Google claims that its “auction-based advertising system, which takes into account relevance and bids, is designed to provide a level playing field on which placement is not automatically awarded to the highest bidder.”
But Google is a dominant company with over 80% of search advertising in the U.S. and an even greater share worldwide. When a company has that kind of dominant position in the market, no less a conservative as Supreme Court Justice Antonin Scalia has said that such a dominant company must be viewed through a different lens.
Google controls search advertising prices primarily in three specific ways. First, Google assigns advertisers a “quality score,” which can be lowered without warning and with no explanation. By lowering an advertisers’ quality score, Google can manipulate paid search to make it more costly or difficult for competitors to buy advertising on Google to reach consumers.
The placement of ads on Google is determined through an auction in which advertisers submit bids for search terms. The bid is the amount that the advertiser is willing to pay each time a user clicks on its ad. The lower the quality score assigned to a bidder, the higher a price the advertiser has to bid to win the auction.
Second, Google sets the minimum bid price for keywords, many of which are so specific that they have only a few bidders to begin with. While technically correct that advertisers bid to win keyword ads, don’t overlook the fact that Google sets the minimum bid.
Moreover, after assigning a quality score to each advertiser that determines how much more one advertiser must pay than another to win the same keyword, Google is creating an environment driven by auctions.
Even more dishonest is the fact that Google often bids their own funds to win keyword auctions for their own sites, essentially paying nothing while happily letting other companies shell it out.
Third, having established that Google has a dominant market share in general search and search advertising, its paid search advertising platform, AdWords, is a “must buy” for businesses that advertise online. Google says advertisers are free to use whatever platform they want.
Just imagine, if you control your company’s online ad budget, and you tell your CEO you plan to give up on reaching 80%-plus of the online market that uses Google, you’ll be looking for a new job immediately.
Google, which often touts the value of ‘openness’ and ‘transparency’, uses its power to lock in advertisers, imposing technological barriers to advertisers’ ability to port their own campaign data they enter into AdWords to other ad platforms using third party tools.