Advertising payments from Expedia Group Inc.’s vacation home rental business to Alphabet Inc.’s Google ballooned 10 times over a five-year period, but failed to increase traffic after the search engine started showcasing its own flight and hotel information, a former executive of the company told a federal judge.
(Bloomberg) — Advertising payments from Expedia Group Inc.’s vacation home rental business to Alphabet Inc.’s Google ballooned 10 times over a five-year period, but failed to increase traffic after the search engine started showcasing its own flight and hotel information, a former executive of the company told a federal judge.
About 500 million people visit Expedia’s Vrbo from Alphabet Inc.’s Google each year and that number didn’t increase even though the company’s search advertising costs grew from $21 million in 2015 to $290 million in 2019, according to Jeff Hurst, Expedia’s former chief operating officer.
With Google, “you are more listening to them tell you what to do as opposed to” a real partnership, Hurst testified Thursday as part of the Justice Department’s antitrust trial against the search giant.
Antitrust enforcers allege that Google has illegally maintained a monopoly over search, and that its dominance over the industry has allowed it to raise prices on advertisers without consequences.
Hurst’s comments echo those made by witnesses from JPMorgan Chase & Co., Home Depot Inc. and Booking Holdings Inc. about the importance of Google’s search advertising as a way to reach consumers over the last week.
Online travel companies like Expedia and Booking once had a mutually beneficial relationship with Google advertising. But around 2015, Google remade its search engine to to show its own flight and hotel information, pushing down the free listings from the travel companies. Google also built new travel search tools which were mostly paid listings, too. That meant online travel agents were forced to pay billions of dollars each year to Google to ensure they show up high in search results and get clicks from travel planners.
Arjan Dijk, a senior Booking executive who formerly worked at Google, called the search engine a “benevolent dictatorship” where advertisers “just have to accept any changes that Google makes.”
Google has argued that its search ads — the text and shopping promotions that appear at the top of a results page in response to user queries – are just one avenue that advertisers can use to reach consumers and that it is losing business to Amazon.com Inc. and ByteDance Ltd.’s TikTok.
“I would not say Google search ads are a must-have for any advertiser,” Jerry Dischler, vice president for Google’s advertising products, said in testimony last month.
About two-thirds, more than 60%, of Google’s total revenue comes from search ads, Dischler said, amounting to more than $100 billion in 2020. Every year since 2012, the company’s search ad revenue growth has been in the “high teens,” according to documents shown by the Justice Department.
Google sells search ads via automated auctions that take place in less than a second after a user enters a query. The Justice Department’s experts testified that Google has made changes to its auction rules to increase prices as much as 15%. The company has also limited the amount of information marketers have about where their spending is going and made it harder for them to opt-out of specific advertising auctions.
Executives of other companies that advertise with Google have also testified about Google’s importance for their businesses.
Ryan Booth, a Home Depot employee said the retailer experimented with “Go Dark” tests where they would withdraw all advertising from Google. But Home Depot found that its revenue dropped by a “meaningful” amount if it stopped advertising on the search engine, he said.
Tracy-Ann Lim, a JPMorgan marketing executive, said the amount of money the company pays for search advertising on Google has doubled since 2020. She attributed that partly to new products being offered by the company and an increased interest in its services over the past few years.
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