Google Forced to Reveal Secret Ad Price Hikes After Court Order
▼ Summary
– Google used internal “pricing knobs” to raise search ad prices by 5% to 15% through small, incremental adjustments.
– Advertisers noticed higher costs but attributed them to market fluctuations rather than Google’s actions, allowing price increases without losing business.
– The court found Google intentionally made changes barely perceptible to avoid advertiser pushback and maintain revenue growth.
– Google will now be required to send monthly reports detailing all changes to its Search Text Ads auction and provide public notices for material adjustments.
– These new transparency measures aim to give advertisers insight into previously hidden pricing mechanisms within Google’s auction system.
A recent federal court ruling has exposed how Google systematically increased search advertising costs through subtle, hard-to-detect adjustments that many advertisers mistakenly attributed to normal market fluctuations. The findings, detailed in Judge Amit P. Mehta’s remedies opinion, reveal that the tech giant used internal controls referred to as “pricing knobs” to implement incremental price hikes ranging from 5% to 15% without alerting advertisers.
These adjustments were intentionally designed to be small enough that advertisers would perceive them as ordinary auction noise rather than deliberate price increases. Google’s own internal surveys indicated that while advertisers noticed their costs rising, they did not suspect the company itself was responsible. This strategy allowed Google to raise prices “largely without losing advertisers,” as many simply assumed competitive dynamics or seasonal trends were to blame.
The court emphasized that Google took deliberate steps to avoid advertiser backlash. In its opinion, it noted that the company “endeavored to raise prices incrementally” so that changes would blend into the natural variability of the ad auction environment. Furthermore, evidence showed that Google made these adjustments without considering competitor pricing, such as rates on Microsoft’s Bing platform, indicating a focus on maximizing its own long-term revenue rather than responding to market conditions.
Advertisers have long described Google’s ad pricing system as a “black box,” citing a lack of clarity into how bids are processed and costs are determined. This opacity made it nearly impossible for marketers to distinguish between organic auction movements and engineered price hikes.
In response to these findings, the court has ordered new transparency measures. Google will now be required to issue monthly reports to plaintiffs and a court-appointed technical committee detailing all changes made to its Search Text Ads auction system. The company must identify which adjustments it considers material and provide copies of any public notices, or explain why notification was not deemed necessary.
Once these reporting requirements take effect, advertisers will gain regular insight into modifications that may influence their advertising expenses. While it remains unclear whether these disclosures will lead to significant changes in Google’s pricing behavior, they will at least shed light on practices that were once concealed within the auction’s opaque mechanics.
(Source: Search Engine Journal)
