US Justice Department Takes Aim at Google Ad Prices

( – A Justice Department lawyer pressed an executive for Google during a trial this week about the search engine’s alleged techniques for pushing up advertising prices unfairly.

In a landmark antitrust trial in the nation’s capital, the United States is suing Google on accusations of creating a monopoly on searching the internet and advertising. While testifying on Wednesday, an executive for Google, Adam Juda, said that the company employs a specific formula to decide the auction winners for ad space.

The Department of Justice (DOJ) accused the company of manipulating auctions online using formulas that favor Google’s bottom line. Online auctions are a multibillion-dollar industry that the tech company dominates. DOJ attorney David Dahlquist pressed Juda by asking him if he agreed with statements made in a document prepared by Google for the European Union. The document stated that Google can “directly affect pricing” by tuning its “auction mechanisms.” Juda replied that he disagreed.

Dahlquist then asked if “tuning” could impact ad pricing, which Juda confirmed. The Google executive started his testimony on Tuesday, which continued into the following day. He said one thing the company can tune is a formula that determines an ad’s long-term value based on a given bid, how many people might click it, the ad’s quality, and the website the ad leads to.

Jada was then asked if Google made any changes to the sales in any way that could raise how much is made per click, which Jada said sounds accurate. One of Google’s lawyers then asked him if any methods existed for his ad quality-control team to unilaterally raise prices. Juda replied, “No.”

Advertisers and website developers have long criticized Google for lacking transparency about how ad space is auctioned off, and many have accused the company of siphoning off massive amounts of revenue. Before hearing testimony on advertising, the case reviewed Google’s multi-billion dollar effort to make sure their search engine is the default application on smartphones and mobile devices.

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