(DailyDig.com) – The Department of Justice presented a lawsuit on October 3 against Google, alleging the company was utilizing its dominant position in the market for internet advertising to unlawfully raise its pricing.
They claimed that Google rigged auctions online, a billion dollar market that Google dominates, to increase its profits.
At the trial in Washington on October 4, Adam Juda, a Google executive, testified that the company employs a formula that includes ad quality to decide who wins the auctions that are employed for positioning advertisements on websites. The United States has charged Google with exploiting its dominant position in web search and some advertising.
Attorney for the Department of Justice, David Dahlquist, questioned Juda whether he agreed with a paper Google created for the European Union in which Google claimed to have direct influence over price by adjusting the parameters of their auction processes. Juda replied he didn’t, but something that can be adjusted is a crude formula that assigns an advertisement a higher score based on the quality of the ad and the website it links to, a rate of click-through depending on how probable it is that a user would click on the ad, and an amortized value that depends on the price bid.
Dahlquist questioned Juda about whether or not ad sales had been altered in a manner that increased advertisers’ cost-per-clickthrough. Juda said, “That’s fair,” in response. But an attorney for Google, Wendy Waszmer, questioned Juda for information about whether or not his advertising quality team could increase costs without consulting anyone else. Juda responded by saying no.
Website advertisers and publishers have accused Google of taking an excessive cut of their earnings due to the company’s opaque ad business practices. The Department of Justice claimed that Google had established its monopoly by acquiring key technologies that delivered advertisements to publishers. Because of Google’s cut, advertising costs went up and publisher profits went down.
The focus on Google’s ad technologies is a new tack the Justice Department has changed from the focus on search engine dominance on all devices.
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