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Google charges more than twice as much as its rivals in advertising transactions, says unedited suits

According to Google, Google is reducing 22% to 42% of US advertising spend going through the system. Newly unedited proceedings by the State Attorney General, Sheds new light on how search giants will benefit from their leadership position in the Internet economy.

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The subsidiary undertakes each advertising transaction on that exchange —Marketplace for ad buyers and sellers— According to a Texas-led lawsuit, it is typically two to four times the fees charged by rival digital advertising exchanges.

Friday’s unedited submission to the Federal District Court for the Southern District of New York came after a federal judge ruled last week that many of the antitrust proceedings could be opened.

“”[T]His analogy is when Goldman or Citibank owns the New York Stock Exchange. [New York Stock Exchange]According to the proceedings, a senior Google employee said.

Google called the proceedings flawed. Google spokesman Peter Schottenfels said:

The proceedings allege that the company has “locked up” publishers and advertisers and has developed a strategy to help its ad-buying tools win more than 80%. Auction at that exchange, Newly revealed figure. It provides a window to Google’s overwhelming advertising advantage, citing Google Docs, which states that Google delivered 75% of all U.S. online ad impressions in the third quarter of 2018. To do.

The proceedings cite programs with codenames such as Bell, Elmo, and Poirot that helped Google generate over $ 1 billion in revenue.

The Justice Department is investigating the largest tech company in the United States on suspicion of monopoly behavior. About 20 years ago, a similar incident could destabilize Microsoft. The WSJ explains.

The proceedings allege that Google’s business practices have increased advertising spending and that brands pass on to consumers with higher-priced products. Google also claims to limit competition with rival exchanges and limit website options for ad serving.

Led by Texas Attorney General Ken Paxton and joining 15 states, the lawsuit is another anti-trust lawsuit by the Utah Department of Justice and 38 State Attorney Generals focusing on Google’s search services, as well as Google’s. It complements the Utah-led lawsuit against the Play app store. These cases will be brought to trial after 2023. The Justice Department is seeking another proceeding against Google’s advertising business.

Texas-led litigation state group lawyers focus on the role of Google’s advertising exchange called AdX. This means that you will be charged 19% to 22% of the price the advertiser pays to the exchange. the publisher. According to the proceedings, this is two to four times the amount charged by AdX’s closest competitor.

According to the proceedings, the company’s overwhelming market share in advertising helped secure these high prices.

Small advertisers pay even higher fees. You trade on another system called the Google Display Network and pay Google a fee in the range of 32% to 40%. The price is consistent with Google’s official statement that publishers will receive 68% of their revenue from AdSense, a tool that serves ads to smaller websites.

In an internal discussion about the Google Display Network, executives said the lawsuit said that the company’s advertising network “can do”, so it makes “a lot of money” with fees. “Small pubs have no alternative source of income,” said a Google employee.

When a system called header bidding opened Google’s advertising auction on rival exchanges about five years ago, the changes following the accusations that the high-tech giant’s system is anti-competitive can be reduced by the system “obviously.” According to an unedited lawsuit that he wrote in an email that he raised the “dilemma,” Google’s profit margin is “about 5%.”

The company considered the threat of header bidding to exist because the system bypassed Google’s tools. According to the proceedings, in 2016, an employee may show that competition with rival exchanges “probably did not justify” the 20% commission Google charged to the exchange. I was worried about it. Some have made strategies to “kill” it.

“AdX is the lifeblood of our programmatic business,” a company executive wrote in an email in 2017. “What do we do?”

The search giant sought to undermine header bidding through partnerships and software that protected its position, the proceedings said. Google offered an alternative to header bidding that seemed to be a concession to competitive pressure, but the lawsuit secretly developed a program called the “Jedi” to ensure that Google’s exchanges won the auction. It states that it did.

According to a newly unedited source, Google employees said the Jedi program “creates a non-optimal yield for publishers and creates a serious risk of negative media coverage when exposed to the outside world.” He predicted that it could create a counterattack from clients and the general public.

The company’s staff also “make publishers think” of the idea of ​​removing rival exchanges “on their own”, primarily by fostering concerns that header bidding will overwhelm publishers’ servers. Discussed doing “Jedi Mind Trick” in the industry. Suit says.

2018, Google has signed a previously reported deal with Facebook The code name is “Jedi Blue”.Complaints claim it

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We engaged in an “18-month header bidding strategy” to increase leverage in such transactions.

The complaint alleges that Google has also developed Accelerated Mobile Pages (AMP). This is a version of a website hosted on Google’s servers, partly designed to load quickly into mobile phones as a way to counter header bidding. Google explicitly designed the AMP page so that it wouldn’t work well in header bidding, the proceedings claimed, and the AMP load with a one-second delay to give AMP what Google called a “great comparison boost.” I intentionally created an ad that doesn’t use.

Publicly Google insisted AMP site loading is 4x faster From non-AMP pages. But internally, Google employees said they worked on what the complaint said they were asked to “justify” the system that actually “slowed down” the website.

According to the unedited section of the proceedings, Google’s internal documents show that AMP pages generated 40% less revenue for publishers.

Texas Attorney General Paxton said Google’s internal communications show that advertising fees cannot be justified. “Only monopolies can charge twice as much as their competitors and still gain market share,” Paxton said.

Google’s reach in the internet economy

Write in Keech Heigai keach.hagey@wsj.com And trip mixle Tripp.Mickle@wsj.com

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Google charges more than twice as much as its rivals in advertising transactions, says unedited suits

Source link Google charges more than twice as much as its rivals in advertising transactions, says unedited suits

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