Google’s internal discussions on ad fees revealed in antitrust trial, full details

OVERVIEW OF THE MOST IMPORTANT EVENTS

Former Google executives testified about the company’s approach to pricing and competing technologies.

Google was considering reducing the fees it charges for ad exchange, AdX.

Despite considering a reduction, the company never changed its 20 percent fee.

In a revealing turn of events in a U.S. antitrust trial, internal Google discussions about advertising fees and competitive strategies have come to light. The trial, which began this week, sees the U.S. Justice Department and state attorneys general accuse Google of monopolizing the online advertising market.

Former Google executives testified Tuesday and Wednesday about the company’s approach to pricing and competing technologies.

According to former Google vice president Eisar Lipkovitz, who worked on display and video ads from 2014 to 2019, Google considered lowering the fees it charges for its AdX ad exchange. Despite considering a cut, the company never changed its 20 percent fee, which some internal discussions suggest could be lowered to 10 percent to 15 percent. High AdX fees have prompted websites to adopt header bidding, Bloomberg reports.

Also read: Former Google exec says search giant tried to destroy rival ad networks

Header bidding allows sites to bid on multiple exchanges simultaneously for ad space, potentially increasing revenue. Google has identified header bidding as a serious long-term threat because it could drive business away from AdX.

The trial also highlighted the experience of Jay Friedman, CEO of Goodway Group, a marketing firm. Friedman recounted that while he could negotiate lower rates with other ad exchanges, Google was reluctant to lower its rates. He noted that despite considering alternatives, a lack of sufficient ad supply from other exchanges kept Goodway Group tied to Google.

Stephanie Layser, former CEO of News Corp., testified that header bidding significantly increased publisher revenues, by as much as 50%. Google, in turn, rejected ads sold through header bidding as lower quality, potentially vulnerable to spam and fraud.

Also read: Google’s advertising dominance under fire: Tough antitrust trial begins today

Brad Bender, Google’s former vice president of display and video products, provided further insight into Google’s strategic approach. He discussed an email he sent to the display team that included notes from former DoubleClick CEO David Rosenblatt. The notes highlighted the use of Google’s ad server, DoubleClick for Publishers (DFP), to generate high switching costs for customers, effectively locking them out of the Google ecosystem.

As the trial continues, the revelations shed light on Google’s strategic moves to maintain its dominant position in the online advertising market, raising important questions about competition and market fairness.

Follow us

Ayushi Jain

Tech news reporter by day, BGMI gamer by night. I combine my passion for technology and gaming to bring you the latest from both worlds. See full profile