A very important investigative scoop by Appitalism's Simon Buckingham (that has been submitted to the FTC's Google-AdMob antitrust investigators) uncovers how Google unilaterally, not-openly, and without advertisers' permission, changed the default settings in all of Google advertisers' accounts, which effectively "duped advertisers out of hundreds of millions of dollars."
In a nutshell, Mr. Buckingham's investigation found that two years ago, Google quietly changed the defaults of all its advertiser clients' accounts so that their ads were served not only to all desktop pcs/laptops, but also to all IP enabled mobile devices too.
- This significantly expanded the number of ads Google served and advertising revenue generated by Google via clicks, but without a consequent increase in the value delivered to the advertiser customer by Google in return.
- As Mr. Buckingham explains it, mobile devices simply can't functionally handle most of the ads Google sends to mobile devices because they require Adobe Flash (which mobile devices generally do not have) and mobile devices have much smaller screens so large-screen-oriented ads are basically dysfunctional in the mobile device market.
- Mr. Buckingham estimates that this deceptive practice likely has costed Google advertisers over several hundred millions of dollars over the last two plus years.
This investigation prompts several disturbing takeaways.
First, this underscores how truly opaque the Google "Black Box" advertising business model is.
Second, the fact that it took over two years to identify a potentially several hundred million dollar company practice as a deceptive and unfair trade practice underscores further that:
- Google is indeed a monopoly with no significant competitive pressure to keep it honest and best serve its advertising customers; and
- How little third-party or government oversight/accountability Google has.
Like any monopoly that does not have the checks and balances of significant competition or third-party/government oversight, a monopoly tends to treat its captive customers as proverbial mushrooms harvested in a closet, where they are fed "organic fertilizer" and kept in the dark.
Third, the fact that Google does not offer the normal "opt-in" permission of customers or even an explicit "opt-out" option to customers, in launching new services like this expansion of AdWords/AdSense (and like Google Buzz...), but unilaterally imposes a default "opt-all" stance is further evidence that there is no competitive or other third-party/Government check and balance on Google's public actions.
Fourth, its spotlights how in the dark Google keeps its advertising clients and how there are no audit, meaningful disclosure, or internal control accountability mechanisms to ensure Google advertisers are not being abused with deceptive or unfair trade practices.
- In other words, no one's watching, so Google can do whatever it wants -- with impunity.
Fifth, this clearly deceptive and unfair trade practice is ripe for a class action lawsuit and FTC enforcement action.
Finally, and relevant to the FTC's Google-AdMob investigation, this shows that for the last two years Google has been covertly and anti-competitively leveraging its market power in desktop PC/laptop search advertising and ad-serving, into mobile.
- This bald exercise of monopoly power also provides the FTC a bay window view into how much automatic market power Google would be able to bring to the Admob platform, and how Google's acquisition of AdMob could rapidly tip the >50% share platform of AdMob to an in-application mobile advertising bottleneck/monopoly.
In short, Mr. Buckingham's brilliant investigative work uncovering Google's default "opt-all" power to mandate acceptance of its edict -- is a lot like a government mandate -- but without any of the authority, legitimacy, appeal-ability, or checks and balances that come with an American Government mandate.
