Maybe it's too early, but that article was not clear to me. Is it alleged that Google incorrectly stated the value of the second place bidder in order to make it look higher, in order to pressure the first place bidder to bid higher? Even that doesn't make much sense, so I'm missing something.<p>> The shift sought “to raise the prices against the highest bidder,” Whinston told Judge Amit Mehta in federal court in Washington... To help eliminate that 20% between the runner-up and what the winner was willing to pay, Google gave the second-place bidder a built-in handicap to make their offer more competitive, Whinston said... Whinston’s comments Friday described Google’s technique, called “squashing,” that seeks to make the runner-up’s bid more competitive.<p>If they're inflating the second-place bid to be higher than the first-place bid, I'd wonder why that wouldn't backfire for them and result in the second highest bid winning a lot of the time. And if they didn't inflate it above the first-place bid, why would the winning bidder feel any pressure to increase their bid?<p>I'm sure it all makes sense, it's just not clear to me from this explanation.
I work with NGO (property law) and couple of months ago we were awarded a grant for ads, around €2000/mo. Initially, I was pretty surprised with how generous this was, but later realized that it's both - a way for Google to brag how much they help "good causes", but most importantly - to raise the ad costs for others.<p>All in all - we made a few spammer operations less profitable, a couple wealthy assholes were angry about us helping people defend themselves and we brought quality traffic to the website and FB group. Thanks Skynet!
The auction code was <i>worse</i> than a Google-only black box, when I was in Ads. The code itself was in a "high intellectual property" subdirectory that most engineers could not access.<p>There's an elaborate economic rationale for second-price auctions, including that they avoid "winner's remorse." Leave it to the late-stage "improvers" to say, "hey, we can capture some of that gap between first and second place!"
Ironically, this is reported on Yahoo!, which invented the practice of ad squashing that ~their journalist~ (edit: a Bloomberg journalist) accuses Google of: <a href="https://web.archive.org/web/20080827230455/http://research.yahoo.com/project/205" rel="nofollow noreferrer">https://web.archive.org/web/20080827230455/http://research.y...</a><p>The formula is interesting: ad selection uses bid ⨯ relevance^q, where q is the squashing value, which is lowered when the second-highest bidder is likely to bid low, creating a tradeoff:<p>> <i>[David Pennock] adds that squashing can significantly improve revenue, at the expense of advertiser and user satisfaction. As a result, it is necessary to set acceptable thresholds for loss of relevance, and then optimize revenue based on those thresholds.</i>
Just a reminder that the EU started a preliminary antitrust action over Google's ad business earlier this year.<p>> Google’s advertising business should be broken up, European Union officials said Wednesday, alleging that the tech giant’s involvement in multiple parts of the digital advertising supply chain creates “inherent conflicts of interest” that risk harming competition.<p>“@Google controls both sides of the #adtech market: sell & buy,” tweeted Margrethe Vestager, the commission’s top competition official. “We are concerned that it may have abused its dominance to favour its own #AdX platform. If confirmed, this is illegal.”<p><a href="https://www.cnn.com/2023/06/14/tech/google-eu-antitrust-ad-tech/index.html" rel="nofollow noreferrer">https://www.cnn.com/2023/06/14/tech/google-eu-antitrust-ad-t...</a>
My company spent a lot (relatively to our size) of money in AdWords withour a correlated conversion rate. Not saying we could not be completely wrong but the intuition is that more conversions are expected.
>Google gave the second-place bidder a built-in handicap to make their offer more competitive<p>What does this even mean? The way this handicap works is very important. What if it is just based off ad relevancy.
In other words, Google's advertising customers lack any real insight into the rates they are being charged for "personalized advertising".<p>They have no choice but to take Google's word for it. It is effectively a "black box" and only Google is allowed to look inside.
I'm wondering what was the overall effect on prices in the end.<p>Did the prices really increased by 15%?<p>Or did the bids, specially the second highest, roughly dropped by 15% meaning the price stayed the same.<p>Or something in the middle.
At the end of the day, Google can set the price however they like for ads on Google Search.<p>Previously they ran an auction. Now they have a very complex price-setting algorithm that has elements of an auction within it, but also secret factors which push bids up or down.<p>But they're well within their rights to just roll a dice.
What laws did they break? I’m confused by the sudden interest in monopolies when the duopolies have developed over 20 years. It’s like after Microsoft government assumed Google / Facebook and Google / Apple and EBay / Amazon had each other so all was good?
Is anyone really shocked that when you tell the seller the maximum rate you are willing to pay that will be motivated to get that maximum rate when the seller is running the auction?