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The US accuses Google of unfair pricing of online ad placements

The US accuses Google of unfair pricing of online ad placements

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Google has been accused of using illegal techniques to push its online advertising prices by the US Justice Department.

In response, Google executive Adam Juda said the company uses a formula, which includes the quality of an ad, to decide who wins auctions. This formula then helps Google determine ad placements on websites, according to Reuters.

The US Justice Department believes that Google is manipulating these online auctions with these formulas to skew favourable results towards itself.

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Justice Department’s attorney David Dahlquist reportedly asked Juda if he agreed with a document that Google had prepared for the European Union, which stated that Google can directly affect pricing through tunings of its auction mechanisms. Juda said he did not. When asked if tuning can impact pricing, Juda said that it can. However, Juda clarified that what can be tuned is the rough formula that gives an advertisement long-term value.

His trial began earlier this week on Tuesday and continued into Wednesday.

Dahlquist reportedly questioned Juda about whether Google had introduced changes to ad sales in a way that raised the cost-per-click by a consumer that advertisers pay, to which he responded that the practice was a fair one. However, his answer reportedly contradicted that which he gave to Wendy Waszmer, a lawyer for Google. When Waszmer asked if there were ways that Google’s ads quality team could raise its prices unilaterally, Juda said it could not.

Google's advertising business has been criticized by advertisers and website publishers for a lack of transparency, with both accusing Google of siphoning off too much revenue.

The testimony on advertising is a change from previous testimony that has focused on the billions of dollars that Google has spent to keep its search engine the default on smartphones and other devices

This is not the first we have heard of Google misleading advertisers. Earlier this year, the company was accused of misleading companies including Fortune 500 brands, the US federal government, and many small businesses with regards to its ad viewership. 

The misalignment likely came from Google’s proprietary TrueView skippable in-stream video ads which Adalytics estimates cost media buyers up to "billions of digital ad dollars", which were ultimately spent on "small, muted, out-stream, auto-playing or interstitial video ad units running on independent websites and mobile apps".

TrueView is Google's proprietary cost-per-view ad format that is displayed on YouTube, apps, and across the web. With TrueView, advertisers only pay when people actually view their ads rather than impressions. That said, TrueView will ask users if they want to skip the video ad they are watching after five seconds.

Adalytics said that it found out that many advertisers who were paying for TrueView ads outside YouTube were not getting what they paid for and additionally, not getting consumer experience that meets Google's stated quality standards.

"For example, many TrueView in-stream ads were served muted and auto-playing as out-stream video or as obscured video players on independent sites. Often, there was little to no organic video media content between ads, the video units simply played ads only," said Adalytics.

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