Google is under antitrust investigations from both the federal government and the states, whose law enforcement agencies are increasingly skeptical that its dominant market position has been reasonably gained.
Many of the details of Google’s behavior have remained under the seal of the court. But as a result of a filing error by one of Google’s very expensive anti-trust attorneys, new details were accidentally disclosed about the alleged ways it is crushing competitors in the digital ad market.
We now know the details of Project Bernanke, in which Google has used its knowledge of past ad bids to change bids from its customers, giving Google a privileged position to win ad show auctions over other market competitors. The company hid this information from news outlets who also sell ads through Google’s ad-purchasing system, and in the process, the project raised more than $ 200 million a year.
There are also new details about Jedi Blue, a secret covert agreement between Facebook and Google to give Facebook a preferred position in ad auctions, supposedly in exchange for Facebook’s agreement not to compete with Google for online advertising.
All of this sheds more light on Google’s shady, near-total control over the digital ad market, where it is the operator of the dominant ad exchange as well as a buyer and seller. In the Texas antitrust case, Google’s position becomes analogous to the pitcher, batter, and umpire in the same baseball game.
Google has deliberately kept the details of the space opaque, claiming that the rest of us are too dumb to understand how it works. Google’s chief economist, MIT-trained mathematician Hal Varian, has said Google’s advertising business is “too detailed” to publicly explain. In response to an antitrust lawsuit brought by Texas against its dominance in digital advertising, Google claimed the state had a “profound misunderstanding” about the digital marketplace.
In other words, we dumb rubes have to kneel before our superiors and believe what the smart set tells us. While it’s unclear why Google chose ‘Bernanke’ as the nickname for its project, the tip for the former Federal Reserve Chairman is quite a good thing. Ben Bernanke oversaw the financial crisis that resulted from all the country’s credit rating agencies and regulators telling us to ignore what both the evidence and common sense suggested.
“Trust us,” quantitative financial analysts said in 2008. “We’re very smart,” they claimed, just before putting pressure on the entire US economy.
It’s funny until it isn’t. Google’s actions in the marketplace, particularly in the digital advertising space, have disrupted the marketplace, crushing entire competitors and industries under their dominant weight. America’s news business, from the New York Post to The Washington Post, CNN to Fox News, has been hit hard by Big Tech companies, which, according to a study, make billions by distributing news outlets’ content while paying nothing for the privilege . .
Together, Google and Facebook manage more than half of digital ad revenue, billions of dollars of which once supported the American journalism industry. The companies claim that dominance has been both fair and good for the news media.
But the Texas complaint against Google claims the opposite: “Google’s advertising-buying intermediaries. Don’t act in the best interest of their customers. Google subjects the smaller and less sophisticated advertisers to complicated arbitrages that are extremely difficult to understand. ”
Following Project Bernanke’s leakage, it appears that publishers may also have been misled into competing in an unfair market where Google had a clear information advantage. In a market where Google has the dominant information advantage to favor itself, competitors suffer, as do consumers. When news outlets don’t receive ad revenue from the circulation of their own content, the profits they would use to drive new content, product offerings and better journalism will suffer.
Jason Kint, CEO of Digital Content Next, called Project Bernanke and Jedi Blue ‘cute project code names,’ but the ones that covered up hundreds of millions of dollars in profit – or, ‘enough [money] to finance all journalists who lost their jobs in 2020. ”
“Everyone,” remarked Kint, “should be furious.”
Although Google wraps its digital advertising business with the imprimatur of high intellectualism and technical complexity, you are shedding the technocratic language and left with an age-old motivator: greed. The millions of dollars that Google will undoubtedly pay to the economic experts and anti-trust attorneys to confuse and twist the problems should not overlook this fundamental truth.
Rachel Bovard is senior director of policy at the Conservative Partnership Institute.