The Leadership Letter

Real correspondence from the people running real companies — and what it reveals about leadership.

When Your Platform Rules Create the Competition You Fear

When your own pricing structure drives customers to build workarounds, the real threat isn't the workaround — it's the rule.

Huge +1 to this proposal, Drew. I've lately been asking people why we don't allow third-party exchanges to bid on our auction, because this seemed to be the single fundamental problem that 'required' header bidding. —Nitish Korula

On the core tension, Vahab Mirrokni identified three strategic dimensions: First, on EDA (Enhanced Dynamic Allocation): "other exchanges compete in EDA with their average bid, but AdX buyers get to compete with their real bid" — an asymmetry publishers were beginning to notice. Second, on header bidding's appeal: publishers sought to escape paying high revenue share on high-margin impressions, suggesting Google consider "a tier-based revenue sharing scheme that would take less % on very high revenue impressions." Third, on structural remedy: "One solution would be to add it as a native part of the DFP ad serving and separate it from AdX" — enabling the ad server to call all exchanges, match cookies, and award impressions independently of AdX's revenue-share layer.

Assaf Grabinsky pressed for urgency: "We are not able to prove to [publishers] they can make more money by working exclusively with AdX: we don't have stats to support this, and publishers are not able to easily conduct A/B testing in DFP." Jonathan Bellack closed the thread by announcing the discussion would move to a smaller working group led by Drew Bradstock and Jim Giles.

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Court Exhibit
United States v. Google LLC (Ad Tech)
1:23-cv-00108 (VAED), Trial Ex. PTX0238 — DOJ public archive
August 4, 2015
Public domain
View the primary source →