Breaking Down Google’s Legal Battles: Insights from Commit Agency’s Rebel Reels

In the fast-paced world of digital marketing, few topics have drawn as much attention in recent months as the legal battle between Google and the U.S. government. In a recent episode of Commit Agency’s, Rebel Reels host Jade Frazier sat down with Meredith Schrom, the agency’s Digital Director, to discuss the implications of a groundbreaking federal ruling. The ruling found Google guilty of monopolistic practices in the search and digital advertising market, a decision that could have far-reaching consequences for advertisers and the broader digital landscape.

The Google Lawsuit: What Happened?

At the heart of the discussion is a ruling issued by a U.S. federal judge, who found that Google had been engaging in monopolistic practices that gave them an unfair advantage in the digital advertising market. The 277-page ruling detailed how Google manipulated ad auctions to maintain dominance, raised ad prices without advertisers realizing it and entered into exclusive distribution agreements with device manufacturers to secure its position as the default search engine.

While these findings were not entirely surprising—advertisers have long suspected foul play—the ruling itself was groundbreaking. As Meredith Schrom noted, “The real surprise is that they were actually found guilty of it because you think of Google as being untouchable with how much they are worth.”

The Impact on Google’s Business Practices

One of the most significant takeaways from the ruling is how Google’s manipulation of ad auctions has allowed them to dominate the digital advertising landscape. Schrom explained a practice known as “squashing,” where the bid of the second-highest advertiser is inflated, forcing the top bidder to pay more in order to keep its place. Google claimed that this practice was designed to help smaller advertisers, but in reality, it primarily boosted Google’s revenue. As Schrom put it, “We always have to remember that Google is a for-profit business with shareholders to report to. If they’re making changes like this, it’s not just for the benefit of others—they’re making money, too.”

For advertisers, this manipulation has resulted in higher costs without their full understanding of the reasons behind the increases. Google’s gradual price hikes—often 5% to 15%—could easily be mistaken for market fluctuations or shifts in campaign strategy. According to Schrom, “These are the kinds of ad increases that can be disguised as just normal market changes.”

The Degradation of Google’s Search Ad Product

Another critical point in the ruling is the degradation of Google’s search text ads product, a change that has hindered advertisers’ ability to fine-tune their campaigns. Schrom discussed two major shifts that have impacted advertisers: first, in 2020, Google stopped reporting on search queries that resulted in only one click. Citing privacy concerns, this change left advertisers with less insight into which keywords were driving conversions and which weren’t.

Second, Google made keyword matching more inclusive by default, meaning advertisers were forced to include misspellings and variations of keywords they had previously opted out of. These changes reduced advertisers’ ability to control their campaigns, ultimately benefiting Google’s bottom line at the expense of advertiser optimization.

How Google’s Dominance Was Secured Through Device Agreements

A key aspect of Google’s monopolistic behavior involves its exclusive distribution agreements with device manufacturers like Apple and Samsung. By becoming the default search engine on nearly all devices, Google has made it nearly impossible for competitors like Bing, which holds 6% of the market share, to gain traction.

This strategy has created a cycle in which advertisers continue to allocate a significant portion of their budgets to Google, simply because they dominate the market. As Schrom explained, “It’s incredibly hard for any other competitors to gain any real traction. The judge found that there’s no real competition for those device contracts because the device makers can’t afford to switch away from Google.”

Google’s Response and What’s Next

Unsurprisingly, Google has responded to the ruling with plans to appeal. Schrom described their response as “very Google,” with the tech giant thanking the judge for acknowledging that Google is the best search engine while simultaneously claiming that the ruling unfairly restricts their ability to make their services available.

While the appeals process is likely to take time, this ruling could lead to increased scrutiny of Google’s practices, potentially leveling the playing field for competitors in the digital advertising space. According to Schrom, “It’ll definitely put more of a spotlight on Google’s practices and potentially lead to tighter regulations and more oversight in the industry.”

The Changing Search Landscape

Even outside the context of this lawsuit, the search landscape has been shifting. Schrom noted that more and more searches are now happening outside of traditional search engines like Google. Platforms like TikTok, Reddit, and even ChatGPT are becoming increasingly popular for searches, which could give Google more competition in the long run.

“It’s an interesting time to be in digital marketing,” Schrom said. “We’re seeing the search landscape change, and I think Google will have to adapt.”

What Advertisers Should Do Moving Forward

For advertisers, the key takeaway from this ruling and the broader changes in the digital landscape is to stay informed and adaptable. The search advertising space is evolving rapidly, and it’s essential to stay up-to-date with the latest developments to ensure you’re making the best decisions for your business.

Schrom recommended Ad Age as a great resource for advertisers looking to stay informed about the Google lawsuit and its potential implications. As she explained, “Ad Age is one of the main advertising publications that can help people in the industry understand how the ruling could affect us.”

Conclusion:

The Rebel Reels episode highlighted how critical it is for advertisers to understand the broader forces shaping the digital advertising landscape. Google’s monopolistic practices, as revealed by the recent ruling, have significant implications for advertisers and the industry as a whole. However, as the search landscape continues to evolve, new opportunities will emerge for advertisers willing to stay informed and embrace change.

Commit Agency is dedicated to helping clients navigate these complexities. As the digital landscape continues to shift, agencies like Commit will play a crucial role in guiding businesses through the challenges and opportunities that lie ahead.

If you have questions about how this ruling could impact your advertising strategy, or if you’re looking for advice on navigating the ever-changing digital landscape, feel free to Contact us. We’re here to help.