SAN JOSE, Calif. (Legal Newsline) - A class action filed for business owners alleging they are paying more to be placed in Google display advertisements.
Michael Stellman and his lawyers at Ahdoot & Wolfson sued Google and Alphabet, Inc., on Sept. 15 in California federal court, complaining nearly every small business depends on Google as a middleman to buy display ads through exchanges.
"Google increased its exchange fees by surreptitiously implementing a secret auction-manipulation program known as 'Reserve Price Optimization,'" the suit says. "(T)his program operated to override publishers' exchange floor prices and deceptively increase the amount advertisers must pay for impressions on AdX."
Ad exchanges charge publishers a share of transaction value that has ranged from 5%-20% of the inventory's clearing price, the suit says. The higher the "take rate" for the exchange, the less surplus is there to be split between the advertiser and the publisher.
"(W)hen bidding into AdX, advertisers revealed the maximum they would be willing to pay for each impression, bidding their true value," the suit says. "They did so because they relied on Google’s misrepresentations that AdX ran a second-price auction and that revealing this information would not be used against them.
"Google secretly manipulated the auction through a subversive program: Reserve Price Optimization."