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Marcus Johnson (00:00):

In the rapidly-evolving world of retail media, few platforms are as uniquely positioned as DG Media Network. With over 20,000 stores, Dollar General serves as a lifeline for over 90 million shoppers across the US, at a time when all shoppers are looking to save money. DG Media Network, media built better.

(00:27):

Hey, gang. It's Monday, September 15th. Jeremy, Yuri, and listeners, welcome to Behind the Numbers, an EMARKETER video podcast made possible by DG Media Network. I'm Marcus. Joining me for today's conversation, we have Senior Director of Briefings, living in New York, it's Jeremy Goldman.

Jeremy Goldman (00:44):

Happy Hispanic Heritage Month, Marcus.

Marcus Johnson (00:46):

Same to you, sir. And also, a Principal Analyst who heads up our ad media and tech teams, based in New Jersey, it's Yory Wurmser .

Yory Wurmser (00:55):

Hey, Marcus and Jeremy.

Marcus Johnson (00:57):

Hello, fellow. Thanks for hanging out today, gents. Today's fact.

(01:05):

Where does all the coffee come from? So, who should we be thanking for this sweet nectar that keeps us going during the day? Coffee drinkers, gents?

Jeremy Goldman (01:19):

I have Yuri's share. I think you're more of a tea guy, right?

Yory Wurmser (01:23):

I am. I am.

Marcus Johnson (01:24):

Okay. Brazil is number one. Gives us close to 40% of the world's coffee. Thank you, Brazil. In second place, gents, any guesses? Second-largest producer of coffee in the world. It's not what you're thinking.

Yory Wurmser (01:41):

Yeah.

Jeremy Goldman (01:43):

India? I don't know.

Marcus Johnson (01:45):

No.

Jeremy Goldman (01:45):

Colombia?

Yory Wurmser (01:46):

Kenya?

Marcus Johnson (01:47):

Colombia's third. They have 7%. Vietnam.

Yory Wurmser (01:52):

Oh, wow.

Jeremy Goldman (01:52):

Huh.

Marcus Johnson (01:52):

With close to a fifth. 17% of the world's coffee comes from Vietnam. So it goes Brazil with 40%, Vietnam with 17. So, those two give us well over half. Then in distant third, Colombia, with 7%, according to the US Department of Agriculture.

Yory Wurmser (02:08):

I had no idea.

Jeremy Goldman (02:09):

Vietnamese coffee is great, by the way.

Yory Wurmser (02:13):

Is is.

Jeremy Goldman (02:13):

So good.

Yory Wurmser (02:13):

It is very, very good.

Marcus Johnson (02:16):

Don't know if I've tried it before, but I want to now. Govind Bhutada of Visual Capitalist explaining that most of the world's coffee comes from the coffee belt, a horizontal, geographical region that stretches along the equator, between the Tropic of Capricorn and the Tropic of cancer.

(02:30):

From this region, the top 10 coffee producers control nearly 90% of the annual global coffee supply. Thank God for coffee. I had to get to 10:00 AM the other day before I grabbed my first cup.

Jeremy Goldman (02:45):

So, Brazil is like the Google of coffee.

Marcus Johnson (02:46):

I was trying to fight people. Yes, exactly. Exactly right. Good pivot. Today's real topic, the Google trial verdict. Well-played, Jeremy.

(02:56):

So Trishla Ostwal and Kendra Barnett of Adweek remind us that last August, might have been late, after a landmark court battle, US Federal Judge Amit Mehta found that Alphabet-owned Google had maintained an illegal monopoly in the online search space, pointing to the company paying certain folks like Apple, $20 billion a year to be the default search engine on its devices.

(03:25):

We had to wait a year, but the sentence is in. Lily Jamali and Rachel Clun of the BBC explain that Google will not have to sell its Chrome browser, or Android OS, but must share information with its competitors, at least for the next six years. The US Department of Justice had demanded that Google sell Chrome, but this decision means it can keep it, just no more exclusive deals, and also it has to start sharing data with folks.

(03:51):

Jeremy, what were some of your top takeaways from the verdict?

Jeremy Goldman (03:55):

It was funny, because actually Yuri was the first person that I reached out to right afterwards, just to talk about it.

Marcus Johnson (04:02):

That's good.

Jeremy Goldman (04:04):

Thank God for Slack. I mean, I thought it was almost like a best case scenario if you're Google. Especially given some of the very strong wording that had come out before directed at Google, with this particular case. So, I mean, that was my number one takeaway is Google got away, and was quite lucky in this regard. It remains to be seen how lucky everybody else will feel about just having access to select Google data over a certain number of years.

Marcus Johnson (04:37):

Yeah, it definitely feels like Google won. That appears to be the general consensus, Yuri. Shares of Alphabet spiked 8% in the extended trading, meaning investors appeared to be pretty relieved by this.

Yory Wurmser (04:49):

Yeah. I mean, they'd lost the trial, in the sense that they are called a monopolist. But yeah, they have to be happy with this stage, the remedy stage. Basically the big punishment is the exclusive, non-exclusive. They're no longer able to do the exclusive deals.

(05:11):

And the sharing data, in terms of the exclusivity, they had basically given up on that. That was not even, I think, a major question whether to have to give that up. They had to give up some data, but it wasn't super, super important. That said, the data that they are going to have to share, is going to, I think, make some difference for generative engines, sort of training generative engines.

(05:37):

I don't think it's nearly enough data to absolutely handicap Google, but I think it will make some marginal differences for those engines. Given how close the battle for generative AI is right now? I think it is meaningful.

Marcus Johnson (05:52):

Oh, interesting. Okay. Because there were concerns that, okay, how much will these measures actually level the playing field? Jim Jansen, Principal AI Scientist at Qatar Computing Research Institute, former Professor at Pennsylvania State University says, "It's hard to know how much Microsoft, OpenAI, and others will benefit."

(06:11):

One, from Google, the fact that Google can still pay vast sums to be the most featured search engine, they just can't be exclusive deals, like you were saying. Two, the data sharing part of this, they were saying it appears to be quite limited. It's only available to qualified competitors. There might be a fair few of those, but only qualified ones. And will include just some of its search index and interaction data. Nothing ad-related.

(06:37):

But Bill Baer, who was an Assistant Attorney General for Antitrust in the Obama administration agrees, saying, "The real question is going to be, are these data licensing requirements going to be sufficient to create the potential for a more competitive search market?" Yuri, it sounds like you're saying yes to a certain degree, right?

Yory Wurmser (06:55):

Right. I'm saying maybe. There are a couple things here that are still unclear. One is, what exactly is the data that they're going to have to share? I mean, it's search index data, snapshots of search index data, and user interaction data. The details of that are going to have to be determined by a technical panel, exactly what types of data will come out.

(07:20):

That will have some effect on how much impact it will have. It will also make a difference, in terms of training some of these generative engines, and whether or not it makes a difference. I'm not saying it will, but I'm saying it's possible that it might.

Jeremy Goldman (07:34):

Yeah. The key, the wording that you were using was, will it make it more competitive? It'll make it more competitive. Will it make it competitive? No. I think that that's largely part of the problem is if you're trying to create a true remedy here, you do have Google that's very dominant. It was becoming slightly less dominant? Yes. And largely that's in part because there are so many different offerings to consumers, in terms of how to search.

(08:03):

We didn't even really talk about Chrome yet, and the fate of Chrome. But I think that Google has so many advantages, that to create a more competitive environment for other players, but not going that far, doesn't really change the landscape all that much.

Yory Wurmser (08:18):

Yeah. It depends on really how close... If this agreement, if this remedies phase hadn't happened, say that the trial they were declared not a monopolist, do these remedies make the battle closer? Do they give some advantages to the competition? I think it does. The real question is, is it enough to make a real difference, in terms of who wins and who doesn't? That's really an open question, still.

Jeremy Goldman (08:45):

Yeah.

Marcus Johnson (08:46):

Yeah. Jason Aten of Inc. was making the case that antitrust remedies aren't necessarily about punishing bad behavior, they're about restoring competition. The court decided it seemed a lighter touch was enough, because it doesn't feel like they've been handed down a bigger penalty as you would've expected.

(09:03):

But that's not really the point here. The point is to try to level the playing field. Are they doing that? Which you'll see, also Mr. Jansen of the Qatar Computing Research Institute, was saying that this is an administration nightmare, because there's all sorts of privacy issues.

(09:19):

He was saying that it'll be complicated for Google and the court to manage the data sharing, because users agreed to share their data with Google, not a third party when they do their searches. So they have to figure that piece out as well.

(09:32):

Sneaky winner, Apple. Right? It can continue to get paid by Google to host its search engine. It just won't be an exclusive contract. Wall Street analysts estimating that if Apple wasn't allowed to receive these payments, its annual profit would've been cut by 15%. So, this seems like a big win for them, as well.

Yory Wurmser (09:53):

It's really interesting, because I think a key part of the remedies phase of the trial was testimony by Eddy Cue of Apple, who said that traffic to Google from Safari went down in March for the first time ever. I think that was an indication to Judge Mehta that GenAI was actually making a difference, and starting to have an impact.

(10:19):

Google's stock price dove at that point. But of course, he had some mixed motives there, because Apple does benefit a lot by this ruling.

Jeremy Goldman (10:30):

And Apple... We were talking about stock price before Apple went up as a result of being able to keep a lot of the benefit that they were getting from this deal.

Marcus Johnson (10:40):

Yeah. Yeah. Economists also pointing out that this may even encourage the forging of closer ties between the two firms, with some speculating that Apple will partner with Google running the latter's Gemini AI products on the iPhone. So, maybe these guys get closer together as a result.

(11:01):

Assistant Attorney General Abigail Slater was saying, rather hopefully saying, the judge's ruling restores competition to the search engine market, but further measures could be needed. So, it seems like they're somewhat okay with the verdict or the sentencing. But maybe we will pursue stronger measures down the road.

(11:22):

Going to the GenAI piece of this, in a statement after the ruling, Google said, "Today's decision recognizes how much the industry has changed through the advent of AI, which is giving people so many more ways to find information." It seems the judge agreed, writing, "The emergence of GenAI changed the course of this case."

(11:43):

Jeremy, what do you make of the argument that the rise of AI search and the competition that comes from that, was the reason to enforce more light touch remedies?

Jeremy Goldman (11:53):

I mean, I can see it both ways. I think that you could easily make an argument that the rise of AI search further fuels Google's dominance by obviously there's this ad tech component to what's going on with Google right now, and that's under scrutiny. As publishers are starved from organic traffic, they're getting less traffic generally.

(12:17):

We've discovered, we've actually charted quite a bit of that for our clients. As a result, I think there's an argument to be made that maybe you should actually be harsher on Google, because of this. At the same time, I can see the fact that you do see a little bit of the perplexities of the world, and Anthropics, and obviously ChatGPT being pretty major.

(12:40):

And maybe saying, well, there is a little bit more of a competitive landscape that is encroaching on Google's territory, so therefore maybe we don't have to slice and dice their company, because there are companies that have Google in their crosshairs already. So, I see it both ways, but ultimately I think that the AI overviews have a chance to, over time, really cement Google's dominance and its strength in the marketplace.

Marcus Johnson (13:07):

Yeah. Yuri, this is interesting, because this is what happens when you take five years to make a decision, right? Things change. This lawsuit was technically filed back in 2020, during the first Trump administration.

Yory Wurmser (13:20):

It absolutely changed in the five years. 2020, Google was an undisputed leader in search. Still is the undisputed leader in search. But in terms of generative AI search, ChatGPT actually has more daily users and more interactions, if you take away AI overviews, which are its own pseudo or partial generative search.

(13:44):

But Gemini is catching up. At the moment, though, ChatGPT is leading, and it's a fair question whether it's a separate market from search. I agree with Jeremy, though, that over the long run, Google has distribution advantages, especially after this trial. Has cash advantages. Has infrastructure advantages.

(14:12):

They probably make it a favorite to become the winner in the long range. But at the moment, I would say that that OpenAI and ChatGPT are ahead, in the race for generative AI.

Marcus Johnson (14:23):

Yeah. It feels like there is some validity to this idea of AI search engines are the new competition for Google. Jeremy, you'd written in a piece and you cited some data saying 41% of US adults now use AI tools like ChatGPT for deeper answers. 32% go to Reddit, 21% TikTok, Resolve, and Pollfish. Younger folks driving this trend.

(14:44):

So it does, and Yuri, you mentioned some of the data showing that ChatGPT is catching up, or pulling level in a lot of respects of search, depending on what metrics you're looking at.

Yory Wurmser (14:59):

I mean, just to amend that, if you look at search overall, ChatGPT is minuscule, still, next to Google Search. But when you look at specifically these generative, these elaborate questions with full answers, that's where it becomes much more competitive.

Jeremy Goldman (15:17):

Yeah. Exactly. It's almost like to paraphrase what you were saying before, should we treat it as its own thing, or is this just the future evolution of search, and everybody's going to be searching like that? So, it's kind of almost like the really old days of the internet.

(15:30):

I am older than I look. I know. I just use a lot of beauty products. If you look back a long time ago, people had directories that people found things. So, Google was like the new search, in that you could write for a natural query. Otherwise, you would go into a Yahoo directory to find sites that were actually indexed by hand, by human beings. And then search evolved.

(15:54):

So I do think at some point, pretty much everything becomes generative search, or the vast majority eventually does become generative search.

Marcus Johnson (16:02):

Yeah. That's a good point. I don't envy Judge Mehta's position, because he was arguing, unlike the typical case where the court's job is to resolve a dispute based on historic facts. Here, the court is asked to gaze into a crystal ball and look into the future. Not exactly a judge's forte, he says.

(16:22):

He continues saying these new AI competitors, the new AI competitor reality gives the court hope that Google will not simply outbid competitors for distribution, if superior products emerge.

Jeremy Goldman (16:37):

Marcus, quick follow-up. You're good at research. Can you get his email address? Because there's a lot of these judges and legislators who I think could very much benefit from just pinging us directly, and asking us what's going to happen. So we can tell them, and we can make better informed decisions.

Marcus Johnson (16:54):

[inaudible 00:16:55] to call. Which, I don't know. Do you think he's a Pro Plus subscriber? Probably.

Jeremy Goldman (16:58):

Yeah. If not, he should be. We'll give you a discount, Judge Mehta.

Marcus Johnson (17:04):

You mentioned earlier, gents, that there's another case going on. It's an ad tech one that Google is under scrutiny for. In another article, Ms. Jamali of the BBC noting that regulators will have another shot at forcing a breakup later this month, in the remedies phase of the different antitrust case the US government is mounting against Google over its dominance in ad tech.

(17:29):

Steve Law of the New York Times thinks this case will influence other judges who are weighing how to handle monopoly cases in their courtrooms. Yuri, does this ruling, in your opinion, have any bearing on the second Google ad tech case?

Yory Wurmser (17:44):

I think it does have a bearing in two ways. One, it sets precedent. It's the first major antitrust trial in the tech world, I'd say, since Microsoft Netscape. There've been others. But the first major one. So I mean, that first of all just sets the precedent. It sets the tone a little bit as well in terms of Google, its changing business position.

(18:07):

So, I think in those two ways it has an influence going forward. That said, these are totally different issues. It's a totally different court. So, it doesn't mean that Judge Brinkema is going to come back and take a very light touch as well, like Judge Mehta did. It could be totally different. But I do think this decision does influence what she does.

Marcus Johnson (18:31):

Okay. Jeremy?

Jeremy Goldman (18:32):

I agree. I mean, the Google brand name is the Google brand name. These are not operating as, I mean, even if they're different departments and different units, the fact is, these are different parts of a business. But ultimately, Google has been branded as a monopolist that then doesn't get reined-in the way that you might if something was a monopoly.

(18:53):

So that's kind of like, I think, the precedent, I agree, that's being set. I think the only counterpoint is, yes, because this is a totally different judge in a totally different venue, to somebody to look and say, "Well, we didn't correct as much as we ought to have in this particular case, and therefore in mine, I have to factor that in and maybe come down harsher."

(19:16):

Yeah, I wouldn't totally rule that out. I think the other thing that we left out, is there's a lot of scrutiny on the ad tech side in Europe right now. So, does that set some kind of precedent that we look at and we say, there is a little bit of arguably alleged self-dealing or benefit that Google gets by operating its own ad exchange?

(19:39):

So I think that those are all the variables that I would look at, when trying to decide how the other case is going to pan out.

Marcus Johnson (19:46):

Yeah. I've got the BBC article pulled up right here, by Liv McMahon, BBC, saying Google just fined about over $3 billion in the EU for allegedly abusing its power in the ad tech sector. This is what Jeremy was just talking about.

(20:01):

There was a piece in The Economist, gents, that was reminding us, myself, not so long ago, America's tech giants looks like they were vulnerable to a techlash. That was the word of the year for a couple of years, or one of the words. This kind of douses cold water on that notion, to a certain extent.

(20:24):

That said, there is still time for it, a techlash to happen, because this is just one of many cases. You mentioned the ad tech case going on with Google. Meta, not the judge, the company, faces a ruling from a judge as early as this Fall, in an FTC lawsuit over allegations that it snuffed out its nascent competitors.

(20:41):

Amazon has its own FTC lawsuit over allegations it squeezed small merchants, which is scheduled to go to trial 2027. And the DOJ has sued Apple, saying the company makes it hard for consumers to ditch its devices. So, plenty of time. But that techlash has not happened quite yet.

(20:57):

Google did say that it would appeal against both remedies. So, maybe none of these actually happen. I think a lot of the experts have said that it probably will lose on appeal, but it's still appealing the exclusive contracts piece of this, and having to share data as well.

(21:14):

That's all we've got time for today's episode. Thank you so much, gents, for hanging out with me today. Thank you first to Jeremy.

Jeremy Goldman (21:18):

Pleasure, as always.

Marcus Johnson (21:20):

And of course, to Yuri.

Yory Wurmser (21:21):

Great to be here, as always.

Marcus Johnson (21:22):

And thanks to the whole editing crew, and to everyone for listening into Behind the Numbers, an EMARKETER video podcast made possible by DG Media Network.

(21:30):

Rob Rubin will be here tomorrow, hosting the Banking and Payments Show, talking about why Stablecoins have taken over the payments conversation, and why retailers are racing to launch them.