Google debunks 7 'misleading claims' about FB ad buying arrangement amidst lawsuit

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Google has defended allegations of its ad buying arrangement with Facebook being anti-competitive, with director, economic policy Adam Cohen clearing up seven myths in a recent blog post. Cohen said it wanted to "set the record straight" as a result of the "misleading claims that have been circulating". This comes after the Wall Street Journal reported last December that 10 US states are suing Google for reportedly running "an illegal digital-advertising monopoly" and bringing on board Facebook for "an alleged deal to rig ad auctions". The lawsuit is led by Texas Attorney General Ken Paxton who said last year that Google is "brazenly abusing its monopolistic power" and encouraging Facebook to agree to a deal "that undermines the heart of the competitive process", WSJ reported.

Meanwhile, the New York Times recently reported that Facebook supporting header bidding was viewed by Google as "an existential threat" that called for "an all hands on deck approach". In 2017, Facebook was testing header bidding with publishers such as The Washington Post, Forbes, and The Daily Mail, reported NYT, which added that this later ended when it signed a deal with Google in 2018.

As part of the deal, Facebook had 300 milliseconds to bid for ads while Google's partner companies usually had just 160 milliseconds or less to bid, NYT said, quoting court documents. The deal also allegedly offered Facebook direct billing relationships with sites where ads would be placed. On the other hand, Google controlled pricing information for its other partners. At the same time, court documents viewed by NYT showed that Google helped Facebook identify 80% of mobile users and 60% of web users, but other partners did not have access to such data on who was being shown ads.

Both WSJ and NYT said Google's internal code name for its deal with Facebook referenced Star Wars characters. Although Google previously denied being involved in any anti-competitive behaviour, the company is now attempting to debunk the myths that have surfaced over the past few weeks.

The PR move is similar to WhatsApp's recent clarification of its privacy policy update, which saw the company listing out a series of things it will not be able to do post-update.

"AG Paxton tries to paint Google’s involvement in this industry as nefarious. The opposite is true. Unlike some B2B companies in this space, a consumer internet company like Google has an incentive to maintain a positive user experience and a sustainable internet that works for all—consumers, advertisers and publishers," Google's Cohen said, adding that there has been an "inaccurate portrayal" of its open-bidding agreement with Facebook.

Myth 1: Google dominates the online ad landscape for image-based web display ads

In the blog post, Cohen said the adtech industry is "incredibly crowded and competitive", with Google having to compete with rivals such as Adobe, Amazon, AT&T, Facebook, Oracle, Twitter, and Verizon. This competition has made ads more affordable and relevant, reduced adtech fees, and expanded options for publishers and advertisers, Cohen said.

He explained that Facebook is the largest seller of display ads, citing a chart by eMarketer published last year, and that Amazon surpassed Google as the preferred ad buying platform last December.

"We compete fiercely with those companies and others such as Mediaocean, Amobee, MediaMath, Centro, Magnite, The Trade Desk, Index Exchange, OpenX, PubMatic and countless more. A growing number of retail brands such as Walmart, Walgreens, Best Buy, Kroger and Target are also offering their own ad tech," Cohen said.

Myth 2: Google "extracts a very high ... percent of the ad dollars otherwise flowing to online publishers"

According to Cohen in the blog post, Google's adtech fees are lower than reported industry averages, with publishers keeping about 70% of the revenue when using its products. For some types of advertising, Cohen said publishers keep even more - up to 95% - citing a 2020 analysis it did of revenue data from the top 100 news organisations globally.

Myth 3: Google created an alternative to header bidding that "secretly stacks the deck in Google’s favour"

Cohen explained that open bidding was created to address the drawbacks of header bidding. "Header bidding auctions take place within the browser, on your computer or mobile phone, so they require the device to use more data in order to work. This can lead to problems like webpages taking longer to load and device batteries draining faster," he said.

He added that the multilayered complexity of header bidding can lead to fraud and other problems that can artificially increase prices for advertisers, as well as billing discrepancies that can hurt publisher revenue. Hence, the alternative, open bidding, was created to run within the ad server instead of one's device. According to Cohen, this solves several problems associated with header bidding.

He stressed that open bidding provides publishers access to demand from dozens of networks and exchanges, which helps increase demand for publisher inventory and competition ad space. This in turn enables publishers to drive more revenue.

At the same time, Cohen said its publisher platform has always integrated with header bidding, so publishers have the choice to use their preferred bidding solution. "Amazon also launched an entirely new competitive header bidding solution, which uses the same server-side approach that we do," he said.

Myth 4: Google's open bidding agreement with Facebook harms publishers

Cohen called AG Paxton's claims about Facebook's participation in Google's open bidding programme "misleading", adding that Facebook Audience Network's (FAN) involvement is not a secret. Facebook's participation in the programme is well-publicised, according to him, and is one of over 25 partners participating in open bidding.

"Our agreement with FAN simply enables them (and the advertisers they represent) to participate in open bidding. Of course we want FAN to participate because the whole goal of open bidding is to work with a range of ad networks and exchanges to increase demand for publishers’ ad space, which helps those publishers earn more revenue. FAN’s participation helps that," Cohen said.

He added that open bidding is still an extremely small part of its adtech business, forming less than 4% of the display ads it places.

Separately, a quick check by MARKETING-INTERACTIVE found that Facebook did announce its participating in the open bidding programme in a 2018 blog post, but merely mentioned it in one line.

Cohen also debunked claims that it manipulates the open bidding auction in FAN's favour. "We absolutely don’t. FAN must make the highest bid to win a given impression. If another eligible network or exchange bids higher, they win the auction. FAN’s participation in open bidding doesn't prevent Facebook from participating in header bidding or any other similar system. In fact, FAN participates in several similar auctions on rival platforms," he explained, adding that Google's standard revenue share for open bidding is 5% to 10%.

Myth 5: Google’s Accelerated Mobile Pages (AMP) was designed to hurt header bidding

Cohen called these claims false as Google's engineers designed AMP in partnership with publishers and other tech companies to help webpages load faster and improve the user experience on mobile devices.

AMP supports a range of monetisation options, including header bidding, Cohen said, and publishers are free to use both AMP and header bidding technologies together if they choose. The use of header bidding does not factor into publisher search rankings, Cohen clarified.

Myth 6: Google forces partners to use its tools

It is a norm for publishers and advertisers to use multiple technologies simultaneously. Citing surveys from research-based intelligence company Advertiser Perceptions, Cohen said the average large publisher uses six different platforms to sell ads on its site, and plans to use even more in 2021. Quoting eMarketer, Cohen added that the top 100 advertisers use an average of four or more platforms to buy ads. Hence, Google builds its technologies to be interoperable with more than 700 rival platforms for advertisers and 80 rival platforms for publishers.

"AG Paxton’s complaint talks about the idea that we offer tools for both advertisers and publishers as if that’s unusual or problematic. But that reflects a lack of knowledge of the online ads industry, where serving both advertisers and publishers is actually commonplace," Cohen said.

According to him, many firms with competing ad tech businesses, such as AT&T, Amazon, Twitter, Verizon, Comcast among others, offer ad platforms and tools similar to Google that cater to both advertisers and publishers. Cohen also clarified that Google does not require advertisers or publishers to use its whole stack and many do not.

Myth 7: Google uses privacy concerns to advantage itself

To this, Cohen said AG Paxton misrepresents Google's privacy initiatives, explaining that it is committed to operating its advertising business in a way that gives people transparency into and control over how their data is used. Consumers also increasingly expect, and data privacy laws require, strict controls over ad tracking tools like cookies and ad identifiers. As such, the company is focused on meeting those expectations and requirements. This has since resulted in open and collaborative industry initiative called the Privacy Sandbox as well as privacy-protecting solutions that allow other adtech companies to continue operating.

Photo courtesy: 123RF

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