I have the impression that Google has changed its tactics in the following way:
- Past: They tried to show ads always, even when there was minimal keyword bidding competition, meaning that they would show plenty of ads, even the low CPC ones.
- Now: They are trying to push up minimum CPC, meaning that even in low competiton scenarios, they will tend to show only high CPC ads, decreasing the frequency of the low CPC ads. Sometimes not even presenting a single ad (even in situations in which there are bidders, low CPC bidders though).
You would think: Hey! Google is about maximizing revenue, therefore, they can do this in order to "convince" low CPC bidders that they should increase their minimum CPC, thus providing the revenue maximization that any business wants. The problem is that in classic economic theory, you can only do this when a monopolist controls supply. So, my impression is that Google is following this tactic, only because they have the weight of a cuasi-monopoly.
What do you think? Do you have a similar impression?
Now that I think a bit more about this, someone could actually sue Google basing the case on their behaviour. If they are behaving this way, that means that they must have some kind of internal documents that prove this point. People there are clever, they must have realized that the laws of monopoly economics apply to them. Someone must have done some presentation ,calculations, reports on the subject and concluded that they needed to tweak the Adwords algo to achieve this "monopoly maximization" situation.
These documents and the above mentioned practice, can actually prove in court that Google is a monopoly and order the payment of fines or the splitting of the company.
[edited by: carlitos at 4:02 pm (utc) on Oct. 27, 2009]