As Google’s second antitrust trial this year continues, a Boston University economist testified that Google’s stranglehold over the advertising market allows it to charge between 19 and 27 percent higher rates to advertisers than a “competitive market” would allow.
Marketing Brew reports that the ongoing antitrust trial against Google has shed light on the tech giant’s dominant position in the digital advertising market, with particular attention being paid to its ad exchange, AdX.
The government has argued that AdX is a core component of Google’s advertising monopoly due to its exclusivity. Lawyers for the DOJ have emphasized that publishers cannot access the vast number of advertisers using Google’s ad tools without going through AdX, a claim supported by testimony from executives at major media companies like News Corp and Gannett.
Matthew Wheatland, chief digital officer of the Daily Mail, testified in court that the publication had considered switching from Google’s ad server but ultimately decided against it due to its reliance on AdX. An internal test conducted by the Daily Mail revealed that leaving AdX could result in a 28 percent loss of programmatic revenue. Wheatland also noted that AdX’s take rate of 20 percent is significantly higher than other exchanges, nearly double in some cases.
The DOJ further argued that this reliance on AdX also comes at a cost to advertisers. Expert witness Timothy Simcoe, an economist from Boston University, presented research indicating that AdX overcharges advertisers by 19% to 27% compared to what would be expected in a competitive market.
Throughout the trial, internal documents and emails from Google employees have been presented, highlighting concerns about the exclusivity of AdX. As early as 2011, Google began developing a tool called AWBid (AdWords bidding) to open up the platform and allow more exchanges to bid on Google’s inventory. However, the tool was eventually limited to retargeting campaigns and accounted for only a small portion of Google’s advertising business. Emails from Google employees, including former VP Scott Spencer, expressed apprehension about the potential impact of AWBid on Google’s sell-side business and the desire to maintain the company’s 20 percent revenue share.
Read more at Marketing Brew here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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