Why Google Dominates Advertising Markets: Competition Policy Should Lean on the Principles of Financial Market Regulation

Details

Author(s):
  • Dina Srinivasan
Publish Date:
December 7, 2020
Publication Title:
Stanford Technology Law Review
Publisher:
Stanford University
Place of Publication:
Stanford, California
Format:
Journal Article Volume 24 Issue 1 Pages 55-175
Citation(s):
  • 24 STAN. TECH. L. REV. 55 (2020)
Related Organization(s):

Abstract

Approximately 86% of online display advertising space in the U.S. is boughtand sold in real-time on electronic trading venues, which the industry calls “advertising exchanges.” With intermediaries that route buy and sell orders, the structure of the ad market is similar to the structure of electronically traded financial markets. In advertising, a single company, Alphabet (“Google”), simultaneously operates the leading trading venue, as well as the leading intermediaries that buyers and sellers go through to trade. At the same time, Google itself is one of the largest sellers of ad space globally. This Article explains how Google dominates advertising markets by engaging in conduct that lawmakers prohibit in other electronic trading markets: Google’s exchange shares superior trading information and speed with the Google-owned intermediaries, Google steers buy and sell orders to its exchange and websites (Search & YouTube), and Google abuses its access to inside information. In the market for electronically traded equities, we require exchanges to provide traders with fair access to data and speed, we identify and manage intermediary conflicts of interest, and we requiretrading disclosures to help police the market. Because ads now trade on electronic trading venues too, should we borrow these three competition principles to protect the integrity of advertising?