Comprehensive Analysis of DOJ's Product Markets and Substitutability in the Google Trial

DOJ witnesses and documents establish that a core element in the case is the definition of the relevant product markets. The DOJ has focused on two primary markets: search ads and text ads, explaining that text ads constitute a narrower segment within the broader search ads market^[1]. The Department further argues that markets should be defined on a pragmatic, factual basis, rather than exclusively on legal presumptions, drawing on precedents such as Brown Shoe to emphasize their approach. In addition, some arguments presented by plaintiff states propose a general search advertising market, which mirrors general search services, including both text ads and shopping ads on general search engines^[1][5]. This broader definition is consistent with how advertisers view these services, considering elements like return on investment (ROI) and continual demand for always-on channels such as Google Search.

Substitutability has emerged as a key point throughout the trial. DOJ experts and testimony illustrate that various forms of digital advertising—including display, social, and retargeting ads—should not be seen as interchangeable with search ads. For instance, the trial included evidence where witnesses argued that display advertising primarily builds awareness while search ads are designed to capture high-intent consumers. One witness clearly stated that search and display advertising are not substitutable, emphasizing that the unique performance and context of each channel drive distinct advertiser strategies^[2][1]. Furthermore, internal discussions and expert testimonies reveal that even within the search advertising space, there are important differences between text ads and Product Listing Ads (PLAs) due to advertiser control over messaging and conversion dynamics^[1]. These distinctions underscore that even if multiple formats share superficial characteristics, their underlying functionalities and returns differ significantly.

The trial presented several real-world examples to highlight how market dynamics and substitutability play out in practice. In one instance, Nike's decision to stop advertising on Facebook was described as analogous to an extreme price increase for one particular channel, which prompted advertisers to reallocate spend to other platforms. This example demonstrated how limitations on scale in one channel could shift the balance between digital groups, influencing competition and strategic choices^[2]. Similarly, evidence from the travel search market provided detailed testimony on how Google’s search products compete with alternatives such as online travel agencies and metasearch platforms, including Priceline, Expedia, and Tripadvisor^[3]. For example, Google's internal analysis noted a decline in generic travel queries and a corresponding shift in consumer behavior towards platforms like Airbnb, where direct traffic strategies meant that ad spending on Google decreased relative to competitors^[3]. These examples illustrate that while digital advertising channels may appear substitutable at a cursory glance, the functions they serve and the resulting competitive dynamics are markedly different in practice.

A major theme in the trial was that advertisers focus on ROI as the primary consideration when allocating budgets. Testimonies revealed that advertisers typically do not shift ad spend frequently between different formats, such as text versus digital display ads, because each channel delivers unique value. A representative from Home Depot recalled that shifting budgets between platforms is unusual, implying that the channels are viewed as distinct and non-fungible^[1]. This sentiment was echoed by other witnesses who stressed that the always-on nature of search ads versus episodic display campaigns influenced advertisers to accept higher prices within a channel to maintain a consistent flow of high-intent customer interactions^[1][5]. This reluctance to substitute between channels reinforces the DOJ’s argument that Google's practices lead to limited competition and entrenched market power.

In addition to search and text ads, the DOJ and some state plaintiffs have proposed an additional market definition that encompasses general search advertising. This market incorporates not only text ads but also shopping ads and other forms of advertising that appear on general search engines^[1][5]. Here, the argument is that this broader definition better reflects the way advertisers consider and deploy their ad spend, since advertisers often view these services as an integrated tool for capturing customer intent. Moreover, this broader market perspective captures the complexity of digital advertising, where factors like contractual obligations, consumer brand loyalty, and unique algorithmic performance differentiate one type of ad from another. Such widening of the market concept illustrates the multifaceted nature of substitutability in modern digital ecosystems.

Beyond traditional search markets, the trial also examined competition within the Android ecosystem, shedding light on how product market definitions extend into mobile search and application services. Testimony from a former Android and Google Play executive clarified that key revenue drivers for Google on Android include search, the app store, and Play services. Moreover, competition between Android and Apple’s mobile offerings has driven innovation and influenced device strategies; for example, Google monitored the rate of users switching between Android and iPhone as a measure of strategic effectiveness^[4]. The role of preinstallation agreements and revenue sharing with OEMs and carriers further underscores the market power exerted by Google’s ecosystem. These agreements effectively lock in preferred consumer behavior by preloading the Google Search widget and other applications, even when manufacturers have the technical capability to provide alternative access points.

The evidence and testimony presented in the trial provide a detailed view of how product markets are defined and how substitutability is evaluated in the context of Google’s dominant platforms. The DOJ’s approach emphasizes the importance of understanding consumer alternatives and the specificity of advertising functions, whether in search or broader digital advertising spaces^[1][2][5]. At the same time, examples drawn from travel, retail, and the mobile market reveal that while alternatives may exist, differences in user behavior, advertiser strategies, and market dynamics limit the practical substitutability across channels^[3][4]. This comprehensive analysis underscores the complexity of digital markets, wherein nuanced differences between ad formats and ecosystem dynamics significantly influence competitive outcomes.