Did Google Break The Law?

I know that headline is more than a little ambiguous, as Google has probably broken multiple laws, if only because they’re so big and there are so many laws. But “Did Google break the law using sneaky, underhanded means to carry out anti-competitive trade practices to kill off an alternative ad allocating system called ‘header bidding’ because it threatened to damage one of its biggest revenue streams” is way too long for a blog post title.

As a prelude, here’s a brief description of header bidding and how it differs from Google’s “Waterfall” system:

Header bidding is an advanced programmatic advertising technique that serves as an alternative to the Google “waterfall” method. Header bidding is also sometimes referred to as advance bidding or pre-bidding, and offers publishers a way to simultaneously offer ad space out to numerous SSPs or Ad Exchanges at once.

Normally, when a publisher is trying to sell advertising space on its site, the process for filling inventory goes something like this:

First, your site reaches out to your ad server. In general, direct-sold inventory takes precedence over any programmatically sold options. Next, available inventory is served through the site’s ad server, such as Google DoubleClick in a waterfall sequence, meaning unsold inventory is offered first to the top-ranked ad exchange, and then whatever is still unsold is passed along to the second ad exchange, and so on. These rankings are usually determined by size, but the biggest ones aren’t necessarily the ones willing to pay the highest price. (For publishers, this means lower overall revenue if the inventory isn’t automatically going to the highest bidder.)

To further complicate the process, sites using Google’s DFP for Publishers has a setting that enables them to outbid the highest bidder by a penny using Google Ad Exchange (AdX). And since AdX gets the last bid, they are generally in a position to win most of these auctions.

Publishers end up feeling like they aren’t making quite as much money as they would without Google meddling in the bids.

How Does Header Bidding Help Publishers?

Header bidding is a way for publishers to have a simultaneous auction from all the bidders, rather than the sequential strategy that Google uses. By placing some javascript on their website, when a particular page is loaded, it reaches out to all supported SSPs or ad exchanges for bids before its ad server’s own direct-sold inventory is called. Publishers can even choose to allow the winning bid to compete with pricing from the direct sales.

Got that? Here, as best I can understand, is a summary example:

Say Joe Blow’s Ad Agency and Attack Lawyer Collective wants to be the top bidder for serving ads up for the keyword “mesothelioma” (which, at one time, was the priciest keyword you could buy for digital ads), and it is willing to pay, say, $100 per 1,000 impressions. Under Google’s waterfall method, they would never get to bid if Big Madison Avenue Ad Agency was in the top tier of bidders even though BMAAA only offered $50 per 1,000 impressions, because Google would sell those ad slots only to the highest bidder in the top tier, and would never get down to Joe Blow in the third tier. (This is all greatly oversimplified, and feel free to correct/amend this example in the comments.)

Well, due to the big antitrust lawsuit filed against Google by some 38 (last time I looked) state attorney generals (including Texas), lots of dirty secrets and memos have come to light as part of discovery. Many of the most serious bits were redacted, but that was just changed by judge’s orders:

Two corporate behemoths getting together to strike insider deals with each other that freeze out competitors is pretty much textbook anti-competitive practices 101 stuff.

Holy shit! Google and Facebook are agreeing not to cooperate with any antitrust action by the federal government to bring action against the other. That’s not a red flag, that’s the Nostromo‘s flashing lights and screaming self-destruct klaxon in the original Alien.

So according to these documents, Google is not only a monopoly, it is a coercive monopoly that uses illegal anti-competitive trade practices to stifle competition.

And since the lawsuit was brought by a bipartisan coalition of state attorney generals, Google can’t just buy a few tens of millions of dollars worth of Hunter Biden painting to make the entire thing go away…

Tags: , , , , , , ,

This entry was posted on Sunday, October 24th, 2021 at 3:04 PM and is filed under Crime, Regulation, Texas. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “Did Google Break The Law?”

  1. Drang says:
    October 24, 2021 at 4:38 PM

    Wasn’t Google’s original motto “Do no evil”…?

  2. Seawriter says:
    October 25, 2021 at 8:39 AM

    Their motto was “Don’t be evil.” However, in view of the greater velocity of today’s economy, they dropped the first word, for brevity,

  3. Ken says:
    October 25, 2021 at 11:19 AM

    “Under Google’s waterfall method, they would never get to bid if Big Madison Avenue Ad Agency was in the top tier of bidders even though BMAAA only offered $50 per 1,000 impressions, because Google would sell those ad slots only to the highest bidder in the top tier, and would never get down to Joe Blow in the third tier. (This is all greatly oversimplified, and feel free to correct/amend this example in the comments.)”

    This sounds something like what the RIAA and music copyright orgs (ASCAP/BMI et al) were doing back in the 1980s (and might still be doing) with royalty payments and playlist logs from “non-surveyed stations” (generally college radio, etc. at the “left of the dial”). Those stations would submit their logs full of spins of a bewildering variety of indie rock, folk, jazz, bluegrass, Latin, etc., etc., along with their required royalty payments.

    The logs would be tossed in File 13 (“non-surveyed stations”) and the royalties allocated according to plays on commercial radio to struggling, starving artists such as…oh, Madonna, Bruce Springsteen, Michael Jackson, the Rolling Stones….

  4. Pyrthroes says:
    October 25, 2021 at 3:28 PM

    Given a suborned K Street Congress, raking off “political contributions” (bribes) on every front from infrastructure to national security, social services and tax-accounting, this Google-Twitface scam reflects Soros-sponsored State AGs’ brazen Big Steal theft of Federal and State elections (cf: November 2020, the California recall’s 351,000 “advance ballots”, Virginia’s pending gubernatorial grab).

    Heigh-ho, away we’ll go with Jersey City and New York mayors’ coprophagic Rat machines: “I am the law” (Frank Hague); “What are you going to do about it?” (Boss Tweed).

    Waal, melt mah Thomas Jefferson statue (soon to be followed by Washington’s overlooking Wall Street) if ‘taint trembulating WOC-a-baby quota-hires triggered by Santa’s non-transgendered reindeer with unaborted Easter Bunny eggs. How ya like dem apples, Madame Eve?

Leave a Reply