In a letter to the CFTC, Senator Elizabeth Warren called for an investigation into Google's manipulation of the online advertising market, opening the door to new federal regulation of digital advertising markets. Warren's letter centers on a program called Project Bernanke, which was revealed in April as part of a lawsuit against Google led by the Texas attorney general.
As part of this program, Google used its past ad data to enhance customers' chances of winning auctions. This practice allegedly resulted in $230 million in additional revenue for the company.
Given that Google was able to learn from the past bid data of competing ad buyers, the ad-buying tools gained a competitive advantage that ultimately boosted their winning rates, Warren wrote in the letter.
She said, while this activity is being investigated for potential antitrust violations, the activity raises additional concerns that I believe may be within the CFTC's purview and warrant scrutiny.
A Google spokesperson said the allegations of market manipulation were a mischaracterization of a simple product feature. This is done entirely by Google Ads for Buyers, using the types of data and strategies available to any buyer who participates in the Ad Exchange auction.
In addition, he explained that Google is constantly improving its products and competing more effectively. It is like many other companies in this highly competitive field. The online advertising marketplaces that have long been the core of Google's business are often overlooked as a result.
In its most recent quarterly profit, the company reported more than $44 billion in advertising revenue. This constituted more than 80 percent of the company's total revenue. Meanwhile, digital advertising platforms appear to be a new target for the CFTC. which has traditionally dealt with commodity trading and more recently cryptocurrency.
But Warren argues that digital advertising falls within the legal definition of a good. And that the CFTC's regulation of markets would not prevent other agencies from taking any action as a result. Moreover, if the committee adopts Warren's call to action, it would represent a significant expansion of its powers and a new problem for Google.
"Real-time ad platforms provide a platform to sell ad inventory every time a webpage is loaded," Warren wrote. Meanwhile, tens of billions of digital ads are circulating in the operations of ad platforms every day in the United States.