U of Digital Newsletter - 11/20/24 (premium)

November 14th-November 19th // Estimated Reading Time: 11 minutes

Below is a roundup of last week’s notable industry news, with summaries and our opinions. Packed into this week’s edition: A Comcast spin-off, a Trade Desk product launch, and the DOJ’s proposed solution to Google’s search monopoly…

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Top Stories 👁️ 

US justice department plans to push Google to sell off Chrome browser
Source: The Guardian
November 19th, 2024

Summary: The US Department of Justice (DOJ) has reportedly asked a judge to force Google to sell its Chrome browser after the company was found to operate an illegal search monopoly. Chrome is the world's dominant web browser, with 61% market share, according to Bloomberg (which was the first to report the story🔒). Chrome asks users to login and defaults  to Google's search engine, which in turn generates a massive amount of logged-in user data that is used for targeted advertising.

The DOJ reportedly also wants Google to:

• separate the Android smartphone operating system from search and the Google Play app store (but they stopped short of asking for a forced Android sale).

• stop using exclusive contracts that make Google the default search engine on the iPhone and other devices.

• let websites control whether their content will be used by Google's AI products, like AI overviews.

• empower advertisers with more information and control over ad placements.

Google says it will challenge the proposals, which it called "overreach." Bloomberg reported that a Chrome sale could fetch $20B. 

The case is one of two DOJ antitrust cases filed against Google. The DOJ won the first case, around search, in a landmark ruling in August, and a decision in the second case, related to Google’s ad tech, could come in early 2025. However, it's not clear how a second Trump administration will impact these cases. Although the search antitrust lawsuit was filed during Trump's first term, Trump said recently that he was against breaking up Google.

Opinion: The DOJ is asking for the world knowing they’re going to get a lot less. For optics purposes, a “break-up” would be a big win for them, so we get it. But does a break-up actually solve the Google search monopoly problem? We don’t think so. 

If Google sold off Chrome, its search business would surely take a hit. But it wouldn’t get rid of all the anticompetitive advantages Google has created. It also would do a lot of damage to Google elsewhere that, frankly, they shouldn’t have to incur as a result of this specific case.

The right remedies would be:

1) Terminate Google’s exclusive contracts with Apple and others browsers / platforms
2) Require that Google give users explicit choice about which search engine they want to use as their default in Chrome and Android

That should do the job. 

We think this case might play out much like the Mircosoft antitrust case, in which the initial ruling required that Microsoft break-up into two separate companies, but then Microsoft appealed, and the final outcome was that Microsoft could not force their browser as the default on Windows and had to give users explict choice.

Lots of variables still at play, like what the verdict of the ad tech case will be and what the Trump administration will have to say about all of this.

For now, the DOJ is getting in a (cheap) shot before the actual decision.

Q3 Earnings 📈

Disney (👍): Revenue was up 6% to $22.6B, beating estimates. Disney+ is now profitable; streaming entertainment ad revenue was up 14% and Disney+ Core subscribers reached 122.7M. Shares rose 9%.

Dentsu (👎): Organic revenue was up 0.3%. Japan was a bright spot, but organic revenue was down by 3.1% in the Americas. The Japanese agency holding company lowered full-year guidance to 0% organic revenue growth. Shares fell by single digits.

Walmart (👍): Revenue was up 5.5% to $169.6B, beating estimates. Global advertising revenue was up 28%, including a 26% increase for Walmart Connect in the US. The retailer increased its guidance for the full-year, sending shares 3% higher.

Other Notable Headlines ✍️

Comcast to spin off its cable channels, including MSNBC and CNBC, into separate company - Comcast will spin off most of its cable networks, including MSNBC, CNBC, USA, Oxygen, E!, Syfy, and Golf Channel, into an independent, publicly traded company. While NBCUniversal will retain control of Bravo, NBC broadcast network, the Peacock streaming service, and Universal theme parks, the new cable-focused entity will be led by current NBCUniversal Media Group chairman Mark Lazarus. Despite industry-wide concerns about cable TV's future, these networks remain profitable, and the move is being positioned as a growth opportunity.

Google is getting ready to unveil how Chrome’s cookie opt-in model will work, sources say - The digital advertising industry has been in a holding pattern since July, when Google reversed course on its plan to fully remove third-party cookies from Chrome. Instead, the company said it will allow users to enable or disable third-party cooies.. Sources believe that Google is close to revealing what that opt-in/out user prompt will look like, which will give the entire industry much-needed clarity about what to expect. Publishers need time to test different monetization strategies so that they don't end up in the same situation as when Apple launched App Tracking Transparency, which gave users the ability to opt out of tracking in apps, causing data-driven advertising in apps on iOS devices to take a major hit. Google still needs to ensure that whatever consent language it adopts will satisfy UK regulators, which are overseeing its third-party cookie plans to ensure that competitors and consumers aren't harmed by any change. A recent report from the UK Competition and Markets Authority (CMA) said that they are still concerned that shifting to user choice will substantially shrink the pool of users with third-party cookies enabled, giving Google an unfair advantage.

Threads might get ads early next year - Threads, Meta's Twitter copycat, will begin showing ads in early 2025 for a small group of select advertisers. Meta launched Threads in 2023 as an alternative to X after it was bought by Elon Musk. Threads became the fastest-growing app in history at the time. Although its user experience still leaves a lot to be desired, Threads and another up-and-coming platform called Bluesky are benefitting from users and advertisers leaving X due to brand safety and misinformation problems. The exodus has accelerated since the election because of Musk's close ties to the Trump campaign. There are also rumors that X will merge with Truth Social, Trump's social media platform. Bluesky has added a million users since the election. However, even as users flee X, it appears some advertisers are returning. In an X post, Musk expressed his appreciation for major brands resuming their advertising on X—a far cry from when they stopped advertising on the platform and he told them to "Go fuck yourselves." To help sell more ads, X just inked a deal with PubMatic🔒, which will enable the SSP to make X ads available programmatically.

TikTok pushes to attract SMBs and its latest advertising tool might just do the trick - TikTok's new Symphony Creative Studio, released globally, will let advertisers use AI to generate videos so they can quickly create TikToks. Symphony Creative Studio lets advertisers generate and remix new videos, make variations of existing content, and create new TikToks every 24 hours based on how top-performing ads are trending. The results could be a loop of almost endless content, which would benefit both advertisers and TikTok. Automating these processes eliminates a big pain point for small and medium-sized advertisers who don't have the resources to invest in video production or the experience to know how they should show up on the platform. Advertisers with a TikTok for Business account can use the product free of charge. Once advertisers have the content, they can post it themselves to the platform or let Smart+, TikTok’s AI black box tool, post on their behalf.

Perplexity brings ads to its platform - Threads isn't the only platform getting ads. The AI-powered search engine Perplexity said ads would be coming in Q4, and they’re now here in the form of "sponsored follow-up questions". Brands like Whole Foods and Indeed can sponsor the questions but won't be able to write or edit the questions, which will be generated by AI. 

Perplexity also launched a merchant program and separate shopping feature for its paid customers that inserts shopping recommendations into its search results and lets them order products directly, without visiting a retailer's website. Perplexity makes most of its money from premium subscriptions today, so sponsored follow-up questions open up a new, ad-based revenue stream to fuel growth for the AI company. at a time when companies are still working out how to incorporate ads into AI-generated content. 

In other AI news, OpenAI has agreed to pay Dotdash Meredith at least $16M 🔒 to license its content for training purposes. And Dow Jones has struck deals to license the content from more than 4K global news outlets🔒, which it will use to generate AI summaries for Factiva, its research and news database tool. 

The FTC Thinks Data Clean Rooms May Have A Few Dusty Corners - The US Federal Trade Commission is warning companies that data clean rooms need to be used carefully to avoid "privacy washing." The agency said in a blog post that data clean rooms don't come with a privacy guarantee or let companies off the hook from properly handling personal data. Some have pushed the FTC to look into data clean rooms due to "disingenuous claims" that aim to "convince uninformed regulators" that they protect privacy. Data clean room operators welcomed the scrutiny but argued that when properly used, data clean rooms leave an audit trail that proves data privacy policies were followed. In any case, it's clear that data clean rooms are on the FTC's radar, which makes it imperative for companies to double-check how they are collecting, using, and sharing data via data clean rooms.

Whoops: Did The Current Just Leak The Trade Desk’s Smart TV OS Launch? - This was rumored a few months ago, then CEO Jeff Green denied it, and now it’s happening…

Other Notable Headlines
(that you should know about too) 🤓 

Paramount Demanding A 50% Nielsen Price Reduction: Sources - Paramount and Nielsen's long-term contract ended in September—and they've been duking it out over a renewal ever since. Lots of money is at stake…

Brussels fines Facebook parent company $840M - The European Union has concluded that Meta violated antitrust rules by tying the Facebook Marketplace to the Facebook platform.

LiveRamp Launches Quick Start Insights to Simplify and Accelerate Clean Room Value - As its name suggests, the product aims to help companies more quickly access and activate on insights coming out of their clean room. Launch partners include 12 premium publishers such as G Ad Solutions, News Corp, Roku, SiriusXM Media, and Snap Inc.

Jasper Launches the Industry's First AI Knowledge Layer Built Specifically for Marketing - The AI knowledge and context layer gives companies marketing-specific intelligence and brand control capabilities to help them scale content and brand compliance.

OpenWeb Founder Loses Court Appeal Over Dramatic Ousting - OpenWeb's board of directors voted to terminate CEO Nadav Shoval in September. A judge declined to compel OpenWeb to reinstate him.

Company tied to Alex Jones disputes The Onion's purchase of Infowars - The LLC that operates Jones’ online supplements store tried to have the Onion's winning bid for Infowars disqualified. The Onion has said that it wants to reboot Infowars as “the dumbest website on the internet.” We can’t wait!

Coca Cola’s AI-Generated Ad Controversy, Explained - Coca-Cola used AI to generate its Christmas ads this year. People don’t seem to like them.

Jaguar attempts to pounce on the future with major rebrand - People don’t seem to like this either. What do you think?

That’s It For This Week 👋

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