Google charged ‘supracompetitive’ ad prices, US court rules

Image credit: Search Engine Journal

A United States court ruled in August 2024 that Google employed monopoly power to charge supracompetitive prices for general search text advertisements, impacting digital advertisers through undisclosed auction modifications.

The decision requires advertisers to scrutinize their Google Ads expenditures, particularly for general search text ads, to assess potential overcharges and consider avenues for recovery.

Evidence presented during the trial indicated Google utilized internal ‘pricing knobs’ to artificially inflate the score of the runner-up bid, thereby increasing the cost-per-click (CPC) for the winning advertiser without corresponding changes in bids, ad quality, or market competition.

Specific auction adjustments identified included ‘Format pricing,’ implemented from 2012 to 2019, which accounted for 15 percent of text ad revenue. Another change, ‘Squashing,’ initiated in 2014, also raised the winner’s price, according to court documents.

More recently, the ‘rGSP’ mechanism, introduced in 2019, resulted in a 5 to 6 percent CPC increase for ads in top search slots, the court found.

Advertisers were not informed of these pricing alterations. A Google Vice President of Ads, Dischler, testified during the proceedings, stating, “We tend not to tell advertisers about pricing changes.”

Google is appealing the August 2024 search antitrust ruling. A remedies decision, anticipated in September 2025, is expected to mandate public disclosure of material changes to its ad auction mechanisms.

Separately, Judge Leonie Brinkema issued a ruling on April 17, 2025, finding Google had monopolized various segments of the display advertising supply chain.

Digital advertisers may be eligible for claims potentially valued at 15 to 30 percent of their qualified search ad spend, according to Silver Arbitration Law, PLLC. However, advertisers must address existing arbitration clauses and compile account-specific evidence to support such claims.

Companies like Amazon and Walmart, which are significant advertisers, could be among those affected by these pricing practices.

Source: Search Engine Journal