Paying minimum cpc for position 2 seems like a good deal to me.
If that's not the case and there are more advertisers (as I suspect - consider broad match implications here) then there are too many factors to consider.
Collusion to lower bids seems a dodgy area, and may be against TOS at the least.
How would this communication go? Hi - will you lower your bid, so that I can remain on top of you for a cheaper price?
Of course, price fixing is illegal. How can people not know this?
The chances of getting caught and punished are very low in a situation like this. But yes, illegal.
Agreeing to do something which will end in material loss to a third party is rather different.
Also, it's futile. Cooperating with a small number of people will simply allow others to take your place. And then you'll fall out amongst yourselves - you said you were competitors?
And what if someone reports the others, once approached. That would change things, as well as making my day ;)
If companies are agreeing on a standard price (i.e., "price-fixing"), that is illegal. However, it is a common practice. Ever notice, just by coincidence, music CDs have similar prices? The government doesn't do anything (if they did, the companies would call their Congress critters and the regulators would get their lunchroom closed. Or worse.) The government does something only if it's really blatant and there's lots of complaints (i.e., the voters might actually vote.)
If workers agree on a standard price, namely, they agree that they want $12/hr, well, that's a commie-pinko plot, the corps call out the National Guard, and a few workers are shot "as an example for the others". This is unionization. Corps asked Congress (i.e., massive bribery) to pass the Taft-Hartley Act, which forbids workers to agree on a price. Workers can set up unions only under massive regulation (i.e., strict control) by the government.
Interestingly, the opposite isn't illegal. Companies regularly price-fix the workers' salaries and wages. Ever notice that "just like magic", all salaries and wages for any particular job are identical? Companies have a process to price-fix your wages. It's secretive and the workers don't know about this. None, literally none, of the hundreds of job sites, recruiters, HR managers, etc., tell you about this. It's just small print and you don't really need to know this anyway.
Finally: can buyers price-fix? This is the original question. Can a group of buyers agree to pay a certain price? This form of collusion is known as bid-rigging. There are many clever ways to do this (building contractors, construction, etc., have been doing bids for over 100 years.) It's illegal and often, very hard to prove, esp. in some ingenious forms.
So, yes, it's illegal to agree with competitors on bids at Google, if... you're in the USA. Collusion and price-fixing is generally legal and normal in many parts of the world. You've heard of the De Beers diamond cartel, OPEC oil cartel, and, of course, the Medellin drug cartel.
For more on this, see the Sherman Act, the Taft-Hartley Act, and anti-trust in general.
