State AGs' lawsuit alleges Google misled publishers and advertisers for years about ad pricing by deflating sales for some while increasing prices for buyers

Details show Google employees fretting its ad tech auctions were ‘untruthful’ and based in ‘insider information’

Wall Street Journal 2022-01-15

Context & Ripple Effects

The state case sits within a longer antitrust inquiry into Google's ad stack: earlier reporting said U.S. investigators were examining the way Google bundled its ad tools. A separate unredacted state filing had already raised allegations around a Google-Facebook advertising arrangement.

The newly reported internal concerns add detail to the states' theory that auction design, rather than just product bundling, disadvantaged market participants. That theory later aligns with the DOJ and states' push for a breakup of Google's ad-tech business.

First-order effects

The reported internal messages give State AGs more material to support their allegations that Google's ad auctions relied on information unavailable to publishers and advertisers.
Google must defend both its ad-pricing practices and the internal characterization of those practices as the state litigation proceeds.

Second-order effects

Publishers and advertisers named as allegedly affected gain a more concrete basis to scrutinize how auction rules and pricing are disclosed to them.
The disclosures reinforce enforcers' existing focus on Google's integrated ad tools, increasing pressure on Google to explain how its buying, selling, and exchange functions interact.

Third-order effects

If the states' auction theory is sustained, ad-tech enforcement shifts from challenges to bundled products toward oversight of market rules, data asymmetry, and transaction transparency.
The later call to separate Google's ad-tech business indicates that conduct allegations can build toward structural remedies rather than narrower changes to auction disclosures.

The trend: Digital-ad antitrust scrutiny is broadening from platform integration to whether opaque auction mechanics allocate value fairly between buyers and sellers.

Discussion

@leah_nylen @leah_nylen on x
The extra $9 between the two bids, Google put into a “pool” that it would use to secretly raise the bids by advertisers using its tools to ensure they would always win out over advertisers using non-Google tools. https://twitter.com/...
@leah_nylen @leah_nylen on x
According to Texas, Google told everyone that its online ad auctions were second-price auctions. But in reality, it was using third-price auctions and then pocketing the difference.
@keachhagey @keachhagey on x
Google employees fretted that its ad auctions were “untruthful” and based on “insider information,” according to newly unredacted sections of the AGs' lawsuit. w/ @trippmickle https://www.wsj.com/... via @WSJ
@epsilontheory Ben Hunt on x
“Meanwhile, Google pocketed the difference between what it told publishers and advertisers that an ad cost and used the pool of money to manipulate future auctions to expand its digital monopoly, the newly unredacted complaint alleges.” Don't Be Evil. LOL https://www.wsj.com/...
@markhurst Mark Hurst on x
Like the Facebook Files, but for Google. Now we just need a whistleblower to step forward. https://www.wsj.com/...
@yarongalai Yaron Galai on x
If true, this is absolutely mind boggling. Can't end well for Google. 🤯🤯🤯🤯 🤯🤯🤯🤯 https://twitter.com/...
@aripap Ari Paparo Dot Eth on x
Google would see when it's own systems had both the first- and second-best bids and then would pay the publisher as if the second bid didn't exist, but charge the advertiser as if it did. Wow. https://twitter.com/...
@froomkin Dan Froomkin on x
BREAK IT UP https://www.wsj.com/... https://twitter.com/...
@cbedforddc Christopher Bedford on x
1) Google built an ad empire based on dishonest and corrupt practices; 2) Used it to destroy the in-house advertising of newspapers and other media; And 3) Turned the spigot off to those sites that ran afoul of its liberalism. Google is an evil company. https://www.wsj.com/...
@aripap Ari Paparo Dot Eth on x
WSJ reporting on various Google auction manipulations. I've read this part ten times and don't get it. I *think* what they mean is that the 1st price bid was ignored and instead the 2nd would win but without any reduction. https://www.wsj.com/... https://twitter.com/...
@glennkesslerwp Glenn Kessler on x
A newly unredacted complaint alleges that Google pocketed the difference between what it told publishers and advertisers that an ad cost and used the pool of money to manipulate future auctions to expand its digital monopoly https://www.wsj.com/... via @WSJ
@caseynewton Casey Newton on x
A couple times a month something called the Google News Initiative emails to brag about how they donated like $20 to a fact-checking startup and in the future I will just respond with a link to this story and a 🤔
@carnage4life @carnage4life on x
I'm continually impressed by the timing of people who sow a bunch of seeds and then call in rich & retire before the chickens come home to roost. Tech billionaires like Larry, Sergey & Chamath are the true black belts of this lifestyle. https://twitter.com/...
@michaelcarusi Michael Carusi on x
This is a great example of why I tend to steer clients away from Google PPC ads. Aside from frankly being a waste of time for small businesses, if you can't even trust Google's internal algorithm, why bother? https://twitter.com/...
@jason_kint Jason Kint on x
I'll wait until the mostly unsealed third complaint is public so I can screenshot it but WSJ is out in the meantime. The kicker juxtaposes a Google employee quote next to an anonymous Google spokesperson. ps why does a Google get deception anonymity? 1/2 https://www.wsj.com/...
@karlbode Karl Bode on x
facebook gets all the attention but google is gonna go through some stuff with these antitrust lawsuits still amazed the revelations they paid wireless carriers billions not to compete in the app space barely warranted a few headlines https://twitter.com/...
@somospostpc Alex Barredo on x
At some point billion dollars fines stopped making sense and executives should start facing jail time https://twitter.com/...
@alex @alex on x
Tech: Trust us we are good, also we have no comment to anything and you can't talk to that person you want to Also Tech: https://t.co/RmLqu6oUq3
@cdixon @cdixon on x
Can't be evil > don't be evil https://twitter.com/...
@trippmickle Tripp Mickle on x
The digital ad market is murky; Google owns the dominant tools at every link of the chain; rivals complain it tilts the market in its own favor. Newly unredacted material in Texas' complaint aims to show how Google does exactly that w/ @keachhagey https://www.wsj.com/...
@jessefelder Jesse Felder on x
‘Google misled publishers and advertisers for years about the pricing and processes of its ad auctions, creating secret programs that deflated sales for some companies while increasing prices for buyers, according to a lawsuit by state attorneys general.’ https://www.wsj.com/...
@asharma Amol Sharma on x
WSJ continues to deliver the goods on the state AG lawsuit against Google — here, with unredacted details that are very revealing. From @trippmickle & @keachhagey https://twitter.com/...
@mattrosoff Matt Rosoff on x
The difference between what Google employees said internally according to unredacted docs, and what spokespeople are now saying, is, how shall we say it...stark. https://www.wsj.com/...
@caseynewton Casey Newton on x
Some of the shadiest stuff Google ever pulled, at the expense of journalism and democracy https://www.wsj.com/... https://twitter.com/...
@econliberties @econliberties on x
Just to be clear: this reporting documents a criminal conspiracy between @Facebook and @Google. @TheJusticeDept should file a suit in response. That's par for the course for @Facebook. We've been documenting their crimes — join us in demanding action. https://sign.moveon.org/... …
@natemcdermott Nathan McDermott on x
One of the great jokes of the 21st century is that Google started out with “Don't be Evil” as their corporate motto, before removing it once their stock valuation reached a certain threshold. https://twitter.com/...
@jason_kint Jason Kint on x
Oomph. A deal, now a section one allegation which can be filed as criminal, with full knowledge of Facebook's COO (Sheryl Sandberg signed it), Facebook's CEO, Google's SVP and Google's CEO. Sandberg has had quite a week, see last night's thread below. https://twitter.com/... http…
@jesselehrich Jesse Lehrich on x
to be clear, bid-rigging like this is a Section 1 Sherman Act violation that carries criminal penalties, including up to 10 years prison. cc @TheJusticeDept. https://twitter.com/...
@profcarroll David Carroll on x
...the inside story of how Google rigged adtech auctions while the adtech industry found itself robbed blind...until the criminal concentration of market power in the dicey dirty world of digital advertising simply became too much to bear... https://twitter.com/...
@jesselehrich Jesse Lehrich on x
🚨🚨 “Mark Zuckerberg & Google chief executive Sundar Pichai personally approved a secret deal that gave the social network a leg up in the search giant's online advertising auctions....” https://www.politico.com/...
@sachalouise Sacha Haworth on x
🤔hmmmmmm a secret agreement to divide up the ad tech market between google & facebook? feels remarkably like .. oh what's the phrase... something a cartel would do https://www.politico.com/... via @politico
@profcarroll David Carroll on x
J E D I B L U E : The Duopoly is Real In a world...where tech executives brazenly flout the law... https://t.co/2VfN820UVC

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