Backscratching: No Big Deal, Of Course, Among Science Club Members

January 1, 2021

I read “Facebook : Inside the Google-Facebook Ad Deal at the Heart of a Price-Fixing Lawsuit.” The write up is interesting because it reveals how high school science club thinking operates. I learned:

Header bidding helped website publishers circumvent Google’s exchanges for buying and selling ads across the web. The exchange auctions ad space to the highest bidder during the split second it takes a webpage to load. Header bidding allowed the publishers to directly solicit bids from multiple ad exchanges at once, leading to more favorable prices for publishers. By 2016, about 70% of major publishers used the tool, according to the states’ lawsuit. Google worried a big rival might embrace header bidding, such as the Facebook Audience Network ad service, or FAN, cracking Google’s profitable monopoly over ad tools, the states allege. The Facebook service said it paid publishers $1.5 billion in 2018, the last time it provided such details on its financial payouts.

This seems to boil down to a slick way to ensure that maximum money rolls in from certain types of advertisers.

Here’s the swizzle:

the states allege in the final suit, Google gave Facebook special treatment. Among other things, it allowed Facebook to send bids directly into Google’s widely used software, known as an ad server, the draft lawsuit says. Typically, bidders go through an exchange, which sends the winner on to Google’s server. By circumventing the middleman, Facebook could face less competition and save money. Google charged Facebook 5% to 10% on each transaction compared with the standard fee on Google’s exchange of around 20%, and it barred Facebook from discussing pricing terms publicly, according to the draft lawsuit.

What’s up? Nothing. Think of the deal as the lunch at one of those College Bowl type of competitions for science club members.

No big deal, of course.

Stephen E Arnold, December 31, 2020


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