Google has abused its position in the online advertising market. The company gave priority to ads bought via its own advertising tool.
This is evident from a document that was accidentally submitted uncensored in a competition lawsuit against Google in Texas, writes The Wall Street Journal. The document discusses the so-called Project Bernanke. This was a technique by which the company offered its own customers an advantage in the advertising market.
Google active in multiple steps in online ad auctions
The advantage stems from the fact that Google is active in several steps of placing online advertisements. For example, Google is the operator of the largest advertising marketplace in the world, AdX, formerly also known as DoubleClick Ad Exchange. Google likens the ad marketplace to the New York Stock Exchange for online ads. On AdX, multiple advertisers can offer their own ads. Various parties offer tools to facilitate this, including Google with Display & Video 360. The advertisements are then displayed on the various websites that offer advertising space, including websites of Google parent company Alphabet, such as YouTube.
Bidding process takes place within a second
The ad auction takes place while the page is loading. When a user tries to load a page that offers space for advertising, the website sends a signal to AdX that advertising space is for sale. Multiple providers within AdX can then bid against each other for the advertising space. The advertisement of the highest bidder eventually appears on the user’s screen. This whole process takes place in less than a second.
Advantages compared to other traders
Because Google both manages the marketplace itself and is one of the parties that trade on the marketplace, Google as a trader has advantages over other traders on AdX. The company is said to have exclusive access to what other ad buyers were willing to pay. Thus, Google knows how much it had to pay in order to outbid competitors. As a result, the websites displaying the ads ended up getting less for it. This could also make the use of Google DV360 cheaper than the competition’s tools.
Google admits innocence
Google has admitted the existence of Project Bernanke. However, the company denies that there is a problem with the tool. Other buying tools maintain comparable data, the company argues. How these other tools would obtain their data is left in the dark. Google believes that the charge in Texas is misrepresented and says it will challenge it in court.
Monopoly position appears imminent
Google’s position in the advertising market is worrying. Online advertisements are an important source of income for many websites, but the profitability of this source of income is increasingly under pressure as more browsers block tracking cookies. Google is planning to follow this trend next year with its own Chrome browser. Still, since the company itself is highly dependent on the advertising business, it wants to set up an alternative to tracking cookies first. However, it looks like its alternative will only tighten Google’s grip on the advertising market.