Framing the Questions for GOOGL

Wall Street Journal has a good article that spells out the various products underlying Google's search advertising platform. It is an excellent five minute primer. Here's the link.

The search advertising business is not one product, but various components that interact to make a market place. The article shows that Google owns and dominates all sides of that market:

• Sell side (for publishers to publish) 
• Publishers use "ad servers". These ad servers has information on what spaces on media properties are selling ad placement. The ad servers provide that supply info to the market place.
• Large publishers typically use its server, commonly known as DoubleClick for Publishers. (DoubleClick for Publishers and AdX are now tied together in one product called Google Ad Manager.)
• Smaller publishers often use Google’s AdSense.
• Mobile app publishers use Google’s AdMob.

• Buy side (provide ad purchasing tools)
• Google Ads (formerly known as “AdWords”) for buyers to bid for search ads placement on Google (its own property)
• DV360 for (for Display and Video) for buyers to bid for video ad placement. This does placement even outside of Google properties.

• Exchanges 
• Googles owns AdX which is the largest exchange with about 50% market share

• Media Properties
• Google search
• Youtube
• Others

• Analytics

There's plenty of firepower for regulators and antitrust guys here! 

For one, how can you have a market where all participants are owned by the same party? There are numerous other issues. Just as an example, the bundling is problematic. Google Ad Manager is a bundle of 1) DoubleClick for Publishers and 2) AdX. Combining a sell side tool with an exchange is not good optics, since the exchange can favor its own publishers.

Another example is analytics. This is an issue because it acts as the "referee" of the effectiveness of other Google search products. I can easily see regulators demand Google separating this out.

In short, plenty of ways regulators can cut them up.


The question then, is what pricing power or otherwise benefits did Google derive from owning all of this?  If this is all broken up, would GOOGL suffer economically? if so, how much? 

I suspect these questions are unanswerable. Google (and its parents Alphabet) is just not very transparent, particularly for a megacap. I cannot tell how much money they make from Ad exchange versus their own property selling ads, versus the various buyside/sell side tools (including ad servers?).  

If anti-trust is going to be the big overhang over GOOGL stock, then not having the transparency to answer these questions is not going to help. 

For now Google does not even break out Youtube. So they have a long way to go.