Microsoft Slams Google’s Ad Practices

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Microsoft used a speaking slot provided by the Association of National Advertisers to open a broad assault on rival Google, accusing the Web giant of using its market clout to the detriment of advertisers.

Microsoft deputy general counsel Mary Snapp laid out her company’s case to advertisers gathered in Washington, D.C., today for the ANA Advertising Law & Public Policy Conference, which Microsoft sponsored. Ironically, Microsoft based its criticisms on Google’s size in the market, mirroring charges leveled against the software firm in the 1990s.

Snapp said marketers should demand that Google allow them to take advertising data out of AdWords for use in other ad tools. She also decried Google’s policy that lets competitors bid on a brand’s search terms, saying it drives up prices. Microsoft only sells search ads on brand terms to companies that own those terms.

“Google, of course, benefits handsomely from this policy by collecting lots of money from the investments that you and other companies have made in their brands,” she said in her prepared remarks.

Microsoft and Google are locked in a battle over the lucrative search advertising market, with Microsoft trailing far behind. The companies have sparred regularly over which is abusing its power. Google suspects that Microsoft will use its operating system and browser market power to steer users to its search engine. Microsoft sees Google’s stronghold in online advertising as detrimental to competition.

“We realize that, given the state of the market, few of you can afford to give up using Google because of these restrictions,” Snapp told advertisers at the conference. “But that doesn’t mean you should have to accept them either. And the fact that Google has might, does not make it right.”

Google representative Adam Kovacevich painted the attack as part of a broader Microsoft effort to combat Google using legal maneuvers. He pointed to a recent Wall Street Journal article that found Microsoft behind an unusual antitrust claim filed in Ohio by a small Web advertiser.

“In light of recent revelations, we’re not surprised by these comments,” he said. “But we work hard to compete fair and square, and our policies are intended to provide users with the most relevant results possible and give advertisers the best possible return on their investment.”

Google contends that its trademark policy, which allows bidding on brand terms, balances trademark owners’ rights with providing consumers as much information as possible in search ads.

Kovacevich said the AdWords API policy is a non-issue.

“As we have repeatedly made clear, advertisers can easily export their ad campaign data out of AdWords into competing ad platforms like Microsoft and Yahoo, both through CSV export and the AdWords API,” he said. “In fact, both Microsoft and Yahoo offer their advertisers explicit tips and tools for exporting Google campaign data into their platforms.”

In a later phone interview, Snapp said Microsoft is making progress toward providing a counterweight to Google in the online ad market. But that doesn’t excuse what she called “artificial restrictions” created by Google, she said.

“The solution is that Google changes some of these practices to be more open and transparent,” she said.

Microsoft’s legal and regulatory efforts have so far borne some fruit. It was able to rally opposition to scuttle Google’s proposed search advertising deal with Yahoo in 2008. Microsoft subsequently struck a deal with Yahoo that will result in bumping its search market share to around 25 percent from the 12 percent it controls today.

Snapp also used the speech to reiterate Microsoft’s support for the Federal Trade Commission investigating Google’s proposed acquisition of mobile ad network AdMob.

“This isn’t just grumbling,” she said. “This is making sure the next generation of commerce is one that’s healthy, vibrant and competitive.”

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