
Google winning 98% ad spots it auctions off, after order to treat others equally - hadenew119
https://www.wsj.com/articles/google-rivals-ask-eu-to-toughen-measures-in-antitrust-case-1517334038?mod=e2tw
======
ucaetano
> Kelkoo CEO Richard Stables says the firm’s revenue from general search
> traffic dropped by 62% last year, to €2.3 million. In 2018, he projects a
> two-thirds drop to €800,000.

I decided to go to [http://www.kelkoo.co.uk/](http://www.kelkoo.co.uk/) to
check it out. This website is so clearly a scam created for this antitrust
case.

I went ahead to compare two cameras: the Canon EOS 1D X Mark II (a $4k camera)
to a Canon Ixus 275 HS ($200 camera), here are the descriptions of each:

Canon EOS 1D X Mark II

 _The Canon EOS 1D X Mark II offers a good sensor resolution, allowing you to
take an astonishing quality of picture. The Canon EOS 1D X Mark II has a very
reasonable weight for this type of camera, with its LCD display providing a
decent screen size compared to other similar digital cameras. The Canon EOS 1D
X Mark II comes with internal memory, which is extendable with an external
memory card to match the size of your photo and video collection. The lens
aperture (the 'eye of the camera'), which makes your lens contract or dilate
to allow more or less light in, is good for a digital camera in this price
bracket. You can compare prices for the Canon EOS 1D X Mark II, read the full
product details and check out expert reviews at our web site._

Canon Ixus 275 HS

 _The Canon Ixus 275 HS offers a good sensor resolution, allowing you to take
an astonishing quality of picture. The Canon Ixus 275 HS has a very reasonable
weight for this type of camera, with its LCD display providing a decent screen
size compared to other similar digital cameras. The Canon Ixus 275 HS comes
with internal memory, which is extendable with an external memory card to
match the size of your photo and video collection. The lens aperture (the 'eye
of the camera'), which makes your lens contract or dilate to allow more or
less light in, is good for a digital camera in this price bracket. You can
compare prices for the Canon Ixus 275 HS, read the full product details and
check out expert reviews at our web site._

This is pure bullshit, and bullshit journalism.

~~~
sqdbps
>This is pure bullshit, and bullshit journalism.

It's the "Wall Street Journal", a Murdoch business publication that approves
of every business as long as it isn't Google.

~~~
dsacco
_> It's the "Wall Street Journal", a Murdoch business publication that
approves of every business as long as it isn't Google._

Please don't bring politics into this. If you have a substantive criticism
about the WSJ's article, make that criticism. The one you've made is
ideological and unpersuasive.

~~~
jacksmith21006
Is this honestly a question? Murdoch disdain for Google is well known.

~~~
dsacco
Rupert Murdoch can have well documented dislike for Google without his dislike
intrinsically kneecapping the Wall Street Journal’s journalistic integrity.
The comment I replied to criticizes the article we’re discussing
_categorically_ by origin, instead of _specifically_ on merits.

Murdoch’s agenda can be a thesis statement for _why_ the WSJ has poor
journalistic integrity with respect to Google, but it doesn't _demonstrate_
that failing on its own, nor is merely calling out that someone in a position
of power has an agenda a well-reasoned thesis.

Basically, it’s not contributing anything more interesting to the discussion,
and is just going to attract other comments or upvotes that agree. That’s not
insightful discussion, it’s just ingroup commiseration.

~~~
peoplewindow
Appreciate the demand for precision, but you won't get more than anecdotes in
this case.

I used to work for Google and I remember the 180 degree turn in WSJ's output
after Murdoch gave a speech in which he announced Google News was killing
journalism and the future of newspapers was the iPad (this was just after the
iPad was new). Suddenly bullshit articles about us started appearing
constantly.

The first one I remember was about the Safari cookie case, if anyone remembers
that. Basically Safari had shipped a third party cookie filter that broke the
web as a "privacy" feature. Because it didn't work and couldn't ever work
Apple started adding in bizarre documented workarounds that were basically
bugs in the filter, but they chose to document rather than fix, so important
apps like the Facebook like button would start working again. Google started
using these workarounds _as was intended by Apple_ in order to fix its own
products. The WSJ paid some academics to go dirt digging and they found this,
announced Google was hacking Safari's filter etc, Apple exploited the
situation, this caused regulators to go and whack us and so on.

It's quite amazing how easily manipulated governments and especially
regulators are by newspapers. My father used to hate Murdoch with a passion
(he was in the tv biz), and after that I understood why... the power wielded
by people who own newspapers is phenomenal. And they do not hesitate to abuse
it!

~~~
pas
> this caused regulators to go and whack us and so on.

proof? links? source?

Google is big, does and did a lot of things that could be a problem in the
eyes of regulators.

~~~
peoplewindow
It was specifically about the Safari cookies issue.

On the original story:

[http://www.bbc.com/news/technology-17076670](http://www.bbc.com/news/technology-17076670)

On the resulting fine:

[http://www.bbc.com/news/technology-19200279](http://www.bbc.com/news/technology-19200279)

------
natch
Tell me if I've got this right:

Say you have some businesses in industry X that all rely on advertising.

Say one of those businesses also happens to own the dominant advertising
platform that businesses in industry X need to use, in order to effectively
find customers. (Special note for those subset of HN readers who tend not to
read: Yes there may be other platforms, but before you present that as an
objection, note I just said let's say they need to use this one in order to
effectively find customers.)

In this setup, the business that owns the advertising platform has an
advantage over all other businesses in industry X, because it pays itself
advertising revenue, where the other companies have to pay their competitor.
So money is always being siphoned off to pay the advertising platform, with a
cost to most businesses but a (near) zero cost to the business owning the
platform. We can assume the platform is already paid for out of profits made
from advertisers in industries A, B, C, X, Y, and Z.

It seems to me this is a fundamentally rigged game (rigged in fact, not
necessarily by intent) in which all other things being equal, the owner of the
advertising platform always has the upper hand. Even if the bidding process is
made "fair."

~~~
savanaly
>In this setup, the business that owns the advertising platform has an
advantage over all other businesses in industry X, because it pays itself
advertising revenue, where the other companies have to pay their competitor.
So money is always being siphoned off to pay the advertising platform, with a
cost to most businesses but a (near) zero cost to the business owning the
platform.

I don't think this is quite right. If I have a fixed quantity to sell
(approximately true for advertising space on the web) then units I buy from
myself cost me the same as they would cost other companies.

Suppose I have $100, and 5 advertising spots worth $20 each. I have two
options here:

a) If I sell the spots to others then I have $100 + 5 * $20 = $200.

b) If I "sell" the spots to myself (the other wing of my company that needs to
advertise) I have $100 and whatever 5 advertising spots are worth.

You are representing the situation of b as if it were "free advertising", thus
giving my company an unfair advantage. But in fact, compared with situation a,
it is clear I paid for the advertising, as I am up 5 spots and down $100 I
could have obtained by selling the spots. So advertising's cost is not lower
just because I also own the company that sells the advertising spots. If I'm
better off than someone without advertising spots that's because advertising
spots are worth something, not because of any purported shady synergy I get
from owning both the advertising spots and the company that needs them.

~~~
comex
But let’s say the spots are actually only worth $10, in terms of the ability
to generate revenue. If you sell them to someone else for $20, you win because
you get more money than the slots were worth. If you sell them to yourself for
$20, you don’t lose any money and you can still make $10 (which is more than
the slots _originally_ cost you).

However, Google claims it is not doing this:

> As part of the change, Google said it would operate its shopping-ad service
> as if it were a profitable, standalone business to ensure doesn’t overbid
> for ads.

Still, “profitable” could be by the slimmest of margins, and Google would
still have a strong incentive to keep the “standalone” business going (that
is, the profit to their _other_ business), whereas an independent company
wouldn’t.

~~~
daveFNbuck
If you sell them to yourself for $20, you have your original $100, plus the
$10 * 5 dollars in ads, for a total of $150. Because $150 is less than $200,
this means that diverting the ads to yourself loses you money.

------
test6554
Google: We compete against our competitors to see who can pay us the most
money. And our competitors are complaining that they can't pay us as much
money as we pay ourselves.

~~~
Beltiras
Exactly. Google can artificially raise the price beyond their competitors
means.

------
NelsonMinar
It's kind of a clever solution by Google, if a bit troll. They can make that
ad auction 100% fair and still win it because they have more expertise on
running efficient ad campaigns than anyone. IMHO that just doubles down on the
danger of their monopoly power, but perhaps it complies with the antitrust
requirements.

~~~
londons_explore
Most importantly they have more _information_ about each auction than their
competitors.

They know for each user every other search result clicked. They know what the
users interests are. They know which users prefer stuff delivered fast, which
prefer the cheapest items, and which will be wooed by 50% off deals.

They can use that data to present the best possible results, get the highest
click through rate, and sell the most products.

Therefore they can afford to pay more for the ad spots than someone without
that data, who gets less precisely targeted ads, and fewer product sales per
advertisement shown.

~~~
kyrra
Ad auctions have 100ms to reply to an auction request.[0] This does not give
you a lot of time to display the perfect ad for a given customer or search.
Especially when you need to do this at the volume that Google shoes ads.

[0] [https://www.quora.com/How-do-ad-exchanges-and-real-time-
bidd...](https://www.quora.com/How-do-ad-exchanges-and-real-time-bidding-
platforms-work)

~~~
tallanvor
That's unlikely how it actually works on Google's site.

Google doesn't have to connect to an advertiser's network, they already have
the ad information and all targeting and bidding information, so they can
mostly compute the results ahead of time and only do last minute checks for
winners based on, for example, whether the most likely winners have exceeded
daily limits and such.

------
danjoc
This is similar to the old eBay scam where the seller bid on his own items
under a different account. If the price was too low, the seller could always
bid to drive the price up. If the seller won, it didn't matter. The seller is
just relisting the item again after paying himself or cancelling.

I can't imagine how anyone thought this would work; Google participating in
their own auctions. At least on eBay, sellers tried to hide the fact that the
game was rigged.

~~~
luispedrocoelho
There are variations where this works out in google's favor, but there is a
big difference to the ebay situation where you just keep relisting the same
item until it sells for a "good enough" price: each ad impression is only sold
once, there is no relisting.

------
dsl
Google is exceedingly good at extracting value from every ad impression. Even
if the marketplace wasn't ran by Google, I have no doubt that they would still
be bidding high enough to get the vast majority of impressions simply because
they have a higher threshold at which bidding is profitable.

------
zitterbewegung
Which is more expensive. The new system that google is designing? The fine
that they will have to pay? Or the oversight they will have to have to comply
with EU law? (or some combination of the previous?).

On the other hand could Google just quit putting ads on requests from the EU?

~~~
londons_explore
The system is cheap (it cost ~$15M of compute resources and $5M of engineering
time).

The fine is much larger.

The oversight costs nothing now, but they're worried it might prevent them
innovating in the future (as happened with Google Books)

~~~
muro
Anyone can pull random numbers out of their ... :)

------
deecewan
I just don't _really_ get why Google shouldn't be allowed to advertise on
their own platform however they want. Say what you want, but there _are_ other
options for people to use to advertise if they aren't happy with Google.

Google is powerful because they provided a product _so good_ that everyone
used it. And now they're making other services that are also good, otherwise
people would try the second link on the page. And, like all their competitors,
they're advertising their new product.

If I owned a building next to a highway, I wouldn't have to auction off the
side of that building for advertising - I can put my own ad on there (as far
as I'm aware). I also think that dining Google billions of dollars is a tad
ridiculous. Is there truly that much lost opportunity from whatever they're
accused of doing?

------
SubiculumCode
Paywalled, so obvious question. Does Google's deep pockets just bid high?

~~~
kyrra
I believe if you access it via twitter or facebook, WSJ still lets you in. Try
the link from
[https://twitter.com/nat_droz/status/958396191531728896](https://twitter.com/nat_droz/status/958396191531728896)

~~~
dugmartin
I have this bookmarklet I use when I hit paywalls and I don't care if Facebook
knows I'm interested in it:

    
    
        javascript:location.href='http://facebook.com/l.php?u='+encodeURIComponent(location.href)

~~~
fwdpropaganda
How about this:

[https://addons.mozilla.org/en-US/firefox/addon/read-ft-
wsj/](https://addons.mozilla.org/en-US/firefox/addon/read-ft-wsj/)

~~~
thetwentyone
The page says that it's GNU licensed but where I can I find the source?

~~~
fwdpropaganda
The .xpi file is essentially a .zip in disguise (all Firefox add-ons work like
this). Unzip it as normal and read the source. Aside from the manifest, it's 5
lines.

~~~
thetwentyone
Got it, thanks for explaining that. I didn't want to download it before
reviewing.

------
ggggtez
I'm not convinced that percent of ad spots is the right measure of market
share. But it's paywalled, so who knows.

Edit: ok so it's 98% of _2500 arbitrary keywords_. Come on now, that's
obviously a bs metric.

------
starwind0
Can we not link paywalls?

~~~
Whitestrake
While it doesn't address your request not to link them in the first place...
For anyone looking to bypass the paywalls when they are linked: you can copy
the article's title and search Google for `site:wsj.com [title]`.

~~~
alant
Worked for me. what? Bypassing the paywwall is this simple? Does this work for
other news sites with paywall?

~~~
Whitestrake
Most news sites, yes. They want Google's crawler to crawl their full text, and
Google responds poorly to sites that treat their crawler differently than real
search users, so if your Referer (sic) header is Google, news sites will often
give you the whole article.

