Could Google Be Forced to Break Up After District Judge’s Ruling?
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Welcome to Tech News Briefing. It's Friday, April 18th. I'm Victoria Craig for The Wall Street Journal. A show today about marketing and tech and the limits of both. A U.S. federal judge has ruled that Google operates an illegal ad monopoly. We'll look at what that and other anti-competition cases could mean for the company's future. Then, do we trust artificial intelligence enough to design entire marketing campaigns? We'll look at the ad people who do.

But first, for the second time in eight months, a U.S. judge has labeled Google an illegal monopolist. A U.S. district judge said yesterday that the tech giant's dominance in two parts of the online ad industry harms both advertisers and consumers and deprives rivals of the ability to compete, though she rejected a third accusation by the Justice Department.

Let's dig into the ruling and what it could mean for Google and its parent company, Alphabet. Jan Wolf is The Wall Street Journal's business and legal affairs correspondent. First, Jan, walk us through what the U.S. federal judge's decision was for Google. It's a pretty forceful victory for the government. The judge agreed that Google has an unlawful monopoly in two distinct markets, servers and publishers.

Basically, there's two different sorts of tools that are used to place ads online where Google is just dominant and it achieved that domination unlawfully. And it matters because now that there's this finding of liability, the next phase is for the same judge to hold a remedies trial where she would decide, here is some sort of judicial remedy I can impose that would restore competition. And in the worst case scenario, Google would have to sell off

some of its advertising products, which are really a cash cow for the company. AdTech generated $31 billion in revenue last year, or about a tenth of the company's overall sales. So, you know, the stakes are really high for Google here.

This is not the first time that Google has been labeled a monopolist in the U.S. How will both Google and the Justice Department move forward with these cases? Google is under so much antitrust scrutiny that it's hard to keep track of it all. But basically, the way to think of it is that the Justice Department brought two different cases. One about the Google search engine saying that's an unlawful monopoly. And then another one about ad tech tools saying

Software that's kind of not really used by the general public, but is enormously important for placing advertisements online. And so now we have rulings of liability in both cases, one in D.C. and one in Virginia, and the government won in both cases.

And you mentioned all of the regulatory scrutiny it's under. It's not just in the U.S., but we've seen this week alone that it's facing antitrust concerns on three different continents. We have one in the U.K. that alleges that Google overcharged companies there for ad services. And in Japan, a regulator also ordered the company to stop what it called anti-competitive practices in mobile search.

Jan, is this kind of scrutiny par for the course for a company as huge and as integrated into Internet search and all of these functions that we use on a daily basis? Or is this something that could cause real questions about how it operates in the future? This antitrust scrutiny is a major threat to Google's business. I don't think they would dispute that.

Online platforms have tremendous power over the public square and tremendous access to our data. Because of that, you saw a crackdown in recent years. It's sort of an area of bipartisan agreement. And now we're moving to the phase where we kind of find out, okay, well, what's going to happen? And it's moving slowly because these are enormously complex cases involving like expert witnesses and

tons of fact witnesses like former executives to get on the witness stand and testify. What we're seeing now is it's coming to a head and it's not going particularly well for Google. And you mentioned in the very beginning that there's potential that Google could be forced to sell off some of its business. How likely is that looking and what does it mean for Google when it comes to competition in these broader markets of search and advertising? So

You know, it would be a major setback for Google, but there's still a lot of litigation left to come. You know, we have findings of liability against Google from two federal judges, but both of those decisions are going to be appealed. There's also potential for a settlement that is negotiated in a way where it's not that burdensome for Google. And I should point out that, you know, these judges are

I have to also consider whether the facts have changed since these cases were brought. For instance, you could be a monopolist based on conduct from five years ago, but then a judge might say, well, you know what? The market's changed a lot because of, say, AI, because of new competition, and I am reluctant to do anything that might squelch innovations.

We should also mention Google's response to all of this. In some of these cases, particularly in the overseas cases, they've said that they're going to vigorously defend themselves and that they disagree with some of these findings. What is Google's stance on the ruling in the U.S.?

So Google said it's pleased that some of the Justice Department's theories were rejected. I mean, for example, Justice Department said that there were three different distinct markets at issue and it wasn't able to prevail on all three. It prevailed on two. And Google says it's going to keep trying to chip away at this case on appeal. And another strategy would be to try and convince the judge to not impose too extreme of a remedy.

What does this mean for consumers? I mean, you and I who go and we search on Google every day, will we see an impact to any of these decisions if it does come to Google ending up with a forced breakup of its business? So in the AdTech case that has now resulted in a ruling, a lot of the trial testimony was from executives within the news business, like the media industry, who have said that there's real harm to the public because...

Google, they say, takes too large of a cut of digital advertising on the web. So, you know, according to the government, if we see some real remedies here for Google, what's going to happen, at least in their view, is that you'll see different media companies or just different, you know, website based companies making more money. And because of that, being able to offer better services and products to the public.

That's Jan Wolff, WSJ business and legal affairs correspondent. And a heads up, the Wall Street Journal's parent company, News Corp., has been an outspoken critic of Google and was among the companies that were contacted by antitrust investigators. Meanwhile, at the intersection of tech and marketing, AI is coming for Madison Avenue. After the break, we'll explain how humans are the ones lending AI a helping hand to make ads, not the other way around.

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A little background for this next story. Before we called up the reporter, the calendar invite we used decided to attach an illustration of a coffee pot. That's because the reporter is Patrick Coffey. He's a marketing and advertising reporter for WSJ's CMO Today. It seems the scheduling software saw the word coffee and thought, that makes sense. So given that, should we be trusting artificial intelligence to design and execute marketing campaigns for big brands? Patrick?

Patrick has been looking into exactly that question. Patrick, we'll get to whether marketers should hand over the keys to AI in a second. But first, can you just explain why they would even want to do that in the first place?

Well, essentially marketers have a constant demand to produce more content. One of the main reasons is that a big part of marketing strategy now is to personalize everything, going from addressing each customer by name to using the data that they've collected to customize whatever you're showing them based on where they're located, what they buy, the interest they've expressed through their online behaviors and things like that.

So marketers are increasingly turning to generative AI tools.

And they do everything from creating websites to straight up generating ideas for campaigns and now making videos. The thing that I'm really struck by in your story is that it isn't just AI assisting humans in this process. It is exactly the opposite of that. Yeah, that's fascinating. That's from Opella, which is the consumer products division of Sanofi.

They just have like an entire team of AI trained people. And their chief growth officer told me that they don't really tweak the output of the AI. They don't look at an image and say, oh, that's the wrong color or, oh, you know, we need to make that figure look a little different.

Because by the time you can change one little thing, the AI will have produced so much more that you can just kind of pick from what comes out. And obviously they have people who do fact checks, especially because they're in a highly regulated industry. So they can't have things that are medically inaccurate in their content.

But they've gotten it so that in their minds, it's so refined that all they really have to do is just wait for it to churn out stuff. And then they kind of pick from the results. So how do these companies actually train these AI systems? Because we talk a lot on the show about training AI to do this or that. But what does it actually take? What are the inputs that these companies like Sanofi is using to trust these AI machines enough that they can do these ad campaigns essentially solo?

A lot of it is just the material that's already been released by the companies. It doesn't take that much. They'll feed it like three or four campaigns that this brand did recently.

And as they create more stuff, they feed it more prior material. But what they say is just so well attuned to whatever they feed it that it then acts as this particular brand. At the same time, that creates the issue, how does the average consumer trust what they know to be AI generated? And from the advertiser's perspective, how effective will this be in convincing you or I to

to buy the product. People see something, and especially if they know that it's AI, they'll be looking for these imperfections and they'll kind of be skeptical of it. That was Patrick Coffey, a reporter for The Wall Street Journal's CMO Today. And that's it for Tech News Briefing. Today's show was produced by Julie Chang and Pierre Bien-Aimé. I'm your host, Victoria Craig. Jessica Fenton and Michael LaValle wrote our theme music.

Our development producer is Aisha Al-Muslim. Scott Salloway and Chris Zinsley are the deputy editors. And Falana Patterson is The Wall Street Journal's head of news audio. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.