The 130 page summary of the lawsuit is about “How did Google destroy the internet?”

Tram Ho

In a series of antitrust lawsuits that have been and are happening, the lawsuit between the state of Texas and giant Google has become more prominent than all. That’s because it focuses on the tech giant’s dominance in online advertising, instead of search engines like the recent lawsuits filed by the Justice Department and more than 30 other states in the United States. to aim.

The 130-page lawsuit details what Google, Facebook and WhatsApp do with user data – but the most important of which is the section on how Google has used to build and maintain its dominance. their values ​​over the years.

In short, according to this lawsuit, Google has spent the past decade systematically dominating both sides of the advertising market – they make deals without advertisers or publishers. Web version can refuse. And if someone refuses, they have a way of forcing that person to give their consent.

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The company used its too large role in both of these markets to extract market participants – including web publishers and advertisers – in billions of dollars to build. so the giant Google advertising technology empire is today, but in return it is a damage to the rest of the internet.

If you want to understand this better, first you need to be familiar with how the online advertising industry works.

How the advertising industry works

The major web publishers – the technical term of any website with ad space for sale, from CNN to the New York Times – all rely on a specific intermediary called an “ad server. “(Ad server) to help them get the biggest advertising revenue for that space. Most importantly, these web publishers often attach to a certain ad server to manage their ad space – so switching to a new ad server can be disruptive. this cash flow they desperately need.

One of the main jobs of an ad server is to collect relevant information about each particular visitor to a particular website so that ads can be targeted their way. For example, a user visits a website about a chained cat, trackers on that website will collect some unique identifiable information about their computer or phone.

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This dataset is often combined with other data from third-party providers so advertisers get an accurate picture of who the user is and which ads “want” to be targeted. This creates a huge chunk of data to broadcast on what is known as an “ad exchange.” (ad exchange).

Essentially, these ad exchanges operate like auctions where advertisers can bid for a portion of the ad space on a website. As with real auctions, the highest bidders win – and in this case, they will be allowed to show ads in that portion of the space.

All of this happens in a very, very small fraction of a second, to get the ad on your site the moment you open it.

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Google Advertising Toolkit for Publishers

More importantly, a large number of advertising market participants, including web publishers and advertisers, rely on Google. About 90% of the big web publishers use Google’s native ad server, called Google Ad Manager (GAM), a recent survey found. Meanwhile, analysts from technology firm Datanyze showed that the advertising exchange DoubleClick, which Google owns, accounts for 55% of the ad trading market. On the other hand, other competitors all occupy only one-digit market share. That is a serious problem.

So how has Google dominated it?

When Google first entered the advertising exchange market in 2009 after acquiring DoubleClick, the company faced fierce competition from rivals such as Microsoft and once-giant Yahoo.

Google had to quickly get out of its inferior position – and they took advantage of their greatest advantage at the time – a small business ad buying tool called Google Adwords. According to the lawsuit, at the time, Google had about 250,000 small businesses using the tool – restaurants, doctors, welders, and electricians across the United States – that paid Google a fortune an ad position in the Google search results page. As early as 2005, this has been viewed as a monopoly practice.

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A decade later, Adwords changed its name to “Google Ads” and the number of customers exploded. The lawsuit said, in 2013, Google had nearly 2 million advertisers using its services.

Not long after the implementation of its dual grip that included its ad server and ad exchange, Google changed its policy so that countless small businesses looking to bid on Google ads had to use it. The company’s advertising exchange and server.

And to this day, millions of businesses rely on Google advertising and are forced to trade on Google exchanges with no other tools to use.

The pincer is aimed at Google advertisers

Often times, ad buying tools run through a series of different exchanges so that advertisers bid on as many ad spaces as possible and get the best prices – like a self-competing marketplace. due to common sense.

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But according to the lawsuit, Google’s tools for advertisers demand that, if you want to buy ad space in Google’s display network (Google Display Network), will only be purchased on exchanges. Google – even third-party exchanges offer the same ad space for a cheaper price.

According to the lawsuit, Google published an internal document showing, ” by combining its ad server with the market power of buyers, Google prevented customers from switching to another ad server and quickly.” capture the rest of the market “. For many years, the company ” effectively blocked ” other competing ad servers. Even Google allows advertisers to gain access to other exchanges through their products – as in 2016 – the company “intentionally restrains” how pricing is done.

Google’s actions are even more frightening if you look at how big publishers are forced to obey them.

Pliers for web publishers

If a big news site – such as CNN – wants a part in this huge piece of advertising, Google will cleverly force those major publishers to use the same proprietary advertising technology the company has. One of the ways to do so is that the company’s exchange is programmed to show bids only to publishers that have licensed Google’s ad servers.

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That is how Google deals with reputable web publishers with plenty of ad space, when they use Google’s ad servers. They will be ” blocked from accessing and sharing information ” about their inventory (the points that can display ads on the website) on advertising exchanges other than Google. So, even if it wanted to sell its ad space through another service, Google would block it.

In other words, the Texas lawsuit shows that, in a two-pincer set, consisting of an ad server for web publishers and an ad buying tool and an advertisers’ exchange, Google has clamped the online advertising market in his hands and, of course, determines the fees collected from this playground.

Google’s way out of the pincer – but avoid melon peel, meet coconut shell

Publishers have found another weapon to escape Google’s grip. That weapon is called “header bidding” – auction title. Essentially, by adding a piece of code to their website, web publishers can navigate their browser across a series of different exchanges, to display ads on the website in a way. directly, bypassing the wall set up by Google’s ad server.

This means publishers have access to more exchanges, advertisers access more ad space, and no one has to pay Google fees. And all of a sudden, publishers noticed their ad revenue skyrocketing.

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Of course Google is not happy at all. They weren’t even happier when Facebook announced it would begin partnering with publishers using this title auction system. But then things got worse.

According to the prosecutor’s investigation, it turned out that Facebook did not use title auction to compete with Google, but to reach a “collusion” agreement with colleagues in the technology industry.

Over the next year, the two giants were accused of cooperating through an agreement that Facebook would “ditch” its title auction business, instead navigating that advertising business through Google platform. In return, Google promises that the Facebook Audience Network (FAN) will have certain advantages that other third-party ad trading platforms do not.

How is Google’s power destroying the internet?

When a company controls today’s huge online advertising market, it has enough power to influence things outside the internet as well. According to a Texas lawsuit, Google uses its pincer to impose “extremely high taxes on every dollar spent on advertising” on the web.

We don’t know exactly how much the ” tax Google ” is imposing, but we do know about the so-called ” advertising technology tax “. In 2019, analysts estimate that 30% of all advertising dollars goes into the pockets of advertising technology firms like Google – and that number is turning into billions of dollars a year, even bigger. again.

As the cost increases, advertisers will feel its burden first, and finally, the blogs and digital news sites – as well as the one you’re reading here – will feel it. They will be forced to put in as many ads as possible to make up for lost profits.

When that doesn’t work, publishers use tricks to “snatch view” and pray for good luck smiling at them. Gradually, the web has turned from something attractive into something terrible, scary and used the pain of others to build success for a particular company.

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Source : Genk