[lern_too_spel]

The reporter appears to be confused.

> At the same time, Google would charge advertisers the price of the second-highest bid and pocket the difference

If my third highest bid is less than the second highest bid, there is no way to charge me the second highest bid. This is nonsensical.

[aesh2Xa1]

You’re right. The description on this report is faulty, but I think the gist is pretty apparent.

Google tells the website owner that the winning bid was smaller in value than what it really was, thus paying the owner less money.

Google tells the advertisement auction that the winning bid was higher (than what the agreement required), but they only pay the website owner the smaller value. They are paid by the higher bidder and they (Google) keep the difference.

Google can use that excess money however they choose. In this case, they seem to be using it to pump up the value of the second-highest bids (it’s an auction), so that they can receive an even greater difference in the next auction.

[pixl97]

Heh, if this pans out it will be one of the larger fraud cases ever.

[mathteddybear]

WIRED 3 days ago reported on it in a less confusing manner. Also it included a comment from Google

> In a statement, Google said, “AG Paxton’s latest allegation—that we generated a ‘third price auction’ or manipulated our ad exchange—is entirely inaccurate. As of September 2019, we have been running a first price auction, but at the time to which AG Paxton is referring, AdX absolutely was a second price auction.”

[bjterry]

I think you are misunderstanding how second-price auctions work. In a second-price auction, the FIRST price bidder pays the bid of the SECOND price bidder. This sentence is saying that the FIRST bidder is still paying the SECOND price rate, but the publisher is only receiving the THIRD bidder's rate. For example:

* Bidder A - Bids $100

* Bidder B - Bids $90

* Bidder C - Bids $80

Under a true second-price auction, the publisher receives $90, and Bidder A pays $90. The article is alleging that Google changed it so that in this scenario, Bidder A pays $90, but the publisher receives $80.

[pyrale]

> This is nonsensical.

No, it's just fraud. It makes plenty if sense for the person taking the money.

[genewitch]

It's two different parties. You've a website. Google says your ad space is worth '3rd place bid' and pays you out 'your share' of 3rd place. The advertiser that 'won' the bid for ads on your site pays out the 2nd place bid' to Google.

The monetary difference between second and third place bids? Google pockets that plus the fee they take for 'brokering' the ad sale.