U.S. accuses Google of illegal methods to push up ad prices

Google executive Adam Juda said the company uses a formula to decide who wins auctions that are used to place advertising on websites.

A lawyer for the U.S. Justice Department pressed a Google executive on Wednesday about techniques the search and advertising giant used to push up online advertising prices in an allegedly unfair way.

Testifying at a once-in-a-generation antitrust trial in Washington where the United States has accused Google of abusing its dominance of search and some advertising, Google executive Adam Juda said the company uses a formula, which includes the quality of an ad, to decide who wins auctions that are used to place advertising on websites.

The Justice Department has accused Google of manipulating online auctions - a multibillion dollar industry dominated by Google - with these formulas to favour its own bottom line.

Justice Department attorney David Dahlquist asked Juda if he agreed with a document that Google had prepared for the European Union, which said that the company can "directly affect pricing through tunings of our auction mechanisms." Juda said he did not.

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Pressed on if "tuning" can impact pricing, Juda said, "They can." Juda's testimony began on Tuesday and continued into Wednesday.

Juda said one thing that can be "tuned" is a rough formula that gives an ad a long-term value, or LTV, based on the bid given, the potential click-through rate or how many people will likely click on it and the quality of the advertisement and website associated with it.