Google Antitrust & Shifting Baseline Syndrome

Can you remember what life was like before Google bought DoubleClick?

One thing I do care about — even more than the ROI of SME ad budgets or a well-implemented digital transformation — is wildlife conservation.

The RSPB has released its 2020 report on the state of the UK’s birds (here, if you’re interested), and it finds that there are 19 million fewer pairs of breeding birds today compared with the late 1960s.

What would it be like if there were 40 million more birds in the country? Can you imagine?

I can’t really, myself. The best approximation my lazy mind can conjure is Hitchcock’s The Birds.

I reckon it’d be like that every time I went out to buy cheese or popped my head out the window for a daily gasp of fresh air. Which it probably wouldn’t.

The term “Shifting Baseline Syndrome” was invented in 1995 by Daniel Pauly at the University of British Columbia in Canada. The syndrome “is a psychological and sociological phenomenon whereby each new human generation accepts as natural or normal the situation in which it was raised.” (Soga and Gaston)

In essence, we quickly forget how things were and adjust our reference baseline to our new surroundings very quickly.

Strangely, young people are worse than their elders at remembering “how things were”. A study asked people to recall the abundance of different bird species when they were younger. This should be easier for young people — there is less of a temporal gap to bridge. And yet, they were further from the real numbers than older participants were.

The New Scientist retells one anecdote that creates a vivid image of times past:

“Walking in England’s New Forest in 1892, butterfly collector S. G. Castle Russell encountered such numbers of the insects that they “were so thick that I could hardly see ahead”. On another occasion, he “captured a hundred purple hairstreaks” with two sweeps of his net.”

And so, to the antitrust cases against Google and Facebook.

The link is not as strained as you might think. Either way, you’ll quickly get used to this new narrative thread and forget what went before. 🤓

When you consider the current digital marketing world, it seems natural that you would spend on Google to reach your customers. Sure, we can all remember the days before Google (Google them, if you can’t), but we envisage the current infrastructure of the digital marketing world as set. Do you ever think back to the times before Google bought DoubleClick? I absolutely do not.

Google has worked very hard in the background to configure this reality for us. In response, we adapt to it. It’s what we do.

Finally, antitrust hawks are catching up with this nefarious restructuring by a small number of giant tech companies.

The states of Texas, Arkansas, Idaho, Indiana, Mississippi, Missouri, North Dakota, South Dakota, Utah, and the Commonwealth of Kentucky have brought an action against Google (Full complaint here) on the grounds that Google has engaged in deceptive trade practices. In particular, the complaint relates to the display advertising world, starting with Google’s acquisition of DoubleClick.

It kicks off with this beauty:

What an opening. And the eye is inevitably drawn to the accusation of an unlawful agreement with Facebook, which we’ll get to soon.

One might also notice a certain rhetorical verve to this complaint, which is pleasingly sustained throughout. The authors make use of analogies in the stock market and baseball to make their point, in a knowing nod to their audience. These are the references they will get.

Basically, they mean business. And they now understand the complex inner workings of the display advertising market.

These are the main charges:

  • After acquiring DoubleClick, Google inserted itself as a middleman in every stage of the ad-buying process. It required publishers to licence its ad server; publishers had to use its ad exchange; businesses needed to use Google to place their ads. (This frustration is well-known to publishers and advertisers, but it’s good to see the authorities get a handle on it.)

“Google was able to demand that it represent the buy-side, where it extracted one fee, as well as the sell-side, where it extracted a second fee, and it was also able to force transactions to clear in its exchange, where it extracted a third, even larger, fee.”

  • Google used privacy concerns as an “excuse” to tighten its grip on the ad market.

“Google’s entire business model is to collect comprehensive data about every user in the service of brokering targeted ad sales. It then uses privacy concerns as an excuse to advantage itself over its competitors.”

  • After squashing the competition (and the complaint does an excellent job of detailing this process), Google’s ad server quality was severely reduced — at no cost to Google.

“Despite widespread publisher dissatisfaction over the price and quality of Google’s ad server, Google has not suffered any loss to its ad serving market dominance.”

  • Google knows it can abuse its market power. Even if the competition reduces prices, they still can’t compete with Google.

“Internally, Google acknowledges that its fees are very high and that Google can demand high fees because of its market power. “

  • Google takes advantage of small businesses by offering “simple” tools that bury costs in complex terms and conditions.

“Running sequential auctions allows Google to extract additional non-transparent margins, which is not disclosed to advertisers.”

“Google Ads also has market power over the small advertisers it serves because most rely on a single ad buying tool for a given advertising format (e.g., display ads) and have switching costs. Using multiple ad buying tools imposes additional costs on advertisers because of the additional time, effort, training, and expense needed to manage campaigns across tools; Google Ads also does not let small advertisers completely export the data they need to easily switch to another tool. As a result, while very large advertisers might be able to absorb the costs of using more than one tool at a time, small advertisers almost always use just one ad buying tool at a time.”

  • It also alleges that Google added an “artifical one-second delay” to non-AMP (Accelerated Mobile Pages) ads to force websites to run on the Google-led AMP HTML standard. Google wanted this as part of its assault on header bidding, which allowed advertisers to circumvent Google’s exchanges. Getting everyone to run on AMP would keep them in Google’s bejewelled, walled garden.
  • Google and Facebook worked together to fix prices. When Facebook emerged as a threat to Google’s monopoly, Google started working with the social network. This section is heavily redacted, but still makes clear that the two giants signed an agreement in 2018 to manipulate auctions and harm publishers. It is only because of Facebook’s size that it was able to extract any concessions from Google.

“They also coordinated with each other to harm publishers through the adoption of Unified Pricing rules.”

While some of the accusations are perhaps unsurprising when dealing with corporations of this size, with this much to lose, when pieced together it makes for pretty staggering reading.

It goes on to use a fitting butterfly metaphor, taken from Google’s own statements:

“When Google ultimately explains why it “automatically” routes advertisers’ bids across multiple markets, the language is misleading: “If you go butterfly hunting during the height of summer, the bigger your butterfly net, the more butterflies you’ll be able to catch.”

Google, however, does not clarify who it is hunting.”

And like the rest of us, Google may soon find it is catching fewer than it used to.

(This thread is a superb guide to the full complaint against Google.)

Meanwhile, the Federal Trade Commission and more than 40 states are suing Facebook, saying its acquisitions of Instagram and WhatsApp unfairly eliminated competition. They called for Facebook to be split apart and restricted in making future deals, too.

The WSJ was curious about this redacted passage, asking readers to suggest which rival Facebook may have tried to purchase over the years:

Twitter and Snapchat are named above, so it can’t be them. TikTok?

“By using its vast troves of data and money Facebook has squashed or hindered what the company perceived as potential threats. They’ve reduced choices for consumers, they stifled innovation and they degraded privacy protections for millions of Americans.”

- Letitia James, New York’s Attorney General

While they are facing different antitrust threats, both Facebook and Google have shamelessly used the pandemic as an opportunity to show their small business credentials.

Facebook is attacking Apple in full-page ads, alleging that Apple is destroying the free internet with the privacy updates in iOS 14. With all that we now know, we can see echoes of Google’s panic when Facebook arrived on the scene.

I adore the self-interested myopia in this one:

“Apple’s changes will limit their ability to run personalized ads.”

I can’t find the ‘shrug’ emoji, but let’s just say it’s a stretch to equate fewer creepy ads with destroying the internet.

Small businesses already know Facebook is not on their side. The revelations above hammer home that Google also profits from them while giving nothing back.

Apple is too big to crush and has little incentive for a shady deal, especially when its existing shady deal with Google is under scrutiny already. (We wrote about that one last time.) Instead, we see pure desperation from Facebook.

There is a real sense that antitrust action may start to follow in the near future. I’m just not sure many of us expected the US to lead the charge.

We have adjusted our expectations to this new reality. That doesn’t mean we can’t imagine a better future.

Author of the world-famous https://hitech.substack.com/ I used to be with it, but then they changed what ‘it’ was.

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