Technology

Google And Facebook’s Ad Dominance Are Destroying Their Competitors

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Facebook and Google control dominance in the online advertisement business has crushed their competitors the past few years, reducing the number of independent firms and destroying competition.

Venture capital money in digital ad firms reached high of $2.92 billion in 2015 — that number is expected to be less than half that in 2018, according to financial research firmCB Insights, The New York Times reported Sunday.

The number of independent digital ad companies fell 21 percent since 2013, according to LUMA Partners, which analyzes digital media and marketing, with only 185 left.

Overall ad spending online continues to rise yearly, but 90 percent of the growth in 2017 went to Google or Facebook, The NYT reported.

The two tech giants, combined, received about 63 percent of all ad spending in the U.S. in 2017. Facebook and Google receive about 50 percent of global ad revenue.

Most websites on the internet make their money from ads, like Facebook, Google, YouTube, and Twitter. That said, a small but growing portion is seeing an increase in donor or subscription-based content.

Google developed a way to advance its tailored ads, with the ability to target highly specific users, by tracking users’ purchases inside stores and matching them to the ads users see online, The Daily Caller reported in 2014.

The development allowed Google to gain a competitive advantage over other digital ad firms, making its data more accurate than competitors who can only track if users have clicked on the ad — as well as making tailored ads towards individuals who are more likely to purchase the ad.

Google and Facebook’s hold on this market is a threat to not just the free market, but the free market of ideas, according to The Wall Street Journal.

Google banned bail-bond companies from advertising on its platforms in early May. Facebook followed soon after, banning payday loans. Both companies cited these industry’s alleged exploitation of poor and mostly black communities.

Google conducts nearly 90 percent of all internet searches and Facebook has over 2 billion users, which is almost half of all people in the world with an Internet connection.

Given these two companies’ sizes, the ban on payday loans and bail-bond ads, they’ve effectively wiped out an entire industry — raising concerns about anti-trust and anti-competitive behavior. Neither payday loans or bail-bonds are illegal, but both are highly regulated and politically divisive.

Facebook and Google centralize most data on the internet, making them effectively monopolies. Data monopolies “can actually be more dangerous than traditional monopolies,” according to a University of Tennessee, Knoxville professor of law who specializes in antitrust, Maurice Stucke.

Follow Kyle on Twitter @KylePerisic

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