Alphabet Inc’s Google has made significant changes to its advertising platform that restrict the amount of information marketers have about their spending, according to a marketing expert in an ongoing antitrust trial against the search giant. Kinshuk Jerath, a marketing expert from Columbia Business School, testified in federal court in Washington on behalf of the US Justice Department, stating that “Google controls the rules and influences the outcomes of its auctions and these auctions are a black box to advertisers.” Jerath explained that in September 2020, Google altered the information they provide to advertisers regarding the text ads that appear on the search results page, resulting in a reduction of data by approximately 20% or more. Google claimed that these changes were made to protect user privacy.
Consequently, advertisers now have less insight into the ads they are purchasing. Combined with another change by Google, it has become harder for advertisers to opt-out of specific advertising auctions, resulting in higher prices. The US Justice Department argues that Google aims to maintain its monopoly over online search and online search advertising. Search ads make up more than 60% of Google’s total revenue, amounting to over $100 billion in 2020. Internal emails produced as part of the litigation showed that executives from Bank of America Corp labeled this change as one of the most extreme examples of Google removing transparency in the name of privacy.
The reduced information provided by Google harms advertisers by making it difficult for them to know which keywords are essential and useful for them. According to Jerath, advertisers were not informed of the queries they were purchasing for 20% of their spending, which is crucial information for them. Additionally, Google introduced a change called “expanded exact match,” which automatically adds additional keywords such as synonyms or misspellings to an advertiser’s chosen terms. Advertisers are unable to opt-out of participating in expanded exact match auctions, except for negative keywords. Jerath highlighted that opting out of expanded match has become time-consuming, resulting in “unwanted ad spend by advertisers.”
These combined changes have led to “thicker auctions,” diminishing advertiser control in the process. The trial continues.
