Google is embroiled in a massive lawsuit involving online ads. The Wall Street Journal reports that publishers and advertisers from around the United States have sued the tech giant for deception.
According to the Wall Street Journal, several US states led by Texas filed a case against the tech giant back in December 2020 for misleading publishers and advertisers. Google is alleged to have lied about online advertisement pricing, auctioning, and operation for years. The tech giant is said to have developed secret programs that skimmed ad sales from publishers while increasing ad costs for advertisers.
The opposing parties claim that Google pocketed a difference between the price quoted to publishers and the price paid by advertisers. This money was allegedly reinvested in manipulating future ad auctions, strengthening its digital monopoly and position in the online ad market.
The lawsuit documents involve three secret projects. Firstly, Project Bernanke, which ran between 2010 and 2019. The project mainly involved Google’s ad marketplace Adx. Through this marketplace, companies were able to purchase online ads on publishers’ websites. In some cases, the tech giant made it look like multiple parties participated in a so-called second-price auction. Allegedly, Google itself manipulated bidding prices.
In a second-price auction, multiple companies bid for ad space. The winner pays the second-highest bid price instead of the highest bid price. Google is said to have manipulated these bids to up the buyout. Resultingly, publishers received less money for their ad space. The tech giant strictly charged the second-highest amount and pocketed the difference in some cases. Google also artificially raised the price of ads for companies that used its tools. Thereby, publishers allegedly lost up to 40 percent of their ad revenue each month.
Other secret projects
The other two manipulative projects that Google’s charged with are Reserve Price Optimization and Dynamic Revenue Share. These projects were intended to boost Google’s market position, leading to higher advertising costs for advertisers.
Meta victimized as well
Google also allegedly ‘locked’ competitor Meta into a 438 million euro ($500 million) program that required the social media giant to purchase ad auctions held by Google.
In a reaction, Google indicates that the accusations are full of inaccuracies and lack legal properties. According to the Wall Street Journal, the tech giant promises will follow up with a more comprehensive response shortly.
The trial is not expected to take place until 2023.