Google paid US$240 million over the odds to buy a rising star ad tech rival, before parking it, and then killing it off, the blockbuster ad antitrust case has heard.

The Department of Justice alleges the acquisition of AdMeld was a so-called “killer acquisition”, a strategy where Google used its billions to buy challengers and shut them.

The Virginia antitrust trial heard internal Google analysis suggested the start-up was a “threat” to its fast-growing display ad revenue business.

The DoJ has pointed to Google’s acquisitions of several rising stars, including DoubleClick in 2008, and later Invite Media.

DoubleClick was later renamed DFP and is now known as Google Ad Manager.

The court has heard GAM now enjoys a 91 per cent share of the ad server market, and is used by 90 per cent of publishers and 80 per cent of global advertisers.

It delivers 13 billion display ads a day and, two fifths of all global video ads and four fifths of of News Corp’s ad revenue, with a 36 per cent take rate on every ad.

The AdMeld acquisition gave Google a foothold in yield management tools which were emerging in 2011. Competitors included PubMatic and the Rubicon Project.

Google estimated that AdMeld was worth between US$182 million and US$355 million, but finally purchased it for more than $400 million.

Google’s long-time head of ads Neal Mohan, told the court the acquisition was intended to ensure it didn’t fall behind in emerging technologies.

Two years after merging AdMeld tech into its ad exchange AdX, Google shut it down, the court heard.

The DoJ alleges that it shows Google won a monopioly over global ad tech by buying rivals, a claim that Google denies.

Mohan joined Google during the DoubleClick acquisition before rising to run Google’s display ad division and last year becoming CEO of YouTube.

While leading ads, he messaged colleagues telling them to buy one of the leading products, by “picking up the one with the most traction and parking it somewhere”.

Mohan denied Google bought AdMeld to eliminate a competitor. “Absolutely not,” he said. “We needed to close that gap as quickly as possible.”

He said buying the best new companies in the market was a response to the risk posed by large competitors, Yahoo and Microsoft.

The court also heard how Facebook signed a controversial ad deal with Google in 2018, Bloomberg reported.

Former Facebook exec Brian Boland told the court that the social media juggernaut initially intended to challenge Google to sell display ads on third party websites, but concluded it would fail.

The Facebook Audience Network was intended to sell ads on Facebook and Instagram, as well as on websites and apps, before a July 2017 strategy memo concluded: “Google sits between us and the impressions we want to buy” and Google’s scale meants it can “cherry pick the best”.

Boland told the court it was if Google was able to select the 30 best apples from a crate before anyone else got a look “you’re left with the leftovers”.

He then spent six months putting together an agreement between Facebook and Google, internally nicknamed Jedi Blue.

The controversial deal gave Facebook preferential treatment when bidding through Google”s exchange for web or mobile app ads within its Facebook Audience Network.

Google and Facebook were the two largest players in the online ad market, and the deal was agreed by Mark Zuckerberg and Google CEO Sundar Pichai personally.

Documents shown in court said Google was “looking for Facebook to pay 15 per cent of working media cost in order to remove” the last look advantage.

In 2020, a group of US state attorneys general sued Google for alleged monopolisation claiming the Jedi Blue deal agreement violated the antitrust law.

They claimed Google did the deal so Facebook would drop to adopt a new type of technology, known as header bidding, which challenged its dominance.

A New York judge threw out the allegations, saying “there is nothing inexplicable or suspicious”.

The DoJ has brought it back to court claiming it proves that even a company the size of Facebook was unable to compete effectively, proving Google’s a monopoly.

Google denies the DoJ’s claims, and the case is listed to run for another three to four weeks.

– Reporting by Ricky Sutton