Did Google & Facebook Collude & Monopolize Online Business Advertising?

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Did Google & Facebook Collude & Monopolize Online Business Advertising?

Looking Back at Panda & Penguin

On the eve of Google releasing its first major content update since Panda and Penguin, worries arise concerning the impact on search ranking. Interest in the motives behind these updates reoccurs in the fear that Google will once again damage small businesses and content creators in a possible attempt to force them to pay for expensive, questionable PPC advertising.

Those working in eCommerce for a long time remember Google’s Panda Update in 2011 and Penguin in 2012, changing how internet search worked. One of the primary alterations to ranking stemmed from a determination of high-quality versus low-quality websites. Google claimed they intended these algorithms to decrease search results of websites or content farms with large amounts of spam. However, these algorithms negatively impacted many businesses and anyone trying to rank, including artists, writers, and musicians. In the aftermath, Google and Facebook advertising became almost the default advertising to achieve traffic, and both companies’ stocks soared in value, raising the question of collusion.

In February 2011, Google implemented Panda, and in 2012 implemented Penguin giving more authority to popular sites, social media, and news agencies. Many businesses fell behind in search engines and could no longer compete with their product content or what Google deemed “low-quality content,” forcing companies and individuals to turn to social media advertising or Google PPC. Google and Facebook soon began dominating the online advertising market.

Facebook offered their IPO after 2011, and nearly quintupled in value by 2019.

Did Google & Facebook Collude to Monopolize Online Business Advertising?2
 Facebook Stock From Scottrade now TD Ameritrade

Now look at Google’s massive growth from 2012.

Did Google & Facebook Collude to Monopolize Online Business Advertising?3
Google Stock From Yahoo Finance

Google deeming business and marketing content less important than other content compounds in absurdity by an insane ranking system based on search popularity. Under this system, you can post thousands of pages of content on your website and still not rank in search engines because you didn’t have rank or popularity, begging the question of how you obtain traffic since you need traffic to rank for traffic. Consider the ridiculousness of the situation.

You can’t get traffic unless you already have traffic, forcing the need to use social media or Google advertising to obtain traffic.

When Google reduced businesses’ ability to rank online, this grew Facebook’s advertising business which happened to be a pay-per-click model (PPC) similar to Google. Firms unable to obtain traffic from search results turned to social media, the ones that could afford it. Panda and Penguin’s implementation served Google’s interest by forcing advertising from anyone unable to produce or pay for enormous amounts of content, but did Google collude with Facebook, and why?

Why would Google implement a system that gave Facebook an advantage in advertising?

On May 18, 2012, Facebook held an initial public stock offering, less than a year after Panda and just over a month before Penguin’s announcement, on April 24, 2012. Interestingly enough, GM also pulled $10 million worth of advertising just days before Facebook’s IPO.

Just days before Facebook’s historic stock offering, General Motors said it plans to stop advertising on the social media site, concluding that its paid ads don’t have a big impact on consumers.

Facebook likely dodged a bullet in 2012 by getting a boost in business from Google’s changes to internet search. Had Google not implemented Panda and Penguin, Facebook might have started a downward spiral as more companies like GM realized ads weren’t working. This threat may be an underlying reason for Google inadvertently or deliberately assisting Facebook, fearing the exposure of PPC advertising as limited or ineffectual. If PPC advertising doesn’t work, this undermines both Google and Facebook’s core business models.

Determining this advertising’s efficacy proves tremendously difficult because of the cottage industry of armchair marketers selling Facebook and Google advertising: few of which are honest about results. Google, Facebook, and anyone else selling this advertising claim PPC works because PPC delivers what it promises: clicks. You are not paying for sales conversion, which many businesses and individuals seek; you pay for clicks. Marketing and ad companies selling PPC do not talk about sales conversion; they talk about clicks, click-through rates, and traffic with the idea that more traffic means more brand awareness, and more awareness means more sales conversion. Average business owners mistakenly believe they pay for marketing that results in a more direct sales conversion.

The cottage industry of PPC shifted strategies over the years with no one discussing sales conversion anymore because that rate is so low that it makes PPC unsalable. Just look at the search results for social media sales conversion or email any company selling PPC, and they will discuss traffic, likes, and clicks with a no-results guarantee — never sales conversion.

Even if PPC is effective, most companies will readily tell you, as part of their no-guaranteethat it may not work for every product or it takes time to hit the right ad to make it work. The limited effectiveness leaves one to question the return on investment: is there an ROI, or is PPC restricted to likes, traffic, brand awareness, and indirect marketing schemes not easily measured? If this is the case, PPC is a terrible form of advertising because there is no way to measure outcomes accurately or effectively.

Social media advertising might work by creating awareness that causes a person to return later and purchase, but unlike ads on television or radio, ROI cannot be measured over time by sales conversion, except indirectly. While no advertising comes with a guarantee, at least with TV or radio, you can run the ads for six months, and if there is no increase in sales, you kill the ads. PPC advertising’s constant shifting and changing campaigns often end with businesses and individuals wasting money and time for weeks or months with nothing to show. This situation occurs because artists, videographers, advertisers, and other professionals design television and radio ads. Owners or individuals lured by seemingly low-cost ads typically design and execute PPC, but lacking experience in digital advertising makes them prone to wasting enormous amounts of money. Even GM, with all its resources and outlay of $10 million in annual marketing on Facebook, could not make the ads work, so how is a small business or individual going to do it on a few hundred or few thousand dollars a month? The chances are dismal.

If PPC advertising has limited effectiveness, possibly no effectiveness depending on the product, Google had every reason to implement Panda and Penguin. Facebook benefiting from these algorithms, provided support for the PPC model and eliminated most competition, leaving just the two companies to dominate online advertising, which they do today.

Answering whether Google and Facebook’ colluded may require proving the efficacy of the PPC advertising model and connecting more dots, but collusion is not farfetched. The New York Times reported Google and Facebook now face a similar charge in which Facebook received money to not compete with Google’s advertising efforts.

In 2017, Facebook said it was testing a new way of selling online advertising that would threaten Google’s control of the digital ad market. But less than two years later, Facebook did an about-face and said it was joining an alliance of companies backing a similar effort by Google.
Facebook never said why it pulled back from its project, but evidence presented in an antitrust lawsuit filed by 10 state attorneys general last month indicates that Google had extended to Facebook, its closest rival for digital advertising dollars, a sweetheart deal to be a partner.

There are many disturbing aspects to the possibility Facebook and Google colluded, and viewing the history and impact of Panda and Penguin reveals that Facebook and Google profited from these algorithms. If collusion occurred, this allowed for the near-complete monopolization of online advertising, with Google and Facebook maintaining half of the online advertising market share today. Who knows what this means in terms of global business loss? If collusion occurred, individuals, small businesses, and corporations lost billions.

Equally disturbing is the forcing of costly PPC on small businesses, individuals, writers, artists, and musicians. Most new artists don’t have the money to spend on large-scale social media advertising or to waste stumbling upon the right PPC ad — if there is one. If collusion between Facebook and Google proves true, the most vulnerable businesses and individuals will reveal, as those hurt the most.

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Photo by Duncan Meyer on Unsplash

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