Why Google Dominates Advertising Markets

73 Pages Posted: 1 Jun 2020 Last revised: 15 Jun 2020

See all articles by Dina Srinivasan

Dina Srinivasan

Thurman Arnold Project; Yale University - Law School

Date Written: December 9, 2019

Abstract

Approximately 86% of online display advertising space in the U.S. is bought and 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 Paper 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 require trading 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?

Keywords: electronic trading, competition, online advertising, digital advertising, Google, Alphabet, regulation, antitrust, data, privacy, trading speed, colocation, co-location, latency, trading ahead, last look, privacy, big-data, conflicts of interest

Suggested Citation

Srinivasan, Dina, Why Google Dominates Advertising Markets (December 9, 2019). 23 STAN. TECH. L. REV. ___ (2020, Forthcoming), Available at SSRN: https://ssrn.com/abstract=3500919

Dina Srinivasan (Contact Author)

Thurman Arnold Project ( email )

New Haven, CT 06520
United States

Yale University - Law School ( email )

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