New court documents reveal the powerful grip of Google on online advertising.
According to US legal documents, the internet giant is accused of taking a huge cut of as much as 42 per cent of the advertising spend it arranges. According to the papers, this is nearly four times the cut that its competitors take.
These figures were contained in a new, unsealed legal file at a New York federal Court.
One Google employee compared the company’s dominance to a major bank such as Goldman Sachs or Citibank owning the entire New York Stock Exchange.
According to US legal documents, the internet giant is allowed to take a huge cut of up 42 percent of advertising spending it arranges. According to the papers, this is nearly four times the cut that its competitors take (file photograph).
The US Attorney Generals of 16 States and a number of businesses are suing Google for allegedly using substandard tactics to dominate the advertising marketplace.
The internet giant generates billions of dollars by using its advertising ‘exchange’ to allow businesses to buy advertising space on its search results and other websites.
The group suing Google claims that the company takes a cut between 22 percent and 42 percent of these deals. And they say Google tries to ‘lock in’ companies, rather than let them use cheaper rivals.
It claims that Google uses online advertising auctions in order to win 80 percent of the business being offered.
Kent Walker (pictured above), Google’s senior vice president, said in a blog post that the tech giant’s services ‘help people, create more choice, and support thousands of jobs’
The group behind the legal action said one Google employee had conceded that an ‘exchange shouldn’t be an immensely profitable business’ and that Google employees had explained the company charged high prices because ‘we can… smaller publishers don’t have alternative revenue sources.’
Google has denied the allegations. Kent Walker, Google’s senior vice president, said in a blog post that the tech giant’s services ‘help people, create more choice, and support thousands of jobs’.
In Britain, the markets watchdog has said Google controls 90 per cent of the £7.3 billion market for adverts.
The Competition and Markets Authority has said Google’s ‘unassailable’ position inflates advertising prices, with costs passed on to consumers.