Recent testimony in the historic antitrust trial against Google claims that the internet behemoth purposefully changed the parameters of its ad auction in 2017, increasing prices by fifteen percent and perhaps generating billions of more cash.
The internet giant’s covert 2017 plan, dubbed “Project Momiji,” to manipulate advertisement auction pricing to its advantage, was revealed by economist Michael Whinston during the current antitrust lawsuit against Google, according to Bloomberg.
Professor Whinston at MIT explained how Google changed the way it sold ads to “raise the prices against the most high-priced bidder.”
The plan was based on a gap that was found: the second-highest bidder would often only offer 80% of the winning offer. Google’s answer was to give the second-place bidder a disadvantage. This changed the bidding so that the losing bid would be more competitive and close the 20% gap between the two initial bids. It was thought that this change, along with charging more for advertisements with more text, would bring in an extra 15% for Google.
Whinston pointed out that Google was acting like a monopoly by saying, “It is the advertising companies who are in charge of this race. Google is making the rules.” Based on internal emails and evidence from Google financial management Jerry Dischler, he talked about a strategy called “squashing” that would make the runner-up’s bid stronger.
Dischler has already talked about how Google tries to “tune” ad sales to make sure it meets its income goals. According to Breitbart News:
“Bloomberg says that new information about Google’s advertising methods has come to light as the federal antitrust proceedings against the company heat up. Vice President for Advertising Products Jerry Dischler said that Google often changes its ad auction methods, such as the minimum amount of money that can be spent on ads and how much they cost, in order to meet its income goals. Ad prices can go up by as much as 5 percent because of these changes, which are called ‘tunings’ within the company.”
“We don’t usually let advertisers know when prices change,” Dischler said in court. Experts in the field and marketers alike are worried about the ethics of this lack of openness. In an email from 2019, Dischler and his team talked about “shaking the cushions” to look for changes that might help Google meet its quarterly income goals. Dischler said, “My goal was to think outside the box so we could meet our quota.”
The DOJ says that Google has unfairly kept its hold on online search, which has helped it make a lot of money—more than 60% of its income comes from search ads, which will be worth over $100 billion in 2020.