Google is under antitrust control by both the federal and state governments, whose law enforcement agencies are increasingly skeptical that their dominant market position has gained much.
Much of the details of Google’s behavior have been sealed. But due to a filing error by one of Google’s very expensive antitrust lawyers, new details about the alleged ways to crush competitors in the digital advertising market have been accidentally made public.
We now know the details of the Bernanke Project, in which Google used its knowledge of previous ad bids to modify bids submitted by its customers, giving Google an advantageous position to win ad impression auctions 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 amassed more than $ 200 million a year.
There are also new details about Jedi Blue, a secret collusion agreement between Facebook and Google to give Facebook a preferred position in advertising auctions, allegedly in exchange for Facebook’s agreement not to compete with Google in the advertising space in line.
All this sheds more light on Google’s murky and near-total control over the digital advertising market, where it is the dominant ad exchange operator, as well as buyer and seller. The Texas antitrust case analyzes Google’s position as the pitcher, batter, and referee of the same baseball game.
Google has intentionally kept the details of the space opaque, however, claiming that the rest of us are too stupid to understand how it works. Google’s chief economist, MIT-trained mathematician Hal Varian, has said Google’s advertising business is “too detailed” to explain publicly. In response to an antitrust lawsuit filed by Texas against its digital advertising domain, Google claimed the state had a “deep misunderstanding” of the digital market.
In other words, dumb blondes should kneel before our best and believe what the smart set tells us. While it’s not clear why Google chose “Bernanke” as a nickname for its project, the hat tip for the former Federal Reserve chairman is quite appropriate. Ben Bernanke oversaw the financial crisis that caused all the rating agencies and regulators in the country to tell us to ignore what the evidence and common sense suggest.
“Trust us,” quantitative financial analysts said in 2008. “We are very smart,” they said, just before closing the entire U.S. economy.
It’s funny, until it is. Google’s actions in the marketplace, especially in the digital advertising space, have distorted the marketplace and crushed competitors and entire industries under its dominant weight. The American news business, from the New York Post to the Washington Post, CNN and Fox News, has suffered the weight of Big Tech companies, which, according to a study, make billions circulating through the content of news publishers without paying anything for the privilege.
Together, Google and Facebook make more than half of their digital advertising revenue, billions of dollars of which once kept the U.S. newspaper industry afloat. Companies claim that the domain has been fair and good for the media.
But Texas’ complaint against Google states otherwise: “Google’s ad buying middlemen. . . do not act in the best interests of your customers. Google subjects smaller, less sophisticated advertisers to complicated arbitrations that are extraordinarily difficult to understand. ”
After the leak of the Bernanke Project, it seems that publishers could also have been deceived, competing in an unfair market where Google had a clear advantage in information. In a market where Google has the advantage of dominant information to privilege itself, competitors suffer, and so do consumers. When the media is deprived of advertising revenue for the circulation of its own content, the benefits it would use to stimulate new content, product offerings and better journalism are resented.
Jason Kint, CEO of Digital Content Next, called Project Bernanke and Jedi Blue “sympathetic project code names,” but they hid hundreds of millions of dollars in profits – or, “enough [money] to fund all journalists who lost their jobs in 2020 ”.
“Everyone,” Kint pointed out, “should be enraged.”
While Google disguises its digital ad business with the primacy of high intellectualism and technical complexity, eliminate the technocratic language and what’s left is a millennial motive: greed. The millions of dollars that Google will no doubt pay economic experts and antitrust lawyers to confuse and distort the issues at hand should not overlook this fundamental truth.
Rachel Bovard is Senior Policy Director at the Conservative Partnership Institute.