Facebook’s tacit handshake with Google is making technology corporations concerned. The big guys can build an alliance to dominate the online advertising market.
The translation of the article by Daisuke Wakabayashi and Tiffany Hsu, published in The New York Times.
In the online advertising market, when companies want to display ads on the website, they have to hold a placement session (on the website, search engines …). Which company offers the highest price, their ad will be shown. It is estimated that by 2016, more than 70% of investors have applied this method.
Google is the commercial service that dominates most servers and advertising exchanges in the world. So the money at most auctions ran into the “pocket” of this big man.
In 2017, Facebook emerged as a challenger to Google’s dominance in the online advertising market. The company said it is testing a new form of advertising bidding with the goal of being a market leader.
However, less than two years later, Facebook suddenly canceled its project for unknown reasons.
Transactions between Google and Facebook are worrying tech companies. Image: Boston Globe.
Then, the CEOs working with Google filed a complaint about Facebook buying YouTube ads for lower prices.
Documents from the Attorney General’s office show that Google has “privileges” for Facebook. This makes other advertisers question that Google favored Facebook more in return for this social network not competing with their advertising platform.
Confidential transactions between Facebook and Google cause major corporations to worry. They fear that the two giants will together monopolize the transaction at advertising bidding sessions, decide the winners in the service market and dominate the technology products.
Google is monopolizing the digital advertising market. Photo: Bloomberg.
Before the allegations above, Google and Facebook claim that similar transactions are common in the advertising industry and they do not hinder competition.
“These are false allegations, our advertising business is also related to many aspects. Facebook is one of the many companies participating in the program hosted by Google and all are equal, ”said Julie Tarallo McAlister, a spokesperson for Google.
Digital advertising is no longer a generic “cake”
According to the Wall Street Journal, the proliferation of antitrust lawsuits against Google and Facebook has left transactions between the Big Techs falling into the media’s attention.
In October 2020, the Justice Department sued Google over a deal with Apple. Specifically, Google has asked Apple to let its search engine appear favorably on iPhones and other devices.
“The major technology platforms are alliances, which will strengthen their monopoly power in the market,” said Sally Hubbard, former assistant to the Attorney General at the New York Competition Bureau said at the Open Market Organization.
By 2019, the total advertising revenue of Google and Facebook has accounted for more than half of the market share. The majority of ads are displayed on platforms like Google search engine and Facebook’s homepage.
With the backing of Google, Facebook is monopolizing the auction floor. Photo: Fiverr.
In the past, Facebook used to call Google the “party that monopolizes and fabricates the truth”. It is just that Google dominates the auction floor at most advertising companies. However, facing the challenges of spending billions of dollars, hiring hundreds of engineers to compete with Google, Facebook chose to sign the agreement.
Investors said they were thrilled that Facebook became a rival to Google. They are willing to cooperate with Facebook to come up with more satisfactory policies to compete with Google Ads. However, their hopes were suppressed.
According to the complaint, Google gave Facebook the right to bid directly with website owners. Besides, Google also provides Facebook with information of 80% of mobile users and 60% of web users.
For other partners, Google will control the price information, hide the amount the winning websites receive, in order to obstruct transactions.
Most seriously, the statement in the complaint accused both companies of arbitrarily deciding the fixed rate of winning Facebook advertising. This means that without being the one offering the highest bid, Facebook still wins the bid at a pre-determined rate. Many Google partners say they don’t get the same help.
“Facebook is in a race, but they’re at the finish line,” says Adam Heimlich, CEO of Chalice Custom Algorithm, a consulting firm in marketing and scientific data.
According to the Zing / New York Times
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