Publishers Say Google Rigs the Ad Market—”Has Had Really Bad Effects on Publishers”

From a Wall Street Journal story by Keach Hagey headlined “Publishers Feel Validated by States’ Google Antitrust Lawsuit”:

For more than a decade, Google assured publishers its online advertising tools were designed to help them make more money. Many were skeptical.

Last week, an antitrust lawsuit by Texas and nine other states against Google gave publishers’ frustrations a legal voice, alleging that the tech giant runs a digital advertising monopoly and rigs the market in its favor.

“One of the messages news publishers always get is, ‘Stop complaining. Google just has better ad products,’” said David Chavern, the president of the News Media Alliance, a news-publisher trade group. The suit showed “they also controlled everything about the market, and that has had really bad and profound effects on publishers,” he said.

Several publishers cooperated with the states to build a case, people familiar with the situation said, and much of the suit lines up with the complaints publishers have made about Google for several years.

Publishing executives say they were surprised by the volume of internal Google documentation included in the suit. Communications between Google employees, much of it redacted, suggest the employees were aware Google advertising tools didn’t always help publisher clients make more money than other ad tools, according to the suit.

Last week’s lawsuit said “Google employees agreed that, in the future, they should not directly lie to publishers,” citing Google employees’ largely redacted expressions of worry over the way ad tools had been positioned to publishers.

According to a section of an unredacted draft version of the suit viewed by The Wall Street Journal, one senior Google employee fretted that one of Google’s tools “generates suboptimal yields for publishers and serious risks of negative media coverage” if it were “exposed externally.” The filed suit redacts this employee’s comment.

Google has called the suit meritless. A Google spokeswoman on Monday said the suit was drafted from the point of view of Google’s critics and their consultants, adding that the ad-tech industry is crowded and competitive.

Wall Street Journal publisher News Corp, an outspoken Google critic, was among the companies contacted by antitrust investigators, along with New York Times Co. , Gannett Co. , Nexstar Media Group Inc.,Condé Nast and others, people familiar with the matter said.

Most publishers depend on Google’s ad products to generate revenue. Google controls more than 90% of the market for the tools that large publishers use to put their ad space up for sale and dominates every link in the chain that connects publishers to online advertisers.

Some publishers, including News Corp, are in talks to license content to Google for a product called Google News Showcase, people familiar with the situation said.

Matthew Schruers, president of the Computer & Communications Industry Association, a trade association that includes Google, said that the digital-advertising marketplace has gained ground over more traditional forms of advertising in recent years because advertisers find it is often the best return on their investment. “The price of digital ads has fallen dramatically over the past decade,” he said.

This trend had been good for advertisers but less so for publishers, he said.

Much of the states’ suit focuses on Google’s ad server, a tool that helps publishers put ad space up for sale, and how it interacts with the other key elements of Google’s empire: its ad exchange, the marketplace where ad deals are struck in real time; and the buying tools used by advertisers. A key advantage that Google has over rivals is that it can keep track of internet users with a single identifier in all these products.

The suit highlighted “dynamic allocation,” a feature of Google’s ad server that allowed advertisers using Google’s ad exchange to bid in real time for ad space on publishers’ websites, armed with information about prices publishers had set for other exchanges, ensuring that bids through Google could always win. Publishers had long complained this feature hurt competition that drove down their ad prices.

The suit said internal Google discussions showed that “Google knew that dynamic allocation prevented competition among exchanges and did not maximize publisher revenue.”. . .
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Also see a post on politico.com by Shaoul Sussman and Matt Stoller headlined “Why Amazon, Facebook, Google, and Apple Are Bad for America.” Sussman is a Legal Fellow at the Institute for Local Self-Reliance. Stoller is the Director of Research for the American Economic Liberties Project and the author of Goliath: The Hundred Year War Between Monopoly Power and Democracy.

 

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