Google needs more transparency for antitrust battles

Is the Google-Yahoo deal a case of "meet the new boss, same as the old boss?" Is Google throwing its weight around, anointing companies that it blesses and crushing others? No, Fred Vogelstein writes in Wired, but it will need to show substantially more transparency in its advertising practices.

It's less than transparent, Vogelstein says, to claim, as Hal Varian did in a recent blog post, that "ad prices are not set by Yahoo! or Google, but by advertisers themselves, through the auction process." (A claim repeated last week by advertising president Tim Armstrong: "Ads are priced by an auction where an advertiser only bids what an ad is worth to them.")

The fact is, Vogelstein writes:

It is absolutely true that Google's ads are auctioned, but it is also true that Google sets minimum bids for those auctions on an advertiser by advertiser basis. That means that if Google doesn't like you as an advertiser, your price per click - the way advertisers bid on Google ads - will have to be higher to get top placement in search results than an advertiser Google likes a lot.

How do you know if Google likes you? Vogelstein while it used to be easy to determine that based on your price-per-click and frequency of appearance, now Google uses a confusing array of factors, which probably do improve the user experience but:

it has become harder and harder for advertisers to understand how to tweak their search ads to get the best placement - and they no longer have any real choice about where else to go.

But even if Google is no 1990s-era Microsoft, it needs to realize that it is the gorilla in the room and that the time has come to transition from the tight-lipped scrappy competitor to the kind of transparency required of major corporations. "[S]tubbornness in the face of antitrust cops, as Microsoft will surely attest, enables you to win a few battles, but ultimately lose the war."