, bundle the companies’ drugs (or effectively bundle through rebates or other contractual terms) for the purpose of excluding or disadvantaging competing drugs.[19] The FTC later settled with Amgen, allowing the transaction to close under a consent order prohibiting Amgen from engaging in such exclusionary conduct. While the effectiveness of such behavioral remedies remains unclear, enforcers should continue advancing challenges under conglomerate merger theories to prevent history from repeating itself.
[1] Statement of the Fed. Trade Comm’n Concerning Google/DoubleClick, FTC File No. 071-0170 (available at https://www.ftc.gov/system/files/documents/public_statements/418081/071220googledc-commstmt.pdf).
[2] Dissenting Statement of Commissioner Pamela Jones Harbour in the matter of Google/DoubleClick, at 4, FTC File No. 071-0170 (available at https://www.ftc.gov/sites/default/files/documents/public_statements/statement-matter-google/doubleclick/071220harbour_0.pdf).
[3] See Matt Stoller, Should We Save Newspapers from Google?, Am. Affairs, https://americanaffairsjournal.org/
2023/03/should-we-save-newspapers-from-google/ (last visited June 17, 2025).
[4] United States v. Google LLC, Case No. 1:23-cv-108 (LMB/JFA) (E.D.V.A. Apr. 17, 2025) (“Google AdTech decision”) (available at https://cases.justia.com/federal/district-courts/virginia/vaedce/1:2023cv00108/533508/
1410/0.pdf?ts=1744991522).
[5] Google AdTech decision at 1.
[6] Id. at 71-76.
[7] Id. at 26-40.
[8] 15 U.S.C. § 18.
[9] Supra notes 1-2.
[10] United States v. E.I. du Pont de Nemours & Co., 353 U.S. 586, 697–98 (1957).
[11] New York v. Facebook, Inc., 549 F. Supp.3d 6, 36 (D.D.C. 2021).
[12] Google AdTech decision at 87-90.
[13] See Debra A. Valentine, Public Statement: The Evolution of U.S. Merger Law, Fed. Trade Comm’n (Aug. 13, 1996), https://www.ftc.gov/news-events/news/speeches/evolution-us-merger-law; Antitrust Division Submission for OECD Roundtable on Portfolio Effects in Conglomerate Mergers, Dep’t of Justice (Oct. 12, 2001), https://www.justice.gov/atr/department-justice-11.
[14] David Wismer, Google’s Larry Page: “Competition Is One Click Away” (And Other Quotes of the Week), Forbes (Oct. 14, 2012, 8:13pm EDT), https://www.forbes.com/sites/davidwismer/2012/10/14/googles-larry-page-competition-is-one-click-away-and-other-quotes-of-the-week/.
[15] The European Commission similarly declined to block the transaction, likely due to recent reversals by European courts of the Commission’s decisions blocking two mergers on conglomerate effects theories. See European Commission Press Release IP/08/426, Mergers: Commission clears proposed acquisition of DoubleClick by Google (Mar. 11, 2008). One of the great ironies of the merger analysis debates during the early 2000s is that, while the Commission lost several high profile cases and was the frequent target of criticisms urging the Commission to adopt standards closer to those used by the U.S. agencies, time has justified the European approach.
[16] Pls.’ Notice of Proposed Remedies, United States v. Google LLC, 1:23-cv-108 (E.D.V.A.), ECF No. 1430 (filed May 5, 2025) (available at https://storage.courtlistener.com/recap/gov.uscourts.vaed.533508/gov.uscourts.vaed.
533508.1430.0.pdf).
[17] Google’s Initial Proposal for Appropriate Remedies, United States v. Google LLC, 1:23-cv-108 (E.D.V.A.), ECF No. 1431 (filed May 5, 2025) (available at https://storage.courtlistener.com/recap/gov.uscourts.vaed.533508/
gov.uscourts.vaed.533508.1431.0.pdf).
[18] Dep’t of Justice & Fed. Trade Comm’n, Merger Guidelines (2023), https://www.ftc.gov/system/files/ftc_
gov/pdf/2023_merger_guidelines_final_12.18.2023.pdf.
[19] Biopharmaceutical Giant Amgen to Settle FTC and State Challenges to its Horizon Therapeutics Acquisition, Fed. Trade Comm’n (Sept. 1, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/09/
biopharmaceutical-giant-amgen-settle-ftc-state-challenges-its-horizon-therapeutics-acquisition.
