Google’s advertising practices in the eye of antitrust in the United States



Posted on Oct. 27, 2021, 6:46 p.m.Updated Oct 27, 2021, 7:20 PM

It is a lawsuit which is for the moment less inked than the affair of the “Facebook Papers”, but which is very instructive as regards another American giant of the tech and the advertising: Google, which has just published record quarterly results.

At the end of last week, new documents in the case against the Mountain View group were made public and continue to reveal the supposed practices of the firm in the world of digital advertising, a sector it dominates. alongside Facebook. Antitrust complaints that were filed against him in the United States two years ago and resulted in the opening of a lawsuit at the end of 2020.

The plaintiffs (a group made up of 16 American states as well as Puerto Rico) thus argue that Google is knowingly deploying a strategy aimed at locking up within its advertising ecosystem – made up of a very extensive suite of adtech tools (adserver, SSP, DSP, DMP, etc.) – advertisers on one side and publishers on the other. How would the American giant have done it, according to the charges against him? By killing in particular in the bud the “header bidding”, a technology developed by its rivals in adtech in the mid-2010s.

A non-aggression pact signed with Facebook

“Before this technology hit the market, Google had a stranglehold on the open Web advertising market because its monetization platform, AdX (for Google Ad Exchange), was used by 80% of publishers who were connected to its solution ”, argues Arnaud Créput, boss of Smart, direct rival of Google.

“With ‘header bidding’, up to 15 monetization platforms (SSPs) could compete in real time among publishers and Google became just one solution among others. One of the ways to win the auction was to be more competitive on commissions charged to publishers by SSPs, which threatened Google’s margins. “

A danger that would have been quickly apprehended by the Mountain View firm, according to the complainants. “AdX is the lifeblood of our programmatic advertising business,” worries a senior leader of the group in 2017 in an e-mail included in the complaint file filed in the United States. ” What are we doing ? »He asks himself. The answer comes in four letters: “Jedi,” a multi-point response program.

“They have managed to force publishers to go through their own cloud infrastructure of ‘header bidding’, Google OB, with which they take a margin of 5% to 10% which is in addition to their already high historical margins, asserts Arnaud Créput. At the same time, they also signed a non-aggression and mutual preference pact with Facebook, called ‘Jedi Blue’, with the aim of killing header bidding and stifling all forms of competition at the expense of advertisers. and publishers. We are dealing here with a series of preferential and anti-competitive auto practices, ”he said.

Google judges that these complaints are “riddled with inaccuracies”

A strategy that has borne fruit, according to the complainants in the United States, since they claim that more than 11 billion purchases of advertising space are made via AdX every day in the world – i.e. a volume of transactions higher than those operated on the NYSE and the Nasdaq in aggregate on a daily basis. “It’s as if Goldman Sachs or Citibank owned the NYSE,” compared a Google executive cited in the complaint, suggesting that the group was in the oven and in the mill – and therefore potentially in a position of conflicting ‘interests.

Mechanically, this very dominant position has consequences on the prices applied by Google to publishers, argue the complainants. “Google is now using its immense power in the market to extract a very high tax of 22 to 42%”, they assure, with reference to the transactions carried out through the intermediary of AdX. A puncture which would be, according to them, two to four times greater than what its rivals levy on this part of the adtech market for the same service.

“Only a group in a monopoly situation can present rates that are twice those of its rivals and still continue to increase its market share,” tackled Texas Attorney General Ken Paxton, head of the line. this legal action. Opposite, Google defends itself by arguing that the content of these complaints is “riddled with inaccuracies”.

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