
Google says it doesn't monopolize digital ad market – senators don't buy it - belltaco
https://www.npr.org/2020/09/15/913328975/google-says-it-doesnt-monopolize-digital-ad-market-senators-don-t-buy-it
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throwaway_kufu
What so many people fail to realize about these issues vis-a-vis Google, it’s
not so much the issues of Google having a monopoly or not on the ad
market...in either case google is a dominant market incumbent that uses its
position (in this case web traffic, data and online ad platform) to unfairly
compete and stifle competition.

Google has often used data acquired through their market position to start
subsidiaries to unfairly compete with their ad customers.

The reason it’s unfair is because Google has not just the ad data but the web
search data, this often results in a Google ad customer going from #1 google
Organic search result for key terms, to #2 to Google’s competing subsidiary.

Worse from going from #1 to #2 to a google product, the natural instinct to
save the business is to increase ad spend to be sure you are still the #1 ad
to our place the google at the top of organic search, of course ad spend goes
right into the pocket of your new competitors core business anyway, and in
many instances googles subsidiary will start bidding for your same keywords so
they literally can’t lose competing with your business rather the have
basically acquired an off form of rent seeking equity or they kill your
business and become the market incumbent.

Of course the kicker are those instances a google subsidiary gets a custom
tool at the top of google results (such as Flights) above both organic and
ads.

~~~
doukdouk
Words get abused a lot, and for some of them, they do not have a clear-cut,
universally agreed upon meaning. "Monopoly" is one of such words (others
candidate include: freedom, democracy, justice).

When random person X complains about, say, Google having a monopoly, there are
two possibilities:

\- Person X means something along "Google has a dominant market position and
abuses its power", slightly abusing the meaning of "monopoly".

\- Person X means Google is literally a monopoly, that it is not possible to
get online ads otherwise and does not know that firms such as Facebook exist.

Somehow a lot of people choose to believe interpretation #2 is true, and spend
a lot of time debating whether this or that company is a "monopoly" as if it
is somehow more important than the substantive issues.

~~~
speeder
I am the CMO for a company.

Google is the ONLY ad provider that give results, all others don't even get
any clicks.

How that is not a monopoly on the classic definition? Every time Google has a
bug and screw with my ads, the revenue of the company I work for tanks hard,
and I am yet to find any solution for it.

~~~
nova22033
_Google is the ONLY ad provider that give results, all others don 't even get
any clicks._

Being effective doesn't make you a monopoly.

~~~
tomlue
I don't think he meant that other companies are bad at getting clicks. I think
he meant his company relies on search engine driven ads. Google has a monopoly
on the search engine. There are many companies that need to rely on search
engine traffic, not social media, for online advertising.

Keep in mind that search engine traffic is enormous, and can fairly be called
a "trade" or "commodity/service" that can be monopolized in it's own right.

I don't think anybody is saying that google has a monopoly on all advertising.

~~~
Spivak
But I don't think this tracks unless you treat search as something special. If
I own a billboard then I have a monopoly on that billboard. Presumably I
built/bought that billboard because I knew that the ad space would be valuable
and that companies would need to pay me for it.

Google owns extremely valuable ad space but that to me doesn't make a monopoly
just because Bing or Facebook's ad space isn't as good for certain companies.

~~~
hannasanarion
And if only one company owned all the billboards in the world, that would be a
monopoly too.

Monopolies are traditionally assessed in terms of product categories, not
entire industries. Nobody ever said "standard oil isn't a monopoly, because
you can also buy coal fuel"

~~~
turtleturtle
And practically any company can build as many billboards as they want. Online
ads aren't restricted by physical space. Google just happens to own most web
traffic because they're really good at search.

~~~
vharuck
Maybe a better analogy is Google owns the biggest road system (search) and all
land beside it for billboards (ads). Very few people use other road systems.

Now, one might say "But users can choose other search engines." But users are
the resource, not the customers. Right now, Google controls most of these
resources. And the very nature of search means they're not sharing access with
competitors.

------
ricardo81
The UK recently evaluated the online ad market and found that Google and
Facebook commanded 70% of all online ad spend in the country [0].

Their large pool of advertisers also helps them command a higher return per
search compared to other platforms, allowing them to outbid its peers to
become the default search choice on devices, e.g. Apple products. Their lack
of privacy sensitive policy also helps their ad targeting.

Generally to me it seems hard for new entrants to make any inroads for market
share when there's a self-perpetuating cycle like that.

[0] [https://www.gov.uk/government/news/cma-lifts-the-lid-on-
digi...](https://www.gov.uk/government/news/cma-lifts-the-lid-on-digital-
giants)

~~~
KorematsuFred
Every company is a monopoly based on how you define the market. Why should we
focus only on online ads ? Why not look at the entire ad spend and then see
what % is controlled by Google ?

By some logic the coffee shop in my block has a monopoly on coffee if their
market is the block. They are irrelevant if you look at the entire city.

~~~
tannhaeuser
That's too relativistic. If only AMZN, GOOG, and FB gain during coronavirus,
this clearly means there's need for action considering the perspective of
online-only advertising going forward. Especially if the success of TikTok as
the only competitor in the space has resulted in government influence.

~~~
Nasrudith
That sounds like an attempt to maintain "never my fault" consistency akin to
stating we need to beat all people at traffic stops instead of admitting that
beating people at traffic stops to look good on crime in the first place was
criminally wrong.

~~~
tannhaeuser
Not sure if I understand what you're saying, but it's not about criminal law,
whether anyone did something wrong, or punishment; rather it's about
maintaining market access.

~~~
Nasrudith
What I am saying is that Tiktok's treatment was clear capricious abuse of
power and shouldn't be taken as a standard or baseline.

------
curiousgal
Same senators who thought Google made iPhones? Not defending Google but I am
saying that most of those senators are not the holders of truth when it comes
to technology.

~~~
manigandham
That's not what happened. The question was asking why a child saw a family
member in an ad while playing a game. The Congressman just held up an iPhone
while asking but it had nothing to do with the hardware.

Of course there are numerous factors that may have contributed to the ad (and
maybe Google wasn't involved) but they went with the smartass answer and the
media ran with that narrative instead. It's not the greatest question but it's
much more valid than what people are assuming it was.

Video of the question (and notice the title):
[https://www.youtube.com/watch?v=wmuROTmazco&t=60](https://www.youtube.com/watch?v=wmuROTmazco&t=60)

~~~
rtx
How does this happen two different comments about one incident captured on
video.

~~~
nerdponx
Because people don't watch the original video, they read spin articles about
the incident.

------
dalbasal
EU courts have arrived at similar conclusions re: Adwords. Specifically, they
found that adwords does this sort of thing to its "search partners,"
competitors to google monetising via Adwords.

Google fought it, lost it, and then took its puny (in google terms) $1.5bn
fine as a (affordable) cost of doing business. They certainly would have be
happy to pay more than this for the gains they made by operating this way.

The issue with Antitrust as it is, is that the "crime" requires active proof
and specificity. Essentially, the (practically) inevitable side effects of
market dominance. You might need to prove specific violations like price
fixing or (like with Adwords, Amazon and other current cases) using market
data to gain an edge as a participant. You might need to prove market
dominance by "proving" price effects and other microeconomic effects.

The problem is, these are hard to prove. You certainly can't prove all of
them. But, they are a problem to the extent that monopolies exist. An
occasional, multi year case ending in a fine <5% of annual revenue... this is
a farce. Antitrust law is having almost no effects.

It doesn't help that software economics are very different, and that a lot of
both theory and legislation practically assumes that the "market" is
commodity-like. It just so happens that dominating literal "marketplaces" like
adwords, amazon marketplace, etc. is an area with precedents.

Meanwhile, it's not like we particularly care if the adwords marketplace is
efficient. There is simultaneously a massive public interest in 2020
monopolies, ooh. Otoh, the cases that prosecutors are making are very
disconnected from the actual public interest. The public isn't all that
interested in ad marketplaces being "better," cheaper or whatnot.

------
jeffbee
You can't count on senators to know what they are talking about. This article
from yesterday I found quite helpful in explaining the details of the
situation.

[https://truthonthemarket.com/2020/09/14/the-antitrust-
case-a...](https://truthonthemarket.com/2020/09/14/the-antitrust-case-against-
googles-adtech-business-explained/)

~~~
Guereric
Thanks, I learned much about the workings of ad space from reading it.

------
cletus
I like the definition of anticompetitive behaviour that revolves around using
power in one market to squash competitors in another.

Example: back in the 90s when Microsoft found itself at the pointy end of an
antitrust effort, they did things like:

\- Restricting OEMs from installing non-Windows OSs

\- When they didn't restrict it, they effectively did by having more
favourable pricing per license if Windows was the only OS you shipped

\- They did similar things with Office but it was less egregious

\- Restrictions on preinstalling Netscape

\- Restrictions on default browser

\- Using Windows to hinder competitors by breaking existing applications,
giving a head start to MS software or moving core functionality into the OS
(as they tried with IE)

Here are some theoretical examples of what anticompetitive behaviour might
look like:

\- Making AdWords usage exclusive (ie you couldn't also use Bing's version)

\- Making Doubleclick exclusive

\- Making either effectively exclusive by providing preferential pricing for
exclusive use

\- Making use of one ad platform require use of another

Antitrust doesn't exist to protect competitors from competition. People forget
that. There are (many) competing display ad platforms. There's less
competition in search (and thus search ads). But you can create your own
search engine as Bing and DDG are witness to (plus all the dead ones).

It's just that all the other search engines suck. Or, perhaps more accurately,
Google is seriously good at search in a way that's hard to replicate.

I personally don't think we should go down this road of dismantling companies
just because their competitors suck. That's the Yelp business model. Yelp
hasn't changed in 10 years. They have so many missed opportunities. But no,
"Google is stealing our content".

Microsoft has the financial muscle to fund a search engine. They do of course.
But Google is much better. Just because Microsoft sucks it doesn't
(necessarily) mean that Google is a problem.

~~~
jeffbee
> Antitrust doesn't exist to protect competitors from competition

That's in America. In Europe, it actually does.

------
nl
The headline doesn't quite convey what the argument seems to be: _Google is
involved in nearly every step in the chain between advertisers seeking to
place their ads and the publishers selling space on their websites. Hawley
pointed to findings from the United Kingdom 's antitrust regulator showing
that Google has dominant positions in various parts of the ad technology
market, ranging from 40% to more than 90%._

There could be some merit in that argument.

But the way it is usually made ("Google (or Google+FB) monopolizes the digital
ad market") seems easy to refute: just look at the demand for TikTok, and
Snapchat is pulling in over $500M (revenue) a quarter and back to robust
growth after some missteps a year or two ago.

And Twitch ads & sponsorships are huge.

Even the UK investigation found Google+FB only controlled 70% of the market
(which I believe is less than the major newspaper publishers controlled in the
newspaper heyday)

------
rch
My impressession is that politicians prefer Facebook over Google.

~~~
mhh__
Google don't seem to be as interested in playing the game as facebook.

~~~
bjo590
They are all playing the same game, but the niches they found success force
them to play differently. Google tried to take over fb.com with g+. FB tried
to attack android with fb phones. They both are fighting over direct direct
messaging with Hangouts/messenger/whatsapp. There is just as much politics in
Youtube as there is in Facebook.

------
LatteLazy
No one seems to agree on what the problem is or what the solution is. Any
"solutions" are complex and it's hard to predict the outcomes of
implementation. The motives of politicians implimenting these solutions have
never been less reliable or more corrupt or short-term-ist as far as I know.
And in the background we have problems 100 times larger than whatever Google
is meant to be: the collapse of democracy, climate change, Chinas rise in
power and fall in decency etc.

------
mensetmanusman
If Congress cuts Google into pieces, they should be consistent and set some
sort of maximum market value (as a percentage of US GDP).

That way, once companies reach a certain size, they can expect a split.

I actually think this would be good for society, because it would shuffle
things up consistently to force new ideas. Also, smaller companies can grow
more effectively, so the stock market should enjoy that as well.

~~~
wuunderbar
And then how do US companies then compete with overseas companies that don’t
have this setback?

~~~
throwaways885
Other than the US regulating the shit out of overseas companies like China
does, they can't.

------
eqtn
make targeted advertising opt in. Make the opt in scary like how android
enables the installation of apk's from unknown sources.

~~~
amelius
Just ban targeted advertising, but allow websites that ask the user to tell
about themselves in order to get tailored product recommendations.

~~~
justaguyhere
Or educate users to pay for quality and make quality websites/products so we
don't have to depend on advertising. This would be insanely difficult to pull
off, but it is at least worth a try.

The incumbents have trained users to expect everything on the internet for
free. People think they pay $75 (or whatever their internet connection costs)
and that should cover everything - news, search, email...

How many people even pay for super important stuff like email? No wonder ads
are everywhere, like bad smell.

~~~
Nasrudith
That sounds like you are asking the customer to serve the market instead of
the market to serve the customer.

------
kirillzubovsky
Despite what Government thinks of Google, I think holding antitrust hearings
is just a political theatre. At the end of the day they might slap Google with
a penalty which by all accounts will be just a margin of error tax write off.
If the government really wants to encourage competition, they need to enable
creation of new businesses, plain and simple.

Google isn't a Monopoly as much as they just have the most eyeballs because
they built a great company. But Facebook, Pinterest, Snapchat, Reddit, and a
few dozen smaller players, are all the answer to Google's monopoly.

I've just spent a few days testing different ad segments, and for the one I
was doing, it turns out Reddit was 5x cheaper than the next cheapest source.
Cool right?

What we need is more companies that are able to capture eyeballs, and an
efficient mechanism to distribute ads among them.

~~~
johnward
> Reddit was 5x cheaper than the next cheapest source

I applaud anyone that can monetize the reddit audience. I've dabbled in their
ad platform and had no luck at all.

------
deepstack
The internet the way is currently design will resulted in centralisation and
end up with monopoly or oligopoly.

~~~
adrianN
Any system in which network effects and winner-takes-all exist result in
centralization and monopoly. I don't think you could design the Internet
differently to avoid this.

~~~
rcMgD2BwE72F
Ban indirect monetization of private data if it is not an opt-in feature
separated from the rest.

~~~
dandelo1953
This!

I am completely confounded that I have not heard of any real legislative
proposals to establish a clear separation of duties in regards storing data
and selling it.

There is an obvious conflict of interest if you both have my data and are
granted free reign to do what you want with it (via click through agreements
that modern society is now dependent upon) you have unfair leverage over me.

If you are able to do this en mass without much competition... I'm thankful
things haven't gotten worse than they are.

Something similar to Glass-Steagall is desperately needed in the digital era.
Hopefully somebody is working on it...

------
tw04
I find it ridiculously disingenuous of the DOJ to pursue Google for "monopoly"
of the advertising market, while allowing Sinclair Broadcasting to do
literally the exact same thing to local TV stations and the related local
advertising markets. While this may not be a political witch hunt - it sure
quacks like a duck.

[https://en.wikipedia.org/wiki/Sinclair_Broadcast_Group](https://en.wikipedia.org/wiki/Sinclair_Broadcast_Group)

~~~
seanhunter
The DOJ should pursue both companies if they think they are illegal
monopolies. They don't need to do things serially. There may be a non-obvious
reason that Sinclair isn't (visibly) being pursued.

------
blablablerg
If Google buys them some more, then the senators might buy it.

------
Animats
Google doesn't quite have a monopoly, but Google, Facebook, and Amazon
together have 70% of online ad spend.[1]

[1] [https://marketingland.com/almost-70-of-digital-ad-
spending-g...](https://marketingland.com/almost-70-of-digital-ad-spending-
going-to-google-facebook-amazon-says-analyst-firm-262565)

------
pruthvishetty
Of course. There are some other players. Facebook, being one of the biggest.
Twitter, Snap, Tiktok, to name a few.

------
knolax
Controversial opinion here but I support monopolies. Compare the innovation
that came out of Bell Labs when Bell had a monopoly vs. the stagnation that
exists with the current telecom oligpoly. Most tech companies are natural
monopolies so they're never going to exist on a purely competitive market, so
it's a choice between oligpoly and monopoly, in which case the latter is far
better for funding research.

~~~
belly_joe
I think this is a good point that doesn't get discussed enough.

Was Bell bad for the consumer? Yes, probably. Was the benefit of the increase
in innovation a net benefit for society when compared to deadweight loss
incurred by monopoly pricing? I don't know.

There is almost no way to answer this question in a rigorous manner, and yet
it's extremely important for policy. The only thing I can think of is
experiment over a long period of time between distinct geographies and see
what happens.

~~~
thundergolfer
In what way was Bell Labs bad for the consumer? I don’t know the history.

~~~
zmflavius
Not Bell Labs specifically, but its parent company AT&T had a vertically
integrated monopoly which gave them control over essentially all
communications technology, and also virtually all telephone service, which it
used to dictate (high) prices and constrain the growth of their competitors.

Now, the monopoly profits AT&T may have been worth it, because without them,
AT&T would not have funded Bell Labs creating among other things C, Unix, the
transistor, the laser, and photovoltaic solar cells.

I will just note that if you want to measure it _was_ worth it, consider what
the GNU in GNU Linux is commonly held to stand for.

------
blippage
Here's a simple heuristic for determining if a company has a monopoly: if they
say that they have a monopoly, then they don't; if they say that they don't,
then they do.

Original author unknown.

~~~
quest88
My app with 0 customers is not a monopoly. Am I now a monopoly?

~~~
jtsiskin
This isn’t what the expression is referring to

------
RockmanZero
I don't buy it neither

------
mtgx
What did they think was going to happen when Google bought the largest mobile
ad network by far for both Android and iOS a decade ago? (AdMob)

Antitrust agencies and governments in general need to set more pro-active
ground rules that attempt to prevent monopolies from even happening in the
first place.

Punishing them after the fact is both ineffective and too disruptive. I'd
rather they didn't allow Google to buy AdMob instead of forcing them to spin
it off now. I mean, sure, I'll take it. Still better than nothing. But this
shouldn't have been needed because AdMob should have remained a competitor to
Google in the mobile ads space, not a division of it.

If large corporations think they have made so much money from their core
market that now it's time to spread to new markets, then they must also have
the money to start their own competitor in that market from scratch. They
shouldn't be allowed to just buy everyone up from that new market.

I think we'd have WAY healthier "free markets" \- and more importantly, high
competition - if this one thing was implemented.

~~~
dialtone
As much as I agree with the core of what you are saying, it isn't AdMob that
is the issue. It's that Google controls both the marketplace, the pub-side and
the buy-side, as well as the browser and the devices used to experience ads.
Apple is now aiming for a similar level of control in the ad space very
blatantly using their ownership of the platform to do what they want to power
themselves up.

This vertical integration in the space is what drives the anti-competitive
behavior, if the Google buy-side were a separate company that happened to
acquire AdMob there would be no real issues as they don't control the whole
stack.

FB on the other hand sells a service and lets companies use their APIs to
integrate as well as competing with them via their internal sales team.

These companies can do this only because you are forced to work with them
because they own such a large part of internet traffic, not because they offer
particularly good services or have better technology or prices.

~~~
wbl
Traditionally vertical integration is fine and horizontal suspicious in
antitrust law. Why are ads different?

~~~
dialtone
I’m not sure how you can say that. The first examples of anti trust action
have been about vertical integration and ownership of critical infrastructure
by a market player not allowing entrance by others because it’s not easy to
lay down more railway or more phone cables or telegraph cables. That’s the
case for the web advertising situation.

