Dischler’s trial testimony, first reported by Bloomberg, on ad auction price manipulation revealed that Google had adjusted ad auctions to meet revenue targets set by CFO Ruth Porat to meet Wall Street’s demands, at times increasing prices by up to 5%. These changes often involved raising the cost of ads and setting minimum spending thresholds, known as reserve pricing. However, Google did not disclose these price adjustments to advertisers.
“We tend not to tell advertisers about pricing changes,” said Dischler.
A redacted email from Dischler read: “I care more about revenue than the average person but think we can all agree that for our teams trying to live in high-cost areas, another $100,000 in stock price loss will not be great for morale, not to mention the huge impact on our sales team.”
Search ad manipulation in the rearview mirror
The price manipulation is a central point in the Justice Department’s case against Google, which alleges illegal monopolization of the online search market by financially incentivizing web browsers and smartphone manufacturers with billions of dollars to favor its search engine.
“People have been aware that something is going on for a long time,” an industry executive who requested to speak on background told Adweek. “We are looking in the rearview mirror here. The schemes covered in these documents will have been replaced by new ones by now.”
Google’s search ad revenue, constituting approximately 60% of its total earnings, amounted to over $100 billion in 2020, according to Dischler.
During cross-examination by DOJ lawyer David Dahlquist on Tuesday, Dischler admitted that in a sworn 2020 interview, he stated that certain auction adjustments resulted in a 5% uptick for a typical advertiser. He also said it’s “possible” some changes to price hikes went up to 10% for certain queries.
However, Dischler acknowledged Monday that a 15% increase in prices could risk driving advertisers to competitors like Meta and TikTok, making it a perilous move for Google. Dischler also disclosed that Google boasts approximately 5 million advertisers, and retail ads account for nearly 35% of Google’s search ads—its biggest ad category.
“Whether it’s pricing or brand safety, there needs to be an overall increase in transparency,” said Avi Ben-Zvi, GM of North America, Winclap. “These are platforms that advertisers are going to be on no matter what.”