Is Google’s advertising system online a monopoly? That’s what a trial going on right now is set to determine.
One of the things that I’ve been accused of from time to time is being a “shill for Big Tech”. At one point, I was even accused of being a “stenographer” for Big Tech, paid by Big Tech to write articles making critics look bad. For obvious reasons, I can definitely say that this is not the case. I’m not being handed money under the table by any one “Big Tech” firm because, if I were, I would have gotten additional staff to work on the site to provide content long ago, not to mention I would have been advertising a long time ago as well. The simple reality is this site is built on integrity and a lot of the proposed “solutions” for taking on the challenges of “Big Tech” are often garbage and either makes the problems worse or introduces new problems all the while solving nothing.
Another sign that this is a site with integrity is that this website provides coverage that ends up being not so flattering with “Big Tech” as well. It’s not just a site that covers the stupid ideas some “Big Tech critics” have and explaining why they are bad ideas, but also a site that covers actual issues from the large platforms side of things as well. This article is a fantastic example of this.
One of the major problems with the large platforms these days (and it’s far from the only platform) revolves around the advertising model that exists today with them. This is commonly referred to as the “Adtech” side of things. This area has been problematic on a number of fronts. For one, it brings with it a certain level of surveillance on the users – specifically micro targeting users as the surveillance follows them around the web. Another problem is that it can be a vector for scams and rather shady products, harming consumers in the process. It is also a known issue, although that has actually been a diminishing problem in recent years, that malware can utilize advertising to spread onto people’s machines (this is often known as malvertising).
A third major problem with modern online advertising is that payouts are not only small for the exposure those ads provide, but are increasingly getting smaller. That marries nicely with the fact that it is generally quite monopolistic in favour of Google if you are an website owner trying to pay the web server bills and domain name registrar costs.
Now, you might be reading this article and noticing Adsense ads running on the side of the site. It’s easy to look at that and say, “If ads like Adsense are so horrible, why are you running them?” For that, I say, “Thank you for noticing as that perfectly highlights one of the biggest problems of all.” That, of course, has to do with how monopolistic the system tends to be.
If you are a small website, or even a medium size website like Freezenet, you need to find some way of paying for server costs and DNS. Bills are a fact of life. So, you can offer donation options for users like we do, or run advertising when that isn’t necessarily an option. So, on the advertising side of things, what are your options? Ultimately, it boils down to you either using Google Adsense or, well, nothing at all. Yes, you can ironically use Google to search for Adsense alternatives, but many of the networks (that you likely have never heard of) piggy back off of Adsense in the first place. They simply re-sell Google Adsense and are not an independent ad network at all.
If you are insistent and thinking that I’m not trying hard enough, well, in 2020, someone with far more resources than me tried tackling this very issue. That, of course, was TechDirt. At the time, Google was threatening TechDirt with demonetization over seemingly random issues that made absolutely no sense whatsoever. Fed up with the issue, TechDirt decided that it was time to remove every bit of Google code from their site. This included Google Adsense which they knew might be a bit tricky. Utilizing their vast resources (at least, compared to Freezenet), they dug deep to find a replacement. What they found was similar to what I found. Either the advertising network used Google Adsense anyway or they ran ads that were outright scams (not good). By 2021, they concluded that it wasn’t possible to find a replacement network. If someone like TechDirt couldn’t do it, what hope does a site like Freezenet have?
So, leaning into that a bit, here’s a good question: if you are a website builder and your options are either Adsense or nothing if you want your site to be ad supported, doesn’t that make something like Adsense a monopoly? Like, we have anti-trust laws for a reason, right? We’re not alone in thinking this, either. Various American governments, including both at the state level and the federal level, have very similar concerns to this as well. In 2022, we covered the lawsuit and the allegations are pretty messed up. Not only are there accusations of monopolistic behaviour, but there were also allegations that Google suppressed publisher revenue by as much as 40%. Here’s the famous screenshot showing these allegations:
This, of course, showcases the alleged scheme behind Project Bernanke and the allegations were that Google was essentially taking money both from advertisers and publishers afterwards, keeping the difference for themselves. I remember noting, at the time, that if the allegations are true, that is pretty freaking messed up, but since this Project Bernanke started in 2013 (around the time Freezenet started up), it explains why ad revenue has not only been so low, but keeps dropping despite the continued growth of the site.
My understanding, however, was that this particular lawsuit was settled a while back. For the life of me, I can’t find coverage of that now, so it’s possible I’m not remembering that correctly, but I thought the lawsuit was settled and there would be no further updates on that. There would be no breakup or added competition in the field to help fix some of the problems in the advertising market online.
So, you can imagine my pleasant surprise that there is currently ongoing litigation surrounding Googles Adtech. This happened after Google was ruled to be a monopoly in a separate trial. From ArsTechnica:
“One monopoly is bad enough,” Wood said. “But a trifecta of monopolies is what we have here.”
In its complaint, the DOJ argued that Google broke competition in the ad tech space “by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising.”
The result of such “insidious” allegedly anti-competitive behavior is that today Google pockets at least 30 cents “of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools … and sometimes far more,” the DOJ alleged.
Meanwhile, as Google profits off both advertisers and publishers, “website creators earn less, and advertisers pay more” than “they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools,” the DOJ alleged.
On Monday, Wood told Brinkema that Google intentionally put itself in this position to “manipulate the rules of ad auctions to its own benefit,” The Washington Post reported.
“Publishers were understandably furious,” Wood said. “The evidence will show that they could do nothing.”
Wood confirmed that the DOJ planned to call several publishers as witnesses in the coming weeks to explain the harms caused. Expected to take the stand will be “executives from companies including USA Today, [Wall Street] Journal parent company News Corp., and the Daily Mail,” the Post reported.
The ad tech trial, which is expected to last four to six weeks, may be the most consequential of the monopoly trials Google has recently faced, experts have said.
Evidently, the trial over the adtech is not actually over after all and, over the next month or so, we’ll see more developments on this front. So, it’ll be interesting to see where this story goes next from here.
