Alphabet Inc.’s Google quietly made changes to its advertising platform that significantly limits the amount of information marketers have about where their spending is going, according to an expert called on behalf of the federal government in an ongoing antitrust trial against the search giant.
“Google controls the rules and influences the outcomes of its auctions and these auctions are a black box to advertisers,” said Kinshuk Jerath, a marketing expert at Columbia Business School, who testified in federal court in Washington as part of the US Justice Department’s case.
In September 2020, Google changed what information it provides to advertisers about the text ads that appear at the top of a search results page, Jerath said. The change to those so-called search query reports reduced data that advertisers get on about 20% or more of their text ad spending, he said. Google said at the time that it made the change to preserve user privacy.
The result is that advertisers now have less information about what ads they are buying and, combined with another Google change, it’s also harder for them to opt-out of specific advertising auctions, Jerath said, a “one-two punch” that has led to higher prices.
The Justice Department argues that Google has sought to maintain a monopoly over online search and online search advertising. About two-thirds, more than 60%, of Google’s total revenue comes from search ads, a Google employee testified previously, amounting to more than $100 billion in 2020. Every year since 2012, the company’s search ad revenue growth has been in the “high teens,” according to documents shown by the Justice Department.
A Bank of America Corp. executive called the change “one of the more egregious examples of Google removing transparency from advertisers under the banner of privacy,” Jerath said, citing internal emails produced as part of the litigation.
The reduced information in the reports harms advertisers by making it harder for them to know what keywords they are buying and which ones are useful for them, he said.
“What this means is that for 20% of their spend, advertisers were not even told which queries they were buying,” he said. “You should be entitled to know, this is where I spent my money. ”
Google also made another change, called “expanded exact match,” that adds additional keywords such as synonyms or misspellings to any terms that an advertiser wants to buy for a text ad. Google doesn’t allow advertisers to opt out of participating in expanded exact match except for negative keywords, or words for which they don’t want to buy ads, Jerath said.
“To opt out of expanded match becomes time consuming,” Jerath said. Expanded exact match “makes it easier for advertisers to enter auctions but much more difficult for them to not enter auctions.”
The combined changes lead to “thicker auctions and unwanted ad spend by advertisers,” Jerath said. “Advertisers are losing control.”
