Day 8: Does Google Deserve a Good Price for its Monopolistic Weapons?

Let’s talk about capitalism. Day eight was economics day at the Google ad tech remedy trial. An investment banker, an economist, and a small business owner testified in Google’s defense. I will give you some details, but you can probably guess the general vibe. The real action was in the vision of capitalism Google is presenting as Assumption A.

Shane Goodwin

“Uncertainty” was the theme of Shane Goodwin’s testimony. Goodwin is a professor of finance at Southern Methodist University, and an expert in mergers and acquisitions and corporate governance and strategy. He reviewed DOJ’s remedy proposals and finds them full of uncertainty. His report concludes that the proposals are speculative and risky: a) they are missing important details; b) large divestitures are risky; c) DOJ’s specific requirements raise risks; and d) they could deter buyers (of AdX and DFP). He breaks the uncertainties down: employee uncertainties—compelled to switch to new owners?; loyalty to Google?; attrition problems?—and customer uncertainties—contracts assignable?; loyalty to Google?; multiple buyers of DFP? “Customers are the lifeblood of an organization.”

Goodwin went on to list all the reasons buyers would be deterred, reluctant, or unable. I could recount them (missing details, divestiture complexities, historical failures), but you get the idea. Judge Brinkema got the idea, too, and about the time I was writing “Wouldn’t a buyer price in all of this?” she broke in to say that there would be a third-party monitor, if the divestiture is court ordered, and so wouldn’t due diligence on all these uncertainties be part of proper oversight? DOJ attorney David Geiger did well in cross-examination, arguing that all these challenges are met regularly in completed deals. He pointed to several witnesses we’ve already heard from who were willing to buy AdX and not confused about what is being divested. He asked if the court couldn’t order the scope of assets to be negotiated among Google, the buyer, and the court monitor. This elicited the best reply Goodwin gave all day: “I assume the court can do whatever it wants,” to which Judge Brinkema responded, “Good answer!”

That little exchange got a big laugh, but there is a serious conflict between his answer here and the whole spirit of his testimony. Goodwin assumed the goal was “a successful divestiture.” And by that phrase (used repeatedly), he meant what an investment banker would mean: to be successful, the divestiture would need to maintain ...