Google Antitrust Trial: Internet Giant 'Tunes' Advertising Auctions to to Meet Revenue Targets

In the ongoing federal antitrust trial against Google, the internet giant’s Vice President for Advertising Products, Jerry Dischler, revealed that the company has been “adjusting” its advertising auctions to meet revenue targets, sometimes raising ad prices by up to five percent.

Bloomberg reports that as the federal antitrust trial against Google intensifies, new revelations have come to light about the company’s advertising practices. Jerry Dischler, vice president for advertising products, testified that Google frequently changes its ad auction mechanisms, including the cost and minimum spending on ads, to meet revenue targets. These adjustments, known internally as “tunings,” can lead to an increase in ad prices by as much as 5 percent.

“We tend not to tell advertisers about pricing changes,” Dischler said during his testimony. This lack of transparency has raised ethical concerns among industry experts and advertisers alike. In a 2019 email, Dischler and his team discussed “shaking the cushions” to find potential changes that would help Google meet its quarterly revenue targets. “My goal was to get creative so we could meet our quota,” Dischler added.

The Justice Department alleges that Google has illegally maintained a monopoly over online search by paying billions of dollars to web browsers and smartphone manufacturers. These deals ensure that Google remains the preselected option for users accessing the web. According to Dischler, more than 60 percent of Google’s total revenue, amounting to over $100 billion in 2020, comes from search ads.

In a sworn 2020 interview, Dischler acknowledged that some of these auction changes led to five percent increases for the typical advertiser. He also mentioned that it was “possible” that some changes led to price increases of as much as 10 percent for specific queries. However, Dischler believes that a 15 percent price increase would drive most advertisers to rivals like Facebook or China’s TikTok. “It would be a dangerous thing to do,” he cautioned.

One particular change that boosted Google’s revenue was known as RGSP, which switched the auction so the runner-up was given the top advertiser slot, and the actual winner took the second spot. “Otherwise, Amazon always shows up on top,” Dischler explained. While he couldn’t confirm if this led advertisers to place higher bids, he did acknowledge that it increased Google’s revenue.