Google accused of running 'insider trading' scheme with its online ads

Google’s ad market ‘insider trading’: Tech giant runs a ‘secret scheme’ that lets them use online publisher data to ensure businesses using their technology win ads – and they’ve made millions out of it

  • Google is being sued by ten US states which think it is violating antitrust laws
  • The states say the tech giant has an unfair monopoly on the internet 
  • A huge part of it is advertising, which earns Google hundreds of millions a year
  • Google gets to reap the rewards of both running an ad marketplace for publishers, and operating ad-buying technology 
  • Businesses that use Google’s ad technology to buy an ad pay Google a percentage of the transaction if they win 
  • According to the lawsuit, Google ran a scheme it called Project Bernanke  
  • It allowed them to look at what bids were accepted, guide their clients to get there and secure the ad went to them 
  • It squeezed others, using different ad-buying tools, out of bidding auctions and made Google $230million in the year 2013 alone   

Google has been accused of running an ‘insider trading’ scheme with its ad systems to give its clients a leg up by using publisher data they’d obtained secretly to help them place winning ad bids. 

The allegation is part of an antitrust lawsuit filed that was brought by Texas prosecutors and joined by nine other states against the Silicon Valley giant. Papers were filed this week as part of the lawsuit that were filed unredacted then were  redacted and sealed by a judge. 

The papers were seen by The Wall Street Journal before they were redacted. They allege that Google ran a secret program which let them play both sides of the industry.  

Central to it is an understanding of how Google has unprecedented and unrivaled access to both ad sellers and ad buyers. 

Online publishers like media outlets use Google technology to sell their ads. The tech is known as the DoubleClick Ad Exchange, or AdX. 

It gives Google access to information on how much they charge for those ads, how often they are sold , to whom they are sold and, crucially, how much advertisers are willing to pay in auctions for a coveted ad spot, like an advertising stock exchange or market place.

Google is being sued by ten states in a lawsuit brought by Texas which alleges it has breached antitrust laws

Online advertisers also use Google technology to buy those ads.  

There are two Google ad-buying tools; DV360 and Google Ads. Every time an ad is bought using them, Google gets a kickback.  

According to the lawsuit, Google took the information from AdX and used it to guide the businesses using the tools to help them place winning ad bids. 

Google called it Project Bernanke  and it made them $230million in 2013 alone, according to the filing. Publishers are not told about it when they signed up to use AdX. 

It’s unclear why they named the project as they did. Ben Bernanke was the Chair of the Federal Reserve for two terms.

The lawsuit also gives more details on a secret deal that Google and Facebook had a secret deal that ensured Facebook would bid in and win a certain number of ad auctions. 

The deal was known as Jedi Blue. Details of it emerged in the lawsuit in December 2019. 

At the time, both Google and Facebook said they were doing nothing wrong. 

The new documents reveal that Google admitted it made ‘commercially reasonable efforts’ to make sure ads went to Facebook instead of competitors. 

As part of Jedi Blue, Facebook committed to spending at least $500million in a single year, according to the documents. 

Top executives at each company had knowledge of it, including Sheryl Sandberg – Facebook’s COO – and Philip Schindler, Google’s senior vice president and chief business officer. 

Google, in filings in response to the allegations of the ‘insider trading scheme’, also insisted it acted above board. 

It claims the lawsuit does not understand the online advertising industry.  

‘[It] misrepresents many aspects of our ad tech business. We look forward to making our case in court, ‘ Peter Schottenfels, a Google spokesman, told the Wall Street Journal.

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