FROM THE INDUSTRY
which allowed them to bid $0.01 higher than other inbound bids to snipe auctions for itself. To roll out Open Bidding, Google had made the concession to remove this advantage since otherwise they would likely have gotten little participation. Finally, Google was aware that many publishers actively manipulated floor prices for better yield. In particular, they set their price floors higher for AdX than for other exchanges. This was rational since AdX’s 20% fee was higher than competitors’, so making it bid higher would ultimately give publishers more of every dollar spent. Google wanted to solve all these problems at once. They would follow up on the launch of Open Bidding with several changes. They would move AdX to a first- price auction, get rid of Last Look entirely, and stop customers from pricing AdX higher than other exchanges. They called this whole package of changes the Unified Auction, since in theory it would force all demand (header, AdX, Open, and direct) to compete on a fair basis all at once. There was just one problem: while publishers were happy about the first two changes, the last one, the removal of flexible pricing floors, was about to set off a riot.
Following the announcement of Open Bidding as Google’s answer to header bidding, the product and engineering teams wanted to clean up various problems that were creeping up and threatening to get worse as the overall environment’s complexity increased. For example, because bids could now come in from some exchanges in the header and other exchanges in Open Bidding, each with different auction mechanics and pricing, it was very possible that the highest bid would not actually win every auction. Since header bidding gained widespread adoption, the argument for second-price auctions became questionable and almost all the non-Google exchanges were switching to first-price auctions, where the highest bid won. AdX, meanwhile, was still on a second-price auction, which was causing all kinds of weird situations. It was possible for a bid to come in from a header as a first-price bid, while the same advertiser’s bid would come in through AdX as a second-price bid, and the two would compete with each other. Header bidding had finally eroded, but not fully killed, Google’s unique data and bidding advantage, Dynamic Allocation,
In a meeting at Google’s New York headquarters this package of auction changes was announced, and the publisher customers were not happy. The audio recording of this meeting would later be played in a federal courthouse during the subsequent antitrust proceedings, with audience call outs like “The major difference between the financial market and the programmatic market is that the people that own the financial markets are not also bidding on the same markets” and “there’s really no recourse for us whatsoever to force you to change a product that you’ve already built.” You cannot draw a straight line from this fiasco to the subsequent antitrust and legal troubles, but there are certainly connecting dots. Beginning in the late 2010s, Google got caught in a maelstrom of political and legal trouble, pushed along by partisan politics, struggling competitors, and an angry mob of media companies and their lobbyists. Yield: How Google Bought, Built, and Bullied Its Way to Advertising Dominance (Amplify) by Ari Paparo is available online and in all good book shops.
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SEPTEMBER 2025 Volume 47 No.3
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