Google ‘rigged the online ad market’
Tech giant accused of £270m-a-year ploy to reward favoured firms
GOOGLE has been accused of rigging the online advertising marketplace and handing money it made to preferred clients.
A bombshell lawsuit claims the search engine ran a digital monopoly which increased costs to advertisers and harmed publishers.
It is alleged a secret scheme called Project Bernanke – which is said to have been set up in 2013 – used historical data from Google adverts to adjust its clients’ bids and boost their chances of winning auctions. Hundreds of millions of dollars were said to have been generated for the tech giant through the system – much of it from small business advertisers.
Google then allegedly pooled this money and handed it out to publishers which gave the firm favoured access, such as those who only used Google’s ads. This is said to have given Google and its bidders an unfair advantage to help them win auctions they would otherwise have lost.
While the US web titan generated nearly £270million a year from the project, it cost publishers up to 40 per cent of their revenue, alleged the lawsuit. One major publisher said: ‘We suspected Google was running a rigged game.’
If the allegations are proved true, they said: ‘It’s a staggering breach of trust and business ethics’. They claimed it will have ‘cost publishers and advertisers, including all the small mom and pop shops who have struggled through the pandemic, hundreds of millions of dollars. ‘
The publisher questioned how much more could ‘come out of this can of worms.’
‘How can we possibly trust Google moving forward? They are proposing new solutions for the industry on topics such as the replacement for cookies and they want us all – publishers, advertisers and consumers – to trust them.’ The claims emerged in documents filed in Texas as part of an anti-trust lawsuit, which suggests Google is far more dominant than originally thought.
Internal documents revealed Google had been working on strategies that would improve its chances of winning ad auctions and lower the chances of its rivals.
One alleged that a secret deal had been struck with Facebook which ensured the social media platform would have a leg up in Google’s ad auctions. This included fixed-win rates, information advantages and discounted exchange fees. In return, Facebook is alleged to have agreed not to enter one area of the market which posed a significant threat to Google’s digital ad monopoly.
The lawsuit said the benefit to Google of the deal was to keep Facebook out as a competitor in some areas but in as a participant on others – which was extremely lucrative for the search engine.
For Facebook, the deal made it money but it also saved potentially billions of pounds on the cost of building competing systems. Google previously issued a blog post denying the claims. It said: ‘Like many other businesses, we constantly work to improve our products and compete more effectively. That’s the kind of behaviour that increases competition and makes ads more effective for businesses large and small.’
The firm also denied that its agreement with Facebook harmed publishers. It stressed the ‘Open Bidding’ system is still an extremely small part of our ad tech business, accounting for less than 4 per cent of the display ads we place.’
A spokesman for Facebook owner Meta – which is not a defendant in the lawsuit – said: ‘Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms have helped to increase competition for ad placements.
‘These business relationships enable Meta to deliver more value to advertisers while fairly compensating publishers, resulting in better outcomes for all.’
‘Staggering breach of trust’