Google: Complete control over advertising helps against fraud
Google's behavior reduces competition in the online advertising chain. There are good reasons for this, says the data company in court.
(Image: Daniel AJ Sokolov)
There are good reasons for Google preventing competition in online advertising, two Google managers told the US Federal District Court for Eastern Virginia this week. There, Google has to defend itself against an antitrust lawsuit brought by the US government and several US states. The plaintiffs accuse Google of manipulating the market for online advertising for years, buying up potential competitors and taking other measures to prevent competition in all parts of the online advertising chain. Google's market share is over 90 percent, according to the lawsuit filed at the beginning of 2023.
Google dominates the online advertising market in at least three ways: through Google Ads in software for advertisers, through the advertising exchange Google AdX, and on the side of website and app operators through the ad server DFP (Doubleclick for Publishers). Google defends the closed system with a security argument, among others: fraudsters are constantly trying to abuse online advertising. A closed system, controlled by Google on all sides of the market, makes defense easier.
This is what Googlers Per Bjorke and Alejandro Borgia said this week, as reported by The Verge. Bjorke is senior product manager for Ad Traffic Quality, Borgia for Ad Safety. According to their statements, 15,000 to 20,000 website or app operators try to register with Google every day. The problem: some websites and apps are only created to be populated with advertising, which is then accessed by bots.
When used on a large scale, they can earn millions – harming advertisers, who pay for advertising that nobody sees. At the same time, there are contemporaries who try to place advertisements for all kinds of fraud, malware, defamation or other illegal deception. Google is constantly blocking malicious ads. Controlling both sides of the market helps to ward off the bad guys, both gentlemen assured.
Think about data protection
The Googlers also use data protection as an argument: end users can make settings in Google services to determine whether and how their data is used for advertising purposes. If Google had to work with other advertising exchanges, it would not be able to guarantee compliance with data protection settings.
As an example of advertising fraud, the witnesses referred to the 3ve botnet, which had clicked on up to twelve billion advertisements per day by 2018. Google had compensated the advertisers with more than 30 million dollars. The company was able to recover a good portion of this from the perpetrators. In 2018, six Russians and two Kazakhs were charged with advertising fraud in the USA (USA v. Aleksandr Zhukov et al, US Federal District Court for Eastern New York, case no. 18-CR-633); one Russian and both Kazakhs were arrested in other countries and extradited to the USA. They were sentenced there. Aleksandr Zhukov, who also operated the Methbot botnet, received ten years in prison. Sergei Ovsyannikov received three years and Yevgeny Timchenko two years and four months. Millions of dollars were seized from the perpetrators' accounts, and the convicts will have to pay off millions more for the rest of their lives. The other five Russians have not yet been caught.
Several proceedings
The US Federal District Court for Eastern Virginia currently has to clarify how the various types of online advertising are to be defined as markets, how Google has acquired its considerable market share, what means it uses to defend them and whether Google has abused its dominance in one market to gain advantages in another market. That would be illegal. Google denies wrongdoing. Certain economic reasons can justify conduct under competition law.
The case is called USA et al v Google and is pending in the US Federal District Court for Eastern Virginia under case number 1:23-cv-00108. It is not to be confused with an antitrust case of the same name pending in the U.S. District Court for the District of Columbia under case number 1:20-cv-03010. That court has already determined that Google's search engine operations are illegal, but has not yet decided what remedies it will impose.
Allegations of abuse of an advertising monopoly, including insider trading in online advertising space and the formation of a kind of cartel with Facebook, are the subject of another lawsuit that has been pending in the US Federal District Court for Eastern Texas since the end of 2020. The original plaintiffs are the governments of Texas and nine other US states, which accuse Google of countless willful violations of competition and consumer protection law. The proceedings are due to enter the courtroom phase next March. Meanwhile, other governments have joined the lawsuit(Texas et al v Google, Ref. 1:21-cv-06841).
- The complaint in question USA v Google regarding online advertising in general
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