Google is under antitrust control by both the federal government and the states, whose law enforcement agencies are increasingly skeptical that its dominant market position has been quite won.
Much of the details of Google’s behavior have remained under the seal of the court. However, due to an error in the filing of one of Google’s very expensive antitrust lawyers, new details have been made public by mistake about the alleged ways in which it crushes competitors in the digital advertising market.
We now know the details of the Bernanke project, in which Google used its knowledge of previous advertising bids to change the bids submitted by its customers, giving Google an advantageous position to win bids for advertising impressions over other rivals in the market. The company kept this information hidden from news publishers who also sell ads through Google’s ad buying system, and in the process, the project made over $ 200 million a year.
There are also new details about Jedi Blue, a secret collaboration agreement between Facebook and Google to give Facebook a preferential position in advertising auctions, allegedly in exchange for Facebook’s agreement not to compete with Google in online advertising space.
All this sheds more light on Google’s almost total blurred control over the digital advertising market, where it is the dominant advertising exchange operator, as well as the buyer and seller. The antitrust case in Texas analogizes Google’s position with being a pitcher, a hitter and a referee in the same baseball game.
Google intentionally kept the details of the opaque space, however, claiming that we are too stupid to understand how it works. Google’s chief economist, MIT-trained mathematician Hal Varian, said Google’s advertising business was “too detailed” to be explained publicly. In response to an antitrust lawsuit filed by Texas against its digital dominance, Google claimed that the state has a “deep misunderstanding” of the digital market.
In other words, we dumb rubies should kneel down to the best and believe whatever the smart set tells us. Although it’s not clear why Google chose “Bernanke” as the name for its project, the top hat for the former president of the Federal Reserve is quite appropriate. Ben Bernanke oversaw the financial crisis that has resulted in all rating agencies and regulators in the country telling us to ignore what both the evidence and common sense suggest.
“Trust us,” quantitative financial analysts said in 2008. “We are very smart,” they said just before the entire American economy sang.
It’s funny, until it’s not. Google’s market share, especially in the digital advertising space, has distorted the market and crushed entire competitors and industries under their dominant weight. The American news business, from the New York Post to The Washington Post, CNN to Fox News, has suffered the brunt of Big Tech companies, which, according to a study, make billions of news content circulating while paying nothing for the privilege.
Together, Google and Facebook earn more than half of their digital advertising revenue, of which billions of dollars once supported the American journalism industry. The companies claim that the domination was both fair and good for the media.
But Texas’ lawsuit against Google claims the opposite: “Google ad buying intermediaries. . . do not act in the interests of their customers. Google subjects smaller and less sophisticated advertisers to complicated arbitrations, which are extremely difficult to understand. ”
After the Bernanke Project leaked, it seems that publishers could also have been misled, competing in an unfair market where Google had a clear advantage of information. In a market where Google has the dominant information advantage to privilege itself, competitors suffer – as do consumers. When news is deprived of advertising revenue from circulating its own content, the profits it would use to stimulate new content, product offerings, and better journalism suffer.
Jason Kint, CEO of Digital Content Next, called Project Bernanke and Jedi Blue “nice project code names,” but the ones that hid hundreds of millions of dollars in profit – or, “enough [money] to fund all journalists who lost their jobs in 2020. ”
“Everyone,” Kint remarked, “should be angry.”
Although Google covers its digital advertising business with the imprint of high intellectualism and technical complexity, eliminate technocratic language, and what’s left is an old motivator: greed. The millions of dollars that Google will no doubt pay to economic experts and antitrust lawyers to confuse and distort the issues at hand should not overlook this fundamental truth.
Rachel Bovard is a senior policy director at the Conservative Partnership Institute.