[junon]

I'm aware of what fraud is, I just didn't understand based on the parent comments what fraud was being committed (what lies were told, etc). I didn't pick up on the fact that Google was advertising paying the runner-up bid plus a penny but then marking up the runner-up bid substantially.

[mathteddybear]

But that's not what the witness expert claims. He said "squashing".

Google used a second price auction, and also it ranked ads in the auction by bid multiplied by click through rate. Squashing is something like ranking ads by (bid * power(ctr, gamma)) where 0 < gamma < 1. In auctions where the 3rd bid (or lower) wins under the (bid * ctr) rank switching to squashing may increase revenue, because the actually higher bid will win the auction.