Commentary

Unredacted Google Lawsuit Validates Publisher Complaints

Google’s dominance in the online advertising market is evident in its ability to collect 22% of 42% of media spending handled by its systems, according to a lawsuit by state attorneys general that was unredacted last week. Those previously blacked-out sections have more details that should validate publisher complaints about the search giant.

The commission that Google collects from its AdX marketplace for digital ads is about two to four times as much as fees for other exchanges, the suit claims.

“If Google’s exchange sells $100,000 worth of a publisher’s inventory, Google will extract at least $19,000,” according to a previously redacted section of the suit. The complaint also cites a Google employee as saying, “an exchange shouldn’t be an immensely profitable business” like Google’s AdX, but should instead be “like a public good used to facilitate buyers and sellers.”

The unredacted version of the lawsuit filed by Texas and 11 other states in December argues that Google has abused its dominance in online auctions for advertising. News organizations including the Associated Press, Dow Jones, Reuters, Advance Publications and The New York Times had asked the court to uncover the redacted parts of the complaint.

Citing internal company documents, the suit says Google’s publisher ad server, Google Ad Manager, served 75% of all display ad impressions in the U.S. in third quarter of 2018. In addition, the company’s ad-buying tools, such as Google Ads and DV360, win more than 80% of the auctions in its exchange.

The suit also claims that Google deceived publishers about its Dynamic Allocation process of handling auctions of ad inventory, and knew that it didn’t maximize the yield for publishers.

“Google internally discussed how publishers could make more money selling their inventory if exchanges really competed,” according to a previously redacted part of the complaint, which in an earlier version said competition would boost the clearing prices for publishers by an average of 40%.

The unredacted complaint also has more details about Accelerated Mobile Pages, or AMP, the Google-hosted versions of web pages that load more quickly on smartphones. However, publishers saw 40% less revenue from AMP pages, according to Google’s internal documents.

Facing a threat from header bidding, Google employees discussed playing a “jedi mind trick” by “getting publishers to come up with the idea to remove exchanges…on their own” by stoking worries about straining publishers’ websites, the unredacted complaint says.

The allegations should worry publishers that depend on Google’s technology to sell digital ads. The company has refuted the claims as inaccurate, but more transparency is needed to alleviate the concerns of media buyers and publishers.

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