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Google Ads – Transition to First-Price Auctions & Political Controversy

What to know about Google’s implementation of first-price ad auctions

WATCH: BREAKING YouTube Election Meddling of Tulsi Gabbard

Over the course of the past year, the world’s leader in ad revenue, Google, has facilitated a switch from running second-price sealed-bid auctions for their ads to a first-price system.  This means that the best strategy for ad buyers is no longer to bid honestly, but to bid below their real value.  The effects of the shift aren’t fully known yet, but it seems that many advertisers are optimistic that the change will be positive, leading to more standardization and greater bid visibility among the community.

This conceptual shift isn’t the only thing that Google AdSense has been doing to make headlines of late.  In July, Democratic Presidential Candidate Tulsi Gabbard’s Google AdSense account was suspended, immediately after a democratic presidential debate when Tulsi was the most searched for candidate of the night.  The suspicious timing of the incident in addition to the lack of explanation from google led to a now-pending lawsuit that Tulsi has filed against Google.

If Google’s suspicious activity regarding Tulsi’s AdSense account wasn’t enough, just this last week evidence was brought to the table by Steven Crowder detailing YouTube’s activities surrounding Tulsi’s YouTube account this last weekend.  Evidently, in its search feature, YouTube demoted Tulsi’s channel and content, for a specific period of time (once again, while she was in the headlines over the weekend), and ONLY in the United States.  In any other country, the search results were normal.  And on Sunday afternoon, the search results switched back to their regular status in the United States.

This brings up a question that goes beyond the norm of what we’ve discussed in class regarding auctions, what if the seller (Google) in an auction decides to retroactively withdraw the auctioned ad space at specific times, or blacklists particular buyers on a political basis? This transforms the dynamics of a regular first-price, sealed-bid auction, and places Google into a position as an all-powerful moderator of ad content, a position in which they can freely alter elections and act in a wildly unethical manner with no recourse.


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October 2019