Sen. Elizabeth Warren (D.MA) requested that the Commodity Futures Trading Commission investigate Google's alleged manipulations of the online advertising marketplace. This would allow for a federal regulator to oversee digital advertising markets.Warren's letter is focused on Project Bernanke, a program that was revealed in April by Ken Paxton, Texas Attorney General. Google used historical Google Ads data in order to increase clients' chances of winning auctions under that program. According to the company, this practice resulted in an additional $230 million in revenue.Digital advertising is now the most traded commodity in the world.Warren wrote in his letter that Google learned from other ad buyers' bidding data and gave its tools a competitive advantage. This ultimately led to higher win rates. We are currently investigating this activity to determine if it violates antitrust laws. However, I have additional concerns about the activity that may fall within the CFTC's jurisdiction and warrant closer scrutiny.A spokesperson for Google said that the claims of market manipulation are a mischaracterization. The company stated that this was done entirely by Google Ads buyers using the same data and strategies available to all buyers participating in an Ad Exchange auction. We are constantly improving our products to be more competitive, just like many other businesses in this highly-competitive field.Online ad markets are often overlooked in favour of more glamorous sidelines. But they have been the heart of Googles business for years. The company's most recent quarterly earnings reported that advertising revenue accounted for more than 80 percent.The CFTC would target digital ad exchanges as a new target. It has traditionally dealt with commodity trading and, more recently, cryptocurrency. Warren argues digital ads are a commodity under the statutory definition. However, CFTC regulation would not prevent other agencies from taking appropriate action. Warren's appeal to the commission for action would result in a significant expansion of its power and a new headache for Google.Warren writes that ad exchanges are similar to high-frequency traders in that they provide a platform for selling ad inventory every time a website loads. Every day, tens of billions worth of digital ads are traded on American ad-exchanges. Digital advertising is now the most traded commodity exchange.This letter arrives at a difficult time for the CFTC. It is still waiting for new leadership from the Biden government. Chris Brummer, a Georgetown professor and ex-CFTC commissioner, has been proposed as a frontrunner for the position. However, Brummer is yet to be confirmed by the Senate. Senator Warrens hopes that this will allow him to address his concerns directly.
