Federal court documents show Google raised search ad prices through small adjustments that advertisers couldn’t distinguish from normal auction fluctuations.
The details are based on Judge Amit P. Mehta’s remedies opinion, which states that Google used internal “pricing knobs” to increase ad prices by 5% to 15% at a time.
Google’s own surveys confirmed advertisers noticed higher costs but didn’t realize Google was causing them.
How Google Adjusted Prices Without Detection
The court found Google made incremental price changes to avoid advertiser pushback.
Advertisers noticed rising costs but attributed them to market dynamics. This allowed Google to raise prices “largely without losing advertisers.”
The court wrote:
“When it made pricing changes, Google took care to avoid blowback from advertisers,” and it “endeavored to
raise prices incrementally, so that advertisers would view price increases as within the ordinary price fluctuations, or ‘noise,’ generated by the auctions.”
The court noted that “Google admits it makes auction adjustments without considering Bing’s prices or those of any other rival,” with evidence showing these higher-priced auctions were designed to drive long-term revenue.
The court summarized:
“Through barely perceptible and rarely announced tweaks to its ad auctions, Google has increased text ads prices without fear of losing advertisers.”
During trial testimony, advertisers described Google’s text ad pricing as a “black box.”
Court-Ordered Transparency Requirements
To address these practices, the court will require Google to send monthly reports to Plaintiffs and the Technical Committee outlining all changes to its Search Text Ads auction, identify which changes it deems material, and provide a copy of any public notice (or explain why a notice isn’t needed).
Looking Ahead
The reporting requirements mean Google will be required to disclose how it adjusts ad auction pricing. Once implemented, advertisers will receive regular updates about changes that could affect their costs.
Whether these disclosures lead to meaningful changes remains to be seen. At minimum, they should provide insight into price changes that were previously hidden within the auction’s “black box.”
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