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Unredacted Antitrust Complaint Shows Google’s Ad Biz Even Scummier Than Imagined

249 points by radmuzom 5y ago

lern_too_spel 5y ago
The reporter appears to be confused. > At the same time, Google would charge advertisers the price of the second-highest bid and pocket the difference If my third highest bid is less than the second highest bid, there is no way to charge me the second highest bid. This is nonsensical.
- pyrale 5y ago
  > This is nonsensical. No, it's just fraud. It makes plenty if sense for the person taking the money.
- mathteddybear 5y ago
  WIRED 3 days ago reported on it in a less confusing manner. Also it included a comment from Google > In a statement, Google said, “AG Paxton’s latest allegation—that we generated a ‘third price auction’ or manipulated our ad exchange—is entirely inaccurate. As of September 2019, we have been running a first price auction, but at the time to which AG Paxton is referring, AdX absolutely was a second price auction.”
- aesh2Xa1 5y ago
  You’re right. The description on this report is faulty, but I think the gist is pretty apparent. Google tells the website owner that the winning bid was smaller in value than what it really was, thus paying the owner less money. Google tells the advertisement auction that the winning bid was higher (than what the agreement required), but they only pay the website owner the smaller value. They are paid by the higher bidder and they (Google) keep the difference. Google can use that excess money however they choose. In this case, they seem to be using it to pump up the value of the second-highest bids (it’s an auction), so that they can receive an even greater difference in the next auction.
  - pixl97 5y ago
    Heh, if this pans out it will be one of the larger fraud cases ever.
- bjterry 5y ago
  I think you are misunderstanding how second-price auctions work. In a second-price auction, the FIRST price bidder pays the bid of the SECOND price bidder. This sentence is saying that the FIRST bidder is still paying the SECOND price rate, but the publisher is only receiving the THIRD bidder's rate. For example: * Bidder A - Bids $100 * Bidder B - Bids $90 * Bidder C - Bids $80 Under a true second-price auction, the publisher receives $90, and Bidder A pays $90. The article is alleging that Google changed it so that in this scenario, Bidder A pays $90, but the publisher receives $80.
- genewitch 5y ago
  It's two different parties. You've a website. Google says your ad space is worth '3rd place bid' and pays you out 'your share' of 3rd place. The advertiser that 'won' the bid for ads on your site pays out the 2nd place bid' to Google. The monetary difference between second and third place bids? Google pockets that plus the fee they take for 'brokering' the ad sale.
rendall 5y ago
The GDPR pop-up on this blog is among the scummiest, sad to say; the kind that requires you to uncheck 10s of 3rd party trackers.
denton-scratch 5y ago
I can see how anti-trust comes into it, if they're abusing their market power. But isn't this also straight fraud? I mean, running an exchange, and then lying to both advertisers and publishers about the price that was struck? If antitrust is hard to prosecute because of the vagueness of "market power", why don't they just throw them in the slammer for fraud?
- mathteddybear 5y ago
  I guess not really. The ad exchange is sort of an auction of auctions; for bare efficiency, every participating network submits only their top two candidates. This is communicated to ad networks; I guess, there is no obligation that the networks pass the bids of their advertisers unchanged. Google has some secret sausage there. To Google Ads advertisers, Google says "you participate in a second-price auction, competing with other Google Ads advertisers and other networks; if you win you will pay the bid of the runner-up, which is the second highest bid from the Google Ads unless another network submits a bid in between" and that holds true. To publishers, Google says "the price is determined in a second-price auction, every ad network submits up to two bids" IANAL but it may be considered as an anti-trust, because it is the owner of the ad exchange who could decide if that obligation exists (regardless of whether it could be plausibly enforced).
pwthornton 5y ago
The allegations here are astonishing. If true, how is this possibly allowed to continue on like this? This is some real mob shit.
- danaris 5y ago
  Because of millions of people on HN and elsewhere who think that as long as you can get away with it, anything you do to make yourself or your shareholders more money is just fine.
  - DamnYuppie 5y ago
    That maybe true but in my opinion is a lesser evil compared to the corruption of government officials who are complicit in allowing this to happen. What is the point of government agencies if all they do is bow to those with the most money?
    - danaris 5y ago
      Implied by your question is the suggestion that the solution is just to abolish government agencies entirely, thus leaving people with no recourse against massive megacorporations, as opposed to trying to fix the problem in some meaningful way. It's certainly true that there are problems with the current implementation of the mechanics of our government, but the idea that throwing them out entirely would leave us with something better just doesn't pass the sniff test.
    - mandmandam 5y ago
      > What is the point of government agencies if all they do is bow to those with the most money? To legitimize the transfer of wealth upward, and protect the system. "Sure didn't we all vote for Trump/Biden". "If you're not voting you can't complain". Etc. From housing to banking to the environment to food and drugs; from healthcare to the military, there is no shortage of examples of revolving doors, veneers, and gaslighting to choose from. The fact that Obama promoted GS people to positions all over his cabinet after the '08 bailouts should have clued in anyone with more than 8 brain cells. https://www.motherjones.com/politics/2009/12/henhouse-meet-fox-wall-street-washington-obama/ https://www.motherjones.com/politics/2009/12/henhouse-meet-f...
deleted 5y ago
[deleted]
ianai 5y ago
I really think this piece could be better written. Give us an executive summary or even bullet points of the activity. It went too fast into the details for me to see the overall trend.
- pyrale 5y ago
  * Jedi blue: cartel activity * Project Bernanke: market manipulation, fraud, frontrunning * AMP: monopoly abuse It is not clear whether Google has fiduciary duty wrt their clients, but if they do and the accusations are proven, they basically looked up every way they could violate it, and did it. It's not simply corporate responsibility; this is Enron levels of bad. In any decently regulated activity, executives would risk jail for that.
  - shkkmo 5y ago
    > In any decently regulated activity, executives would risk jail for that. In the US, executives never go to jail. They negotiate "settlements" where the company doesn't even have to admit wrongdoing and the companies are fined slightly more than they made from the wrong doing. I would love to to see the executives face jail time, both neither major party political party has any interest in changing things.
    - michael1999 5y ago
      The comment you reply to mentioned Enron, which is famous for sending people to actual Jail. Jeffrey Skilling spent 12 years in prison - https://en.wikipedia.org/wiki/Jeffrey_Skilling https://en.wikipedia.org/wiki/Jeffrey_Skilling I'll grant that post-9/11 priorities have defunded white collar prosecution, but people go to jail in the US. If you really want a criminal-consequence-free jurisdiction, come to Canada. We really don't send people to jail for corporate fraud. The Vancouver exchange is a free-for-all, and Montréal boiler-rooms are a movie cliche.
      - specialist 5y ago
        When investors are the victims, white collar criminals go to jail. We'll soon (re)learn if mere customers have that kind of juice. IANAL, but I'd guess they best they can expect is be party to some class action settlement and the criminals get some token fines.
redleggedfrog 5y ago
Sure feels like those "Don't be evil" days are long gone.
- olliej 5y ago
  I went to work for google for a while, and “don’t be evil” is nowhere in any onboarding documents, or anywhere else I encountered while working there.
- lowbloodsugar 5y ago
  As has been noted elsewhere, if a group has to say "Don't be X" it is because they are X. By definition, a company whose slogan is "Don't be evil" is evil. Imagine if their motto was "Don't cut the testicles off our male employees." Like, er, sure, obviously. Wait, what? Was that a possibility?
- jacquesm 5y ago
  I suspect they never really were. It was just marketing.
  - vgeek 5y ago
    I've wondered this same thing. Were they always the same, but with more effort (as a ratio) towards PR and image, or did the Ruth Porat era signify a cultural shift? Maybe the influx of "tech as a high paying job" type people versus "tech as an inherent interest/tech to solve problems" crowd?
  - mandmandam 5y ago
    It's easier to not be evil when you're small. I saw someone here put it in the context of a life cycle, and that rhymes with reality to me.
- thanatos519 5y ago
  If only there were evil people somewhere insidiously committing evil deeds and it were necessary only to separate them from the rest of us and destroy them. But the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart? -- Alexander Solzhenitsyn
hahamrfunnyguy 5y ago
I find it somewhat ironic that the blog is running Google Ads.
- soared 5y ago
  Even worse, the sponsored native ad has the same text styling (bright orange title) as the rest of the actual content, so even I struggled to tell where the article continued. This ad actually goes against google policies.
  - ianai 5y ago
    Yep, confused me too! Doesn’t help that I skip over most social media call outs and ads. Way to confuse your reader. As a reader, I’m here to read your work, not expend mental energy on figuring out where your content is.
- gruez 5y ago
  Turns out pandering to anti-capitalist sentiment can be profitable.
  - tata71 5y ago
  - genewitch 5y ago
    "oh, nice, Bill's going after the anti-marketing dollar, that's smart!"
- ornornor 5y ago
  Adblocks to the rescue! Nextdns if you can’t root your Phone or have an iPhone. I haven’t seen an ad in close to a decade by now.
soared 5y ago
The author analyzed one section of the pdf which amounts to a competitor creating a product, and so google creates their own competitive product. That sounds like a normal business practice. It’s kind of silly to write a short article with an outlandish title, and then your only justification for the title is “just read the table of contents”. That pdf probably has tons of supporting information, but this blog post provides none of it. (The embedded Twitter thread did not load on my initial read through, and it does provide actual content. But again.. embedded Twitter content when you have a brand new pdf filled with info?)
- pessimizer 5y ago
  If the point you're making isn't "why mention anything unless you're willing to personally write a book on it" I don't understand it. You mention that adequate links are provided, so I'm confused.
- JaimeThompson 5y ago
  It appears that when google says "All participants in the unified auction, including Authorized Buyers and third-party yield partners, compete equally for each impression on a net basis" they aren't exactly being honest. Am I misinterpreting?
  - mathteddybear 5y ago
    is "on a net basis" the same as "auction winners are selected based on highest bid after fees"?
- stefan_ 5y ago
  And then competitors meet up to make a contract with each other - oops, was this part of the Smith playbook?
- olliej 5y ago
  Google making a competing product is not the problem. The problem is when google uses its monopoly presence in other parts of the industry to artificially penalize the product they’re competing with.
frankjr 5y ago
When reading things like this (and assuming it's true), I always wonder how it works in practice. I mean somebody has to actually implement the trickery in the codebase, right? Does that mean that one day there was a ticket that could be summarized as "Implement scam"? Or was there an attempt to hide the true purpose of the requested changes? Were the programmers not bothered by it? Were they in on it too? Are the implemented changes kept in Google's monorepo for everybody to see? Is it hidden somewhere else? Is it hot patched?
- pyrale 5y ago
  I can't help but think that some people compensated so highly to do code don't just sell their technical skills.
- monkeybutton 5y ago
  I imagine it would be implemented as mundane looking levers and configurations. Especially easy to do in ML powered systems with lots parameters and moving parts.
  - IX-103 5y ago
    Except for the part where certain accounts would need to be hardcoded instead of dependent on the advertiser. Moving money is probably the most audited part of any code base and something like that would be a big red flag.
- gherkinnn 5y ago
  The people in charge are too far removed to care and the grunts implementing it can be compartmentalised. Optimise for the right KPIs. Throw diffusion of responsibility and you're golden.
- pessimizer 5y ago
  A DBA I know very well was charged with modeling the accounts for an intentional illegal financial trick (in the 80s for Service Merchandise iirc) that would shift the proceeds from the trick into regular accounts after the statute of limitations ran out. The way it was explained to them was that if they were busted on it they would immediately apologize for the "oversight" and pay up. They did it because they enjoyed being employed.
michael1999 5y ago
People think Google bought Doubleclick. But no: Doubleclick bought Google with their own money. This is exactly the sort of thing Doubleclick would have done.
acqbu 5y ago
Google is possibly the most evil company that has ever existed. Avoid like the plague and degoogle everything.

249 points by radmuzom 5y ago

The reporter appears to be confused. > At the same time, Google would charge advertisers the price of the second-highest bid and pocket the difference If my third highest bid is less than the second highest bid, there is no way to charge me the second highest bid. This is nonsensical.

pyrale 5y ago
> This is nonsensical. No, it's just fraud. It makes plenty if sense for the person taking the money.
mathteddybear 5y ago
WIRED 3 days ago reported on it in a less confusing manner. Also it included a comment from Google > In a statement, Google said, “AG Paxton’s latest allegation—that we generated a ‘third price auction’ or manipulated our ad exchange—is entirely inaccurate. As of September 2019, we have been running a first price auction, but at the time to which AG Paxton is referring, AdX absolutely was a second price auction.”
aesh2Xa1 5y ago
You’re right. The description on this report is faulty, but I think the gist is pretty apparent. Google tells the website owner that the winning bid was smaller in value than what it really was, thus paying the owner less money. Google tells the advertisement auction that the winning bid was higher (than what the agreement required), but they only pay the website owner the smaller value. They are paid by the higher bidder and they (Google) keep the difference. Google can use that excess money however they choose. In this case, they seem to be using it to pump up the value of the second-highest bids (it’s an auction), so that they can receive an even greater difference in the next auction.
- pixl97 5y ago
  Heh, if this pans out it will be one of the larger fraud cases ever.
bjterry 5y ago
I think you are misunderstanding how second-price auctions work. In a second-price auction, the FIRST price bidder pays the bid of the SECOND price bidder. This sentence is saying that the FIRST bidder is still paying the SECOND price rate, but the publisher is only receiving the THIRD bidder's rate. For example: * Bidder A - Bids $100 * Bidder B - Bids $90 * Bidder C - Bids $80 Under a true second-price auction, the publisher receives $90, and Bidder A pays $90. The article is alleging that Google changed it so that in this scenario, Bidder A pays $90, but the publisher receives $80.
genewitch 5y ago
It's two different parties. You've a website. Google says your ad space is worth '3rd place bid' and pays you out 'your share' of 3rd place. The advertiser that 'won' the bid for ads on your site pays out the 2nd place bid' to Google. The monetary difference between second and third place bids? Google pockets that plus the fee they take for 'brokering' the ad sale.

rendall 5y ago

The GDPR pop-up on this blog is among the scummiest, sad to say; the kind that requires you to uncheck 10s of 3rd party trackers.

denton-scratch 5y ago

I can see how anti-trust comes into it, if they're abusing their market power. But isn't this also straight fraud? I mean, running an exchange, and then lying to both advertisers and publishers about the price that was struck? If antitrust is hard to prosecute because of the vagueness of "market power", why don't they just throw them in the slammer for fraud?

mathteddybear 5y ago
I guess not really. The ad exchange is sort of an auction of auctions; for bare efficiency, every participating network submits only their top two candidates. This is communicated to ad networks; I guess, there is no obligation that the networks pass the bids of their advertisers unchanged. Google has some secret sausage there. To Google Ads advertisers, Google says "you participate in a second-price auction, competing with other Google Ads advertisers and other networks; if you win you will pay the bid of the runner-up, which is the second highest bid from the Google Ads unless another network submits a bid in between" and that holds true. To publishers, Google says "the price is determined in a second-price auction, every ad network submits up to two bids" IANAL but it may be considered as an anti-trust, because it is the owner of the ad exchange who could decide if that obligation exists (regardless of whether it could be plausibly enforced).

pwthornton 5y ago

The allegations here are astonishing. If true, how is this possibly allowed to continue on like this? This is some real mob shit.

danaris 5y ago
Because of millions of people on HN and elsewhere who think that as long as you can get away with it, anything you do to make yourself or your shareholders more money is just fine.
- DamnYuppie 5y ago
  That maybe true but in my opinion is a lesser evil compared to the corruption of government officials who are complicit in allowing this to happen. What is the point of government agencies if all they do is bow to those with the most money?
  - danaris 5y ago
    Implied by your question is the suggestion that the solution is just to abolish government agencies entirely, thus leaving people with no recourse against massive megacorporations, as opposed to trying to fix the problem in some meaningful way. It's certainly true that there are problems with the current implementation of the mechanics of our government, but the idea that throwing them out entirely would leave us with something better just doesn't pass the sniff test.
  - mandmandam 5y ago
    > What is the point of government agencies if all they do is bow to those with the most money? To legitimize the transfer of wealth upward, and protect the system. "Sure didn't we all vote for Trump/Biden". "If you're not voting you can't complain". Etc. From housing to banking to the environment to food and drugs; from healthcare to the military, there is no shortage of examples of revolving doors, veneers, and gaslighting to choose from. The fact that Obama promoted GS people to positions all over his cabinet after the '08 bailouts should have clued in anyone with more than 8 brain cells. https://www.motherjones.com/politics/2009/12/henhouse-meet-fox-wall-street-washington-obama/ https://www.motherjones.com/politics/2009/12/henhouse-meet-f...

deleted 5y ago

[deleted]

ianai 5y ago

I really think this piece could be better written. Give us an executive summary or even bullet points of the activity. It went too fast into the details for me to see the overall trend.

pyrale 5y ago
* Jedi blue: cartel activity * Project Bernanke: market manipulation, fraud, frontrunning * AMP: monopoly abuse It is not clear whether Google has fiduciary duty wrt their clients, but if they do and the accusations are proven, they basically looked up every way they could violate it, and did it. It's not simply corporate responsibility; this is Enron levels of bad. In any decently regulated activity, executives would risk jail for that.
- shkkmo 5y ago
  > In any decently regulated activity, executives would risk jail for that. In the US, executives never go to jail. They negotiate "settlements" where the company doesn't even have to admit wrongdoing and the companies are fined slightly more than they made from the wrong doing. I would love to to see the executives face jail time, both neither major party political party has any interest in changing things.
  - michael1999 5y ago
    The comment you reply to mentioned Enron, which is famous for sending people to actual Jail. Jeffrey Skilling spent 12 years in prison - https://en.wikipedia.org/wiki/Jeffrey_Skilling https://en.wikipedia.org/wiki/Jeffrey_Skilling I'll grant that post-9/11 priorities have defunded white collar prosecution, but people go to jail in the US. If you really want a criminal-consequence-free jurisdiction, come to Canada. We really don't send people to jail for corporate fraud. The Vancouver exchange is a free-for-all, and Montréal boiler-rooms are a movie cliche.
    - specialist 5y ago
      When investors are the victims, white collar criminals go to jail. We'll soon (re)learn if mere customers have that kind of juice. IANAL, but I'd guess they best they can expect is be party to some class action settlement and the criminals get some token fines.

redleggedfrog 5y ago

Sure feels like those "Don't be evil" days are long gone.

olliej 5y ago
I went to work for google for a while, and “don’t be evil” is nowhere in any onboarding documents, or anywhere else I encountered while working there.
lowbloodsugar 5y ago
As has been noted elsewhere, if a group has to say "Don't be X" it is because they are X. By definition, a company whose slogan is "Don't be evil" is evil. Imagine if their motto was "Don't cut the testicles off our male employees." Like, er, sure, obviously. Wait, what? Was that a possibility?
jacquesm 5y ago
I suspect they never really were. It was just marketing.
- vgeek 5y ago
  I've wondered this same thing. Were they always the same, but with more effort (as a ratio) towards PR and image, or did the Ruth Porat era signify a cultural shift? Maybe the influx of "tech as a high paying job" type people versus "tech as an inherent interest/tech to solve problems" crowd?
- mandmandam 5y ago
  It's easier to not be evil when you're small. I saw someone here put it in the context of a life cycle, and that rhymes with reality to me.
thanatos519 5y ago
If only there were evil people somewhere insidiously committing evil deeds and it were necessary only to separate them from the rest of us and destroy them. But the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart? -- Alexander Solzhenitsyn

hahamrfunnyguy 5y ago

I find it somewhat ironic that the blog is running Google Ads.

soared 5y ago
Even worse, the sponsored native ad has the same text styling (bright orange title) as the rest of the actual content, so even I struggled to tell where the article continued. This ad actually goes against google policies.
- ianai 5y ago
  Yep, confused me too! Doesn’t help that I skip over most social media call outs and ads. Way to confuse your reader. As a reader, I’m here to read your work, not expend mental energy on figuring out where your content is.
gruez 5y ago
Turns out pandering to anti-capitalist sentiment can be profitable.
- tata71 5y ago
- genewitch 5y ago
  "oh, nice, Bill's going after the anti-marketing dollar, that's smart!"
ornornor 5y ago
Adblocks to the rescue! Nextdns if you can’t root your Phone or have an iPhone. I haven’t seen an ad in close to a decade by now.

soared 5y ago

The author analyzed one section of the pdf which amounts to a competitor creating a product, and so google creates their own competitive product. That sounds like a normal business practice. It’s kind of silly to write a short article with an outlandish title, and then your only justification for the title is “just read the table of contents”. That pdf probably has tons of supporting information, but this blog post provides none of it. (The embedded Twitter thread did not load on my initial read through, and it does provide actual content. But again.. embedded Twitter content when you have a brand new pdf filled with info?)

pessimizer 5y ago
If the point you're making isn't "why mention anything unless you're willing to personally write a book on it" I don't understand it. You mention that adequate links are provided, so I'm confused.
JaimeThompson 5y ago
It appears that when google says "All participants in the unified auction, including Authorized Buyers and third-party yield partners, compete equally for each impression on a net basis" they aren't exactly being honest. Am I misinterpreting?
- mathteddybear 5y ago
  is "on a net basis" the same as "auction winners are selected based on highest bid after fees"?
stefan_ 5y ago
And then competitors meet up to make a contract with each other - oops, was this part of the Smith playbook?
olliej 5y ago
Google making a competing product is not the problem. The problem is when google uses its monopoly presence in other parts of the industry to artificially penalize the product they’re competing with.

frankjr 5y ago

When reading things like this (and assuming it's true), I always wonder how it works in practice. I mean somebody has to actually implement the trickery in the codebase, right? Does that mean that one day there was a ticket that could be summarized as "Implement scam"? Or was there an attempt to hide the true purpose of the requested changes? Were the programmers not bothered by it? Were they in on it too? Are the implemented changes kept in Google's monorepo for everybody to see? Is it hidden somewhere else? Is it hot patched?

pyrale 5y ago
I can't help but think that some people compensated so highly to do code don't just sell their technical skills.
monkeybutton 5y ago
I imagine it would be implemented as mundane looking levers and configurations. Especially easy to do in ML powered systems with lots parameters and moving parts.
- IX-103 5y ago
  Except for the part where certain accounts would need to be hardcoded instead of dependent on the advertiser. Moving money is probably the most audited part of any code base and something like that would be a big red flag.
gherkinnn 5y ago
The people in charge are too far removed to care and the grunts implementing it can be compartmentalised. Optimise for the right KPIs. Throw diffusion of responsibility and you're golden.
pessimizer 5y ago
A DBA I know very well was charged with modeling the accounts for an intentional illegal financial trick (in the 80s for Service Merchandise iirc) that would shift the proceeds from the trick into regular accounts after the statute of limitations ran out. The way it was explained to them was that if they were busted on it they would immediately apologize for the "oversight" and pay up. They did it because they enjoyed being employed.

michael1999 5y ago

People think Google bought Doubleclick. But no: Doubleclick bought Google with their own money. This is exactly the sort of thing Doubleclick would have done.

acqbu 5y ago

Google is possibly the most evil company that has ever existed. Avoid like the plague and degoogle everything.