In a federal antitrust trial, Google, a subsidiary of Alphabet Inc GOOG GOOGL, drew scrutiny for allegedly adjusting its advertising auctions to meet revenue goals.
According to Jerry Dischler, vice president of Google’s advertising products, the company regularly modifies the auctions used to sell search ads, which can increase ad prices, sometimes up to 5%.
These changes may also involve raising the minimum spending on ads, known as reserve pricing, reports Bloomberg.
Dischler testified that the company tends to keep advertisers unaware of pricing changes.
In a May 2019 email, Dischler and his team discussed exploring potential alterations to the ad auctions to ensure Google met the revenue targets set by CFO Ruth Porat.
About 60% of Google’s total revenue comes from search ads, exceeding $100 billion in 2020.
Dischler acknowledged that some auction changes resulted in 5% increases for typical advertisers and possibly up to 10% for specific queries.
However, he expressed concern that a 15% price hike might prompt most advertisers to shift to competitors like Meta Platforms Inc META or ByteDance’s TikTok, which he considered risky.
The RGSP altered the auction dynamics by promoting the runner-up to the top advertiser slot and the winner to the second spot.
This move aimed to prevent major advertisers like Amazon.com Inc AMZN or Booking Holdings Inc BKNG from consistently securing the principal place in ad auctions, thereby increasing Google’s revenue.
Google has faced allegations that it has illegally maintained a monopoly over online search through agreements with web browsers and smartphone manufacturers.
The U.S. Justice Department slammed Google for holding a monopoly by allegedly paying over $10 billion annually to secure its position as the default search engine on web browsers and mobile devices, including deals with Apple Inc AAPL and Samsung Electronics Co SSNLF.
Price Action: GOOG shares traded lower by 0.15% at $138.75 premarket on the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.