The Telegraph: Google faces insider-trading claims over digital advertising

The Telegraph: Google faces insider-trading claims over digital advertising

Article by Hannah Boland for The Telegraph - published 11 April 2021

Google has been accused of insider trading in the digital advertising market in court documents which claim it ran a programme that allegedly gave it an advantage over rivals.

The tech firm-which is battling a US antitrust case over its alleged dominant position-is said to have run a scheme called "Project Bernanke" in which it used access to publishers' servers to gain the upper hand in price negotiations with advertisers.

Lawyers for the state of Texas alleged that this amounted to Google engaging in insider trading in digital advertising markets and gave it an unfair advantage over rival ad-buying tools, according to the Wall Street Journal.

The claims were made in court documents released online, which were later removed from the internet and replaced by a redacted version with references to the project scrubbed out.

This redacted version contained a statement from Google that its "advertiser-facing tools, like competitive buying tools, use historical data to attempt to model the optimal bids for impressions to improve win rates for advertisers".

Google operates a large advertising exchange , where publishers and advertisers buy and sell adverts, and also represents those buyers and sellers on the exchange. The company also sells adverts on YouTube and Google's search engine. According to Google, it paid out more than $14bn to publishing partners in its ad network in 2018, up from $10bn in 2015. Publishers keep around 70pc of the revenue when using Google products-higher than the industry average.

Google denied that there was anything inappropriate about using the exclusive information it possessed to inform bids, calling it "comparable to data maintained by other buying tools."

The company said that the Texas complaint "misrepresents many aspects of our ad tech business".

A spokesman added: "We look forward to making our case in court."

Industry figures are now calling for Britain's new Digital Markets Unit watchdog (DMU) to subject Google to more rigorous scrutiny.

James Rosewell from Marketers for an Open Web, a group of news publishers and advertising companies, urged the regulator to act quickly.

He said: "We have an effective monopoly that sits on not just the buy and sell side, but also facilitates the auction. "Google has so much data, there's an information asymmetry with the rest of the market participants."

"It needs to be looked at by the regulator."

The new unit is part of the Competition and Markets Authority, which conducted a market study on digital advertising that concluded last year. It decided against a formal investigation because this would increase the burden on businesses during the pandemic.

The CMA said it did not find evidence to suggest Google was winning ads at a lower price than competitors.

Damian Collins, a Conservative MP and former chairman of the digital select committee, said the latest claims over Project Bernanke appeared to be "yet another example of how Google is using its position of both gatekeeper and dominant player in the digital ads market to stifle competition".

He said this should "definitely be taken into account by the new DMU when it examines the digital ads market".

Mr Collins said: "It's important that we give the DMU the right powers to be able to identify companies using their market power to strategically prevent competition and I hope we'll get the chance to debate it in Parliament in the new session".

Google's digital advertising tools have faced heavy criticism as the company prepares to block adverts that use cookies to record visitors' browsing history.

Critics have argued Google is unfairly using privacy tools to boost its own ad business. As part of its shake-up of cookies, Google is working on technology that would show adverts based on placing users in broad interest groups, such as young mothers.

Google has rebuffed these claims, saying efforts to get relevant ads to consumers have prompted a "proliferation of individual user data across thousands of companies" which has "led to an erosion of trust".

Copyright 2019 Damian Collins. All rights reserved

Promoted by Russell Tillson for and on behalf of Damian Collins, both of Folkestone & Hythe Conservative Association both at 4 West Cliff Gardens, Folkestone, Kent CT20 1SP

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