Users of Google advertising services including retailers, small business and distributors in Australia appear to not be aware that the big search Company that is currently under investigation by the US Federal Government silently raised ad prices within its search results in order to hit revenue goal without telling anyone that they were being slugged additional costs.
The bombshell confession by Jerry Dischler, Google’s vice president of advertising products, was revealed this week during a US Justice Department trial where it’s been claimed that Google is running an illegal monopoly in an effort to drive massive revenue growth.
The stealth changes resulted in hikes from 5% to 10% for advertisers.
Dischler said Google often tweaks ad sales metrics for its advertising auctions, which determine which ads appear as top results in response to user prompts on the company’s search engine, by raising rates or the minimum required spending to secure placement.
“We tend not to tell advertisers about pricing changes,” Dischler said on the stand, according to Bloomberg.
District Judge Amit P. Mehta
Dischler claimed that price increases beyond 10% would be a “dangerous thing to do” because it could drive Google advertisers to simply relocate to rival platforms like Meta or TikTok — though he conceded it would not necessarily drive away enough clients to hurt revenue.
The desperation to hit targets was seen as essential in an effort avoid a bloodbath for its stock price.
If Google missed its “quota for the second quarter in a row and we miss the street’s expectations the search Company is punished pretty bad in the market,” Dischler has said in the past.
Dischler, who finished testifying on Tuesday, said Google earned more than A$150 billion in search ad revenue in 2020 and that rose after COVID.
The trial, which is in its second week, has been held out of earshot of reporters after Judge Amit Mehta agreed with Google lawyer John Schmidtlein that all discussions about the tech giant’s pricing strategies be in a closed session.
On Wednesday, the hearing again began behind closed doors with Google Finance VP Mike Roszak being questioned for the second day, according to Bloomberg reporter Leah Nylen.
The DOJ has also been ordered to remove all files pertaining to the case that were posted to its website by Mehta, an Obama-era appointee presiding over the 10-week case.
The Justice Department has stated that Google spends more than $10 billion annually on payments to prominent partners, from smartphone makers like Apple and Samsung to mobile carriers like Verizon and AT&T, to maintain a dominant hold on online search.
In Australia Google is also paying partners tens of millions for referrals to their search operation.
