Google monopoly ruling—what advertisers need to know about the future of search

Now that Google has been deemed to run a monopoly over parts of the search game, advertisers are reading through the landmark federal court ruling to see what it means for them. There are potential ramifications for search advertising mechanics and pricing, and there are questions about what it portends for Google’s ability to win its next antitrust case that strikes at the heart of its ad tech business. On Monday, the U.S. Department of Justice won its first case against the search giant, when U.S. District Judge Amit Mehta ruled that Google holds a monopoly in search services for consumers and it has monopolistic control over text-based search ads. Most people expected the court to rule the way it did, given Google’s 90% market share of search on desktop and mobile, but it was still considered the most important case against Big Tech since Microsoft was ruled a monopoly in 1999. Google has argued it’s being penalized for having a superior product, but the case hinged on the fact that Google paid $26 billion in 2021 to be the default search engine on browsers on mobile devices, including Apple’s iPhone. “This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” Kent Walker, Google’s president of global affairs, said in a statement following the ruling. Check out the latest Ad Age events and award programs Google plans to appeal the decision and the court still has to determine what the remedy is to create a fairer marketplace. But advertisers are already preparing for a more dynamic ad landscape and more innovation in search. In many ways search has already evolved beyond links on Google’s homepage, as search-type activity has moved to TikTok, Amazon, Reddit and even ChatGPT. “It’s a huge win for advertisers, ultimately a good win for consumers, and obviously search users as well, with the ability for innovation in search outside of the search result page,” said Adam Epstein, president and co-CEO at adMarketplace, which is a search ad platform that could benefit from a shakeup to the status quo. More news: Google, Amazon and The Trade Desk’s DSP battle Here are some of the key takeaways for advertisers looking to understand the ruling’s implications: How Google’s grip on search fixed ad rates The ruling made a distinction as to where Google’s monopoly power was wielded in setting ad rates. Google was found to hold an actual lever over the price of text-based search ads: “Google has a monopoly in the search text ads market,” but “Google does not have monopoly power in the search ads market.” That might seem like a contradiction, but the judge made a distinction between “product listing ads,” which are shopping ads, and the traditional text ads that appear as links on results pages. Amazon was found to have a significant position in shopping ads, too, so Google did not seem to have the same ability to name its price on product listing ads, presumably because of the competition. With text ads, Google was found to have no competitive restraints on pricing, and indeed could adjust the price, often between 5% to 15%. How advertisers price Google Advertisers look at their Google ad investments as an “equation,” said Simon Poulton, executive VP, innovation and growth at Tinuiti, the performance marketing firm. Marketers are interested more in the overall “return on advertising spend” than the price of one ad, Poulton said. “They’re more thinking about what the particular ROAS is, which I think is both a good marketing principle, but it also does obscure the realities of, essentially, auction flaws, or how much advertisers are paying at auction,” Poulton said. Regardless of whether Google is a monopoly, advertisers expect it will still maintain a large share of the search market. It’s unclear that, if given the choice, consumers would shift en masse to a rival such as Bing. Plus, many advertisers say that Google search is still the most powerful advertising machine built. “If you don’t invest there, where else do you go,” Poulton said. “And I think that that’s at the core of the monopoly argument here, is if you don’t participate within the Google auction, you’re going to leave a lot of search users on the ground, because it’s not like you can just go over to Bing and find all those users over there as well.” How innovation could change the search markets “If you look out ahead five years, Google’s grip over the search landscape will have lessened in a real way for the first time in ever,” said one ad agency CEO, who spoke on condition of anonymity because the firm is a large client to Google. “Not because of the case, but the case merely accelerated trends that have been percolating already, and now, perhaps Google [won't be] able to fight back with their bundling tactics.” Many advertisers think the internet is becoming more competitive, outside of just search. The judge didn’t consider TikTok a relevant competitor to Google in search advertising, but that app and others, such as Reddit, are making search ad products. Last month, OpenAI launched SearchGPT, an AI-powered search engine. “It will be good for advertisers to at least have the knowledge of how far they can scale within these ecosystems,” Poulton said, “and what is going to work well rather than putting all their eggs in the basket of Google.” See America's Hottest Brands 20 brands that are trending in 2024 Click here How advertisers see even more possibilities for search Some advertisers have taken the monopoly ruling as a sign that the whole search market could evolve in unexpected ways. These advertisers pointed to how Google could be forced to allow more flexibility when partners, such as Apple and Samsung, adopt its search services. As part of its exclusive deals with the device makers and browsers, to be the No. 1 search option, Google prevented the partners from customizing the experience. That hobbled innovation, according to search experts. “A remedy that is getting a lot of interest and support would actually force Google to make their search results and search ads available to where the searches are actually happening on the Apple browser, or in the Safari operating system,” said adMarketplace’s Epstein, “so that the third-party search properties become the curators of the search experience, which, of course, they have not been able to do for the last 15 years. If they move a single pixel, Google was threatening to pull their search deal.” Google could also improve its search product. Until now, it was content in its dominant position, and that could have affected its drive to improve, according to Damian Rollison, director of market insights at SOCi, the marketing platform. “Users are noting a degradation in overall quality of Google results,” Rollison said. “That’s been a big topic in our industry conversations over the last year or so. And I think we are at a point where it would be healthier for consumers to have more of an alternative than Google is currently offering within its own ecosystem.” Recent news: Brand safety controls questioned in new report How the monopoly ruling affects Google’s upcoming case In September, Google faces an even bigger test of its power in a case that seeks to break up its ad tech business, which was born out of its acquisition of DoubleClick in 2007. The Justice Department contends that Google wields a monopoly over the buy and sell sides of programmatic advertising and is trying to force a breakup. “I don’t think it’s clear how this will end up,” said Zach Edwards, a privacy and ad tech expert, “but I think now that Google lost the search ruling, it’s even more likely than ever for the Google advertising division to end up separate from the main Google team, in some way in the future.”

Google monopoly ruling—what advertisers need to know about the future of search

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