In the ongoing antitrust trial against Google, former executives have revealed that the company considered lowering its high advertising exchange fees—currently the highest in the industry—around eight years ago. This consideration was prompted by the emergence of header bidding, a technology developed by websites to bypass Google’s costly ad services and enhance their ad revenue.
Header bidding, which allows websites to run simultaneous ad auctions directly within the browser, was seen as a serious threat to Google’s ad dominance. Despite internal discussions about reducing the 20% fee charged by Google’s Ad Exchange (AdX), the company never implemented a cut. Instead, it introduced its own version of header bidding in 2019.
The Justice Department, alongside state attorneys general, argues that Google’s monopolistic practices in online display advertising have allowed the company to overcharge clients. They estimate that Google retains between $36 and $37 of every $100 spent on display ads, leveraging its control over both ad-buying technology and the exchange connecting buyers and sellers to stifle competition.
Jay Friedman, CEO of marketing firm Goodway Group, testified that despite negotiating lower rates with other ad exchanges, Google refused to offer reduced rates, forcing his company to continue using its costly services due to the lack of sufficient ad supply from competitors.
Former Google executives, including Eisar Lipkovitz, who served as vice president of engineering for display and video ads until 2019, testified about the internal debate over AdX fees. Lipkovitz recounted recommending a reduction to 10-15%, but the fee remained unchanged, highlighting Google’s ability to maintain high prices without jeopardizing its business.
The introduction of header bidding was seen by Google as a major challenge, with internal documents referring to it as a “serious long-term threat.” Google employees noted the technology’s potential to divert business away from AdX, reflecting the company’s apprehension about losing market share.
Brad Bender, former vice president of product for display and video ads, shared insights from an email discussing strategies to lock in customers using Google’s ad server, DoubleClick for Publishers (DFP). According to notes from former DoubleClick CEO David Rosenblatt, the substantial “switching cost” associated with moving ad servers made it difficult for websites to switch platforms, giving Google a competitive edge.
As the trial progresses, these testimonies underscore Google’s strategic maneuvers to preserve its dominance in the ad exchange market while facing increasing scrutiny from antitrust regulators.
I’m a finance writer with three years of experience in investment analysis. At Investorwelcome , I translate complex financial concepts into clear, actionable insights to help investors navigate the market with confidence. Combining my solid academic background with practical industry knowledge, I’m dedicated to providing readers with accurate and timely information. My goal is to empower both new and seasoned investors by simplifying intricate data and offering strategic advice. When I’m not writing, I stay engaged with market trends and investment innovations to ensure my content remains relevant and valuable.
aparna