As Google's second antitrust trial of the year continues, a Boston University economist testified that Google's monopoly on the advertising market allows it to charge advertisers 19 to 27 percent more than would be allowed in a “competitive market.”
Marketing Brew Reports The ongoing antitrust trial against Google has highlighted the tech giant's dominant position in the digital advertising market, with particular focus on its ad exchange, AdX.
The government argues that AdX's exclusivity makes it a core part of Google's advertising monopoly. Justice Department lawyers have emphasized that publishers can't access the vast number of advertisers who use Google's advertising tools without going through AdX, a claim backed up by testimony from executives at major media companies including News Corp and Gannett.
Matthew Wheatland, Chief Digital Officer Daily Mailtestified in court that the paper considered switching away from Google's ad server but ultimately gave up because of its reliance on AdX. Internal tests conducted by the Daily Mail revealed that leaving AdX could result in a 28% drop in programmatic revenue. Wheatland also noted that AdX's take rate, at 20%, is significantly higher than other ad exchanges, almost double in some cases.
The Department of Justice further argued that reliance on AdX also imposes costs on advertisers: Boston University economist and expert witness Timothy Simcoe presented research showing that AdX overcharges advertisers by 19% to 27% compared to what would be expected in a competitive market.
During the trial, internal documents and emails from Google employees were presented, highlighting concerns about AdX's exclusivity. Google began developing a tool called AWBid (AdWords Bidding) as early as 2011 to open up the platform and allow more exchanges to bid on Google's inventory. But the tool was ultimately limited to retargeting campaigns and only made up a small portion of Google's advertising business. Emails from Google employees, including former vice president Scott Spencer, expressed concerns about the potential impact AWBid would have on Google's sell-side business and the company's desire to maintain its 20% revenue share.
Read more at Marketing Brew here.
Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship.
