Facebook Anti-Trust Lawsuit - Stiddle

 

What is the Facebook Anti-Trust Lawsuit About?

With the 2020 U.S. presidential elections around the corner, Google comes under fire from an antitrust lawsuit which many politicians view as a bid to enhance president Donald Trump’s standing. The charge comes from 11 republican state attorneys from Florida, Arkansas, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Montana, Missouri, South Carolina, and Texas and file under the Sherman Anti-trust laws.

 

The Lawsuit comes after multiple investigations over the past decade, including one in 2013 which lasted 2 years and concluded that there was no misdemeanor on Google’s part, which all aimed to check Google’s power with the search engine.

 

These allegations come in conjunction to other indictments of other big tech giants like Twitter, Facebook, Amazon, and Apple which allegedly have monopolized the markets and closed out competition.

 

GOOGLE Impact on Advertising
From top left: Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg, Google and Alphabet inc. CEO Sundar Pichai

 

The Main Argument Against Google

 

The lawsuit against Google highlights that it has:

  •  Used its monopoly privileges to make Google the default search engine on Apple devices
  • Abused agreements to make other search engines forbidden for preinstallation on devices
  • Entered into ties and agreements to make Google undeletable despite user preference
  • Generally abused monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization

 

Considering that 76% of the search engine market belongs to Google (WebFX) it appears that the department of justice has a very compelling argument against Google. Also, considering the 2001 Appeal in the Microsoft Anti-trust case which ruled that limiting allowed software on Microsoft’s hardware was unethical and resulted in a monitoring committee, it is likely that Google will face some form of consequence but unlikely a break-up.

 

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The Effects to Advertising

 

Google currently has an average return on investment (ROI) of around 8:1.

That means for every one dollar spent on advertising Google returns about 8 dollars in revenue. With the probable limits google will have placed on it:

  • Mobile advertising will likely decline as one of the main concerns of the Lawsuit is the inherent partnership between Apple and Google
    • Google pays Apple $8-12 Billion per year to make Google the default search engine on their devices, accounting for 15-20% of their revenue.
    • Additionally, 95% of ad-clicks on mobile go to google ad campaigns

Anti-Trust Lawsuit

  • Cost Per Click will become cheaper if more search engines and advertisers gain access to advertising privileges online, competition for ads will drive prices lower
    • This has a significant impact on Legal Advertising, Dating and Personal Services, and Legal Services which have some of the highest cost per click rates.

 

  • SEO searches and “pop-up” bubbles will likely become less prevalent
    • A dominant strategy in advertising is to use Search engine optimization (SEO) to ensure an answer or product appears at the top of Google’s results, or even in a featured box with associated link

 

  • Online advertising will become cheaper but have less ROI
    • Google allows you to target an audience based on characteristics which they garner from the user, but the lawsuit could find that collecting this information could lead to political bias in ads and thus it will be harder to target a demographic
    • New advertising methods will become available but will face competition and so more competitive pricing amongst advertisers will dominate

 

  • Local Business could suffer heavy losses from loss of local ads
    • If the lawsuit concludes that collecting user information to cater political ads is illegal it could mean that location, age, and interests could be redacted from private ads preventing local businesses from advertising to people in their community and having to compete with larger corporations
    • Despite the government’s concerns, 4 in 5 consumers want ads tailored to their area with 80% of local searches for services converting to purchase.

 

 

How to Handle the Changes

 

In the future, services such as DuckDuckGo (which uses Microsoft advertising software) could be a vital source for advertisers. In general, Bing and Microsoft Ads take up around 25% of the online search market and have a real prospect at growth because they do not collect personal information as widely as Google which could become a key focus in this monopoly lawsuit.

 

GOOGLE Advertising

 

In general however the future of online advertising will:

  • Be decided by more elaborate search result layout pages
    • these pages must demonstrate that they do not take partiality to any answer or corporation but also that they show more results in a broader display than the current list format.

 

  • Focus on advertisements that focus on consumer convenience and not audience targeting
    • This means that location and local businesses should be a focus for advertisers because consumers prefer the convenience of local suggestions but the lawsuit will target gathering personal information such as age, work, and other vital information to voting stats.

 

  • Have to diversify content and improve AI targeting
    • Advertisers will need to drastically change how they target their consumers based on the likelihood that they will have less information to work with
    • They must also use more diverse platforms with attention to specialized pages that could reflect their target’s interests while receiving much less feedback

 

Looking to learn about Facebook’s IOS 14 Update? See how to overcome the changes to Facebook’s advertising policy.

Checkout Stiddle’s Blog Article: How to Increase ROI in the SaaS Industry