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Is There Any Market Power in Online Display Advertising?

A lawsuit filed by the State of Texas and nine other states in December 2020 alleges, among other things, that Google has engaged in anticompetitive conduct…

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This article was originally published by Truth on The Market

A lawsuit filed by the State of Texas and nine other states in December 2020 alleges, among other things, that Google has engaged in anticompetitive conduct related to its online display-advertising business.

Broadly, the Texas complaint (previously discussed in this TOTM symposium) alleges that Google possesses market power in ad-buying tools and in search, illustrated in the figure below.

The complaint also alleges anticompetitive conduct by Google with respect to YouTube in a separate “inline video-advertising market.” According to the complaint, this market power is leveraged to force transactions through Google’s exchange, AdX, and its network, Google Display Network. The leverage is further exercised by forcing publishers to license Google’s ad server, Google Ad Manager.

Although the Texas complaint raises many specific allegations, the key ones constitute four broad claims: 

  1. Google forces publishers to license Google’s ad server and trade in Google’s ad exchange;
  2. Google uses its control over publishers’ inventory to block exchange competition;
  3. Google has disadvantaged technology known as “header bidding” in order to prevent publishers from accessing its competitors; and
  4. Google prevents rival ad-placement services from competing by not allowing them to buy YouTube ad space.

Alleged harms

The Texas complaint alleges Google’s conduct has caused harm to competing networks, exchanges, and ad servers. The complaint also claims that the plaintiff states’ economies have been harmed “by depriving the Plaintiff States and the persons within each Plaintiff State of the benefits of competition.”

In a nod to the widely accepted Consumer Welfare Standard, the Texas complaint alleges harm to three categories of consumers:

  1. Advertisers who pay for their ads to be displayed, but should be paying less;
  2. Publishers who are paid to provide space on their sites to display ads, but should be paid more; and
  3. Users who visit the sites, view the ads, and purchase or use the advertisers’ and publishers’ products and services.

The complaint claims users are harmed by above-competitive prices paid by advertisers, in that these higher costs are passed on in the form of higher prices and lower quality for the products and services they purchase from those advertisers. The complaint simultaneously claims that users are harmed by the below-market prices received by publishers in the form of “less content (lower output of content), lower-quality content, less innovation in content delivery, more paywalls, and higher subscription fees.”

Without saying so explicitly, the complaint insinuates that if intermediaries (e.g., Google and competing services) charged lower fees for their services, advertisers would pay less, publishers would be paid more, and consumers would be better off in the form of lower prices and better products from advertisers, as well as improved content and lower fees on publishers’ sites.

Effective competition is not an antitrust offense

A flawed premise underlies much of the Texas complaint. It asserts that conduct by a dominant incumbent firm that makes competition more difficult for competitors is inherently anticompetitive, even if that conduct confers benefits on users.

This amounts to a claim that Google is acting anti-competitively by innovating and developing products and services to benefit one or more display-advertising constituents (e.g., advertisers, publishers, or consumers) or by doing things that benefit the advertising ecosystem more generally. These include creating new and innovative products, lowering prices, reducing costs through vertical integration, or enhancing interoperability.

The argument, which is made explicitly elsewhere, is that Google must show that it has engineered and implemented its products to minimize obstacles its rivals face, and that any efficiencies created by its products must be shown to outweigh the costs imposed by those improvements on the company’s competitors.

Similarly, claims that Google has acted in an anticompetitive fashion rest on the unsupportable notion that the company acts unfairly when it designs products to benefit itself without considering how those designs would affect competitors. Google could, it is argued, choose alternate arrangements and practices that would possibly confer greater revenue on publishers or lower prices on advertisers without imposing burdens on competitors.

For example, a report published by the Omidyar Network sketching a “roadmap” for a case against Google claims that, if Google’s practices could possibly be reimagined to achieve the same benefits in ways that foster competition from rivals, then the practices should be condemned as anticompetitive:

It is clear even to us as lay people that there are less anticompetitive ways of delivering effective digital advertising—and thereby preserving the substantial benefits from this technology—than those employed by Google.

– Fiona M. Scott Morton & David C. Dinielli, “Roadmap for a Digital Advertising Monopolization Case Against Google”

But that’s not how the law—or the economics—works. This approach converts beneficial aspects of Google’s ad-tech business into anticompetitive defects, essentially arguing that successful competition and innovation create barriers to entry that merit correction through antitrust enforcement.

This approach turns U.S. antitrust law (and basic economics) on its head. As some of the most well-known words of U.S. antitrust jurisprudence have it:

A single producer may be the survivor out of a group of active competitors, merely by virtue of his superior skill, foresight and industry. In such cases a strong argument can be made that, although, the result may expose the public to the evils of monopoly, the Act does not mean to condemn the resultant of those very forces which it is its prime object to foster: finis opus coronat. The successful competitor, having been urged to compete, must not be turned upon when he wins.

– United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945)

U.S. antitrust law is intended to foster innovation that creates benefits for consumers, including innovation by incumbents. The law does not proscribe efficiency-enhancing unilateral conduct on the grounds that it might also inconvenience competitors, or that there is some other arrangement that could be “even more” competitive. Under U.S. antitrust law, firms are “under no duty to help [competitors] survive or expand.”  

To be sure, the allegations against Google are couched in terms of anticompetitive effect, rather than being described merely as commercial disagreements over the distribution of profits. But these effects are simply inferred, based on assumptions that Google’s vertically integrated business model entails an inherent ability and incentive to harm rivals.

The Texas complaint claims Google can surreptitiously derive benefits from display advertisers by leveraging its search-advertising capabilities, or by “withholding YouTube inventory,” rather than altruistically opening Google Search and YouTube up to rival ad networks. The complaint alleges Google uses its access to advertiser, publisher, and user data to improve its products without sharing this data with competitors.

All these charges may be true, but they do not describe inherently anticompetitive conduct. Under U.S. law, companies are not obliged to deal with rivals and certainly are not obliged to do so on those rivals’ preferred terms

As long ago as 1919, the U.S. Supreme Court held that:

In the absence of any purpose to create or maintain a monopoly, the [Sherman Act] does not restrict the long recognized right of [a] trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.

– United States v. Colgate & Co.

U.S. antitrust law does not condemn conduct on the basis that an enforcer (or a court) is able to identify or hypothesize alternative conduct that might plausibly provide similar benefits at lower cost. In alleging that there are ostensibly “better” ways that Google could have pursued its product design, pricing, and terms of dealing, both the Texas complaint and Omidyar “roadmap” assert that, had the firm only selected a different path, an alternative could have produced even more benefits or an even more competitive structure.

The purported cure of tinkering with benefit-producing unilateral conduct by applying an “even more competition” benchmark is worse than the supposed disease. The adjudicator is likely to misapply such a benchmark, deterring the very conduct the law seeks to promote.

For example, Texas complaint alleges: “Google’s ad server passed inside information to Google’s exchange and permitted Google’s exchange to purchase valuable impressions at artificially depressed prices.” The Omidyar Network’s “roadmap” claims that “after purchasing DoubleClick, which became its publisher ad server, Google apparently lowered its prices to publishers by a factor of ten, at least according to one publisher’s account related to the CMA. Low prices for this service can force rivals to depart, thereby directly reducing competition.”

In contrast, as current U.S. Supreme Court Associate Justice Stephen Breyer once explained, in the context of above-cost low pricing, “the consequence of a mistake here is not simply to force a firm to forego legitimate business activity it wishes to pursue; rather, it is to penalize a procompetitive price cut, perhaps the most desirable activity (from an antitrust perspective) that can take place in a concentrated industry where prices typically exceed costs.”  That commentators or enforcers may be able to imagine alternative or theoretically more desirable conduct is beside the point.

It has been reported that the U.S. Justice Department (DOJ) may join the Texas suit or bring its own similar action against Google in the coming months. If it does, it should learn from the many misconceptions and errors in the Texas complaint that leave it on dubious legal and economic grounds.

The post Is There Any Market Power in Online Display Advertising? appeared first on Truth on the Market.

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Energy & Critical Metals

United Lithium Achieves 99.1% Pure Lithium From Spodumene Concentrate

United Lithium (CSE: ULTH) this morning posted further results from testwork being conducted to produce lithium carbonate, also known as
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United Lithium (CSE: ULTH) this morning posted further results from testwork being conducted to produce lithium carbonate, also known as Li2CO3. The technical grade of the lithium carbonate, as well as the recovery of Li2O is said to be excellent. The results follow the successful testing of proprietary floatation tech.

The lithium carbonate under the test process was produced from spodumene concentrate, with the testing producing a final product with a purity of 99.1%. Lithium rich pegmatite was sourced for the program from Canada, with spodumene specifically selected due to it being classified as the “most important commercial lithium mineral due to its high Li content and favourable processing characteristics.” The processes of calcination, acid roasting, and water leaching were used to produce the lithium carbonate from the spodumene.

Following the successful tests, the company is now proceeding to test for the product of lithium hydroxide from the spodumene concentrate. Pilot plant testing meanwhile will begin in early 2022, which will test lithium rich feed materials. The results of such testing will then be utilized for an economic assessment for the viability of producing lithium from both spodumene and petalite feed.

“Test work to date has demonstrated that it is possible to modify traditional processes and shortcut lithium carbonate production using innovative out of the box thinking. United Lithium aims to commercialize a sustainable and robust process flow sheet for lithium concentrate production, high grade lithium carbonate and potentially high purity battery grade lithium hydroxide, with the ability to accommodate multiple feed materials with minimal modifications,” said CEO Michael Dehn on the development.

United Lithium last traded at $0.70 on the CSE.


FULL DISCLOSURE: United Lithium is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover United Lithium on The Deep Dive, with The Deep Dive having full editorial control. Additionally, the author personally holds shares of the company. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.

The post United Lithium Achieves 99.1% Pure Lithium From Spodumene Concentrate appeared first on the deep dive.


Author: Jay Lutz

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Energy & Critical Metals

ABB, MEDATech demo fully automated fast charging solution on Western Star 4900XD-e

A new prototype ultra-fast charging platform for heavy-duty applications that features the ABB Ability™ eMine FastCharge charger and MEDATech ALTDRIVE…

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A new prototype ultra-fast charging platform for heavy-duty applications that features the ABB Ability eMine FastCharge charger and MEDATech ALTDRIVE battery-electric powertrain solution is helping automate the charge of a Western Star 4900XD-e machine in a trial application.

ABB developed an integrated charging infrastructure, with the latest charger technology and a future-proof automated connection device, while MEDATech created a battery-electric powertrain that includes a charge-reception system that can be integrated into any heavy-duty vehicle.

Together with MEDATech’s complete ALTDRIVE battery-electric vehicle system, ABB’s ultra-fast charging forms a complete electric vehicle package that helps OEMs move away from diesel, according to MEDATech. Integrating ALTDRIVE into new vehicle builds will enable OEMs to fast-track their battery-electric offerings, complete with ultra-fast charging.

Offering up to 600 kW of power, the eMine FastCharge solution was launched by ABB in September as part of its ABB Ability eMine portfolio of solutions.

ABB and MEDATech have previously worked together on the conversion of the Western Star 4900 tractor to battery-electric operation, but this is the first time the two have tested the automated charging functionality of the FastCharge solution on ALTDRIVE technology.

“Designed for the harshest environments, this flexible and fully-automated solution can easily be installed anywhere, and can charge any truck, without the need of human intervention,” Mario Schmid, Project Lead Engineer at ABB, said.

Charging occurs with no help from machine operators, according to the companies. Drivers station their vehicles next to the charger and the ABB Ability eMine FastCharge does the rest. When the system senses a vehicle is near, it moves the connection pin into position and inserts it into the receptacle, carrying out charging in a fully-automated fashion.

With ABB’s charging capability matching charging cycles to the production, charging times of less than 15 minutes can be achieved, according to the companies.

On September 10, ABB and MEDATech announced the signing of an MoU to jointly explore solutions to decarbonise mining operations through charging solutions and optimised electric drive systems in BEVs for heavy-duty applications.

The post ABB, MEDATech demo fully automated fast charging solution on Western Star 4900XD-e appeared first on International Mining.

Author: Daniel Gleeson

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Energy & Critical Metals

Hyperion Metals increases Tennessee land position at Titan Project by 78%

Special report: The company’s land consolidation strategy has rapidly grown its landholdings by 419% from its initial 2,100-acre position in … Read…

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The company’s land consolidation strategy has rapidly grown its landholdings by 419% from its initial 2,100-acre position in September 2020.

Hyperion Metals has increased its land position at the Titan Critical Minerals Project by 78% in west Tennessee, USA by 4,794 acres to 10,905 acres, enabling further growth in the resource.

Since September 2020, Hyperion (ASX:HYM) has grown its landholding by 419% from its initial 2,100 acre position.

These new landholdings include mineral rights contiguous to the recently reported mineral resource estimate at the Titan Project of 431mt at 2.2% THM, which established the project as the largest titanium, zircon, and rare earth minerals project in the US.

Hyperion has also acquired land positions over greenfield locations up to 80km from the Titan Project, with planned exploration work on these properties to help guide future land consolidation.

‘Compelling combination of scale and grade’

HYM managing director and CEO Anastasios Arima said Titan has a “compelling combination of scale, grade, high value critical mineral products, low-cost inputs, world class infrastructure and location” and looks forward to rapidly advancing the critical mineral project.

“We are also highly appreciative of the deep support we have received from the local west Tennessee community that will help us to establish zero carbon, sustainable, critical material supply chains for advanced American industries,” he said.

Major automotive, battery and chemical operations near the Titan Project. Pic: Supplied.

The company says its landholdings benefit from significant cost advantages due to the location and proximity to low cost, world-class infrastructure. That’s expected to provide material cost and logistics advantages compared to projects located in more remote areas.

These factors have contributed to a huge amount of recent investment in Tennessee, highlighting the region as a leading jurisdiction for business, including by major auto manufacturers Ford and Volkswagen, world leading battery producers LG Chem and SK Innovation, as well as major chemical organisations and end users including Chemours.

 


 

 

This article was developed in collaboration with Hyperion Metals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Hyperion Metals increases Tennessee land position at Titan Project by 78% appeared first on Stockhead.


Author: Special Report

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