Magnite, Inc. Common Stock Rosenblatt's 6th Annual Technology Summit: The Age of AI (Part II)

Yeah. No, great question and great setup, Barton. I really appreciate this and all the rest of you that are joining in the throes of August here in summertime, especially staying in overtime in New York. Hopefully you had your shot of espresso to keep you interested and intrigued in ad tech here post 5:00 P.M. Yeah, I think from your question directly, what's Google done here to get the monopolistic ruling? This ad tech trial which Leonie Brinkema headed, really focused on what they did in their network business and how they gained an advantage in tipping the scales in their favor, from an exchange perspective and an ad server perspective. Effectively, Google took over with their DoubleClick acquisition, and subsequent to that, they basically ran the table on ad serving in the open internet marketplace.

They did so by making the economics almost unattractive for anybody else to be able to come in and compete. As a result, they're really the only ad server in town for non-connected television. In doing so, the economics that they gained was really done so at the exchange side and the demand side, without the publishers having any choice or control over doing so.

They really did prefer their exchange by providing that timing of submitting a bid, information about the auction, clearing prices, the ability to bid in unique cases where the rest of the market was held to different standards, to really shift market share in their favor. It's estimated that their market share position's about 60% in that marketplace, as Barton reflected, even though we're a 6%, 7%, 8% share of total market, our fair share is 15-ish percent, which corresponds with their 60% market share position. This really only touches the best top and mobile parts of our business per breakout, which is the Magnite DV+ side. Again, that's really the only piece that this would touch or impact. There is nothing related to this in our expectations, guidance, forecast, et cetera, conversations that we have with any of our sell-side or buy-side analysts to do so.

I know, and we really appreciate Barton's work on this. To date, he has not built in this to our expected numbers for 2026, 2027, 2028 and beyond. It's not something that we would stick our neck out there to describe. But we think there's a fair amount of market share that's up for grabs. What effectively, by giving the supply side or the exchange side an advantage from the ad server and kind of playing unfairly with the rest, they've been able to charge nearly a 50% take rate for servicing that inventory, while at the publisher level, making it seem like it's almost free because they don't really charge much for ad serving. By doing that's what they've done, to skew share.

We think in a fair competitive auction, as much as 30%, 40%, 50% of their share could be up for grabs and up to win. It depends on exactly what rules Leonie Brinkema orders or puts in place to break the monopoly. But effectively, publishers have not been with that ad-serving position, they have not had a choice to move it from them to somebody else and do it at any reasonable economics for ad-serving and to break Google's stranglehold over how they transact and how much money flows to them from Google at whatever take rates they want. Another perfect example of that bargain is that Google, as an SSP, does not even have, or an exchange, does not even have contracts with publishers, meaning they do not have to negotiate take rates. It is a take it or leave it. They either take Google's money or they do not.

If they choose not to, they are not sure if they would receive or cover it in any other way if they decided to exclude Google from participating. So they do not even have that choice. As a result, you would have no paper, no contracts where every other exchange that operates that has to access this inventory through Google's ad server has to basically make do with whatever Google decides to give you as an ad server, which is imperfect information, sometimes past the time that the auction is even completed and finished and a winning bid is returned, and you cannot do anything about it. So that is the monopoly is really you have no choice, no ability to negotiate fees, no alternatives to use in the marketplace, that that is truly where we believe these behavioral remedies should be aimed and really to treat things fairly.

There is a very simple, elegant solution by which to make this market perform fair. It is called Prebid. It is a bit of code. It is an industry standard. It is free, open source software that allows this to have Google's ad server pass the impression level or the ad request over to Prebid and then share it with Google and everybody else in the ecosystem at the same time, with the same data, with the same transparency. We believe that simple fix is truly what jump ball for amount of this volume to be able to transact openly and in a more fair manner. That is really the easiest description that we can use to identify what comes up for grabs.

There is a number of things on the demand side that they use to leverage and gain an advantage and how they use AdWords to buy or how they bundle this with other inventory that we also think is advantageous. But the cleanest, easiest example is simply sharing that impression, give it to us at the same time with the same amount of value, and for doing so, we think the market opens up.

In our view, we have not seen anything change from the behaviors or the patterns of which Google has acted and performed. In fact, even where optically you have things that have been volunteered by Google and they admittedly said, which for our civil trial would be very damaging and very beneficial in our case, which is, "Hey, we are doing away with Last Look." Last Look was a feature that 2, 3 years ago they had in place that would let them steal any auction they wanted at the ad server level, regardless of who else competed, bid for it, won an auction for it. They could steal any impression they wanted for a penny more than what the winning bid was.