5 ms·

The deep question: > In the market for electronically traded equities, we require exchanges to provide traders with fair access to data and speed, we identify

by gen220 6y ago

The deep question: > In the market for electronically traded equities, we require exchanges to provide traders with fair access to data and speed, we identify and manage intermediary conflicts of interest, and we require trading disclosures to help police the market. Because ads now trade on electronic trading venues too, should we borrow these three competition principles to protect the integrity of advertising? It boils down to: should we regulate ad exchanges like we regulate equity exchanges, such that the exchange operator (e.g. Alphabet, NYSE) cannot also be a participant in the traded assets. If you believe the answer is yes, alphabet's ad exchange should not be in the same parent company as youtube and google. Unbundling the ad exchange from alphabet's other services sounds like it would be a herculean technical nightmare! Might be easier to start from scratch (:

jeffbee 6y ago
Of all the crazy stuff that has been proposed on HN under the umbrella of "breaking up Google", excising the ad exchange might be the least technically challenging, and also one of the few that are economically practical.
- treis 6y ago
  I don't see how it's economically practical. How are Chrome, Gmail, Maps, et al going to be able to support themselves without the ad cash cow?
  - easton 6y ago
    Sell AdWords space just like everyone else, right? The tight integration between Search and Ads might be lost though, since they wouldn't be able to talk to each other the same way. I'd imagine that'd take a chunk out of revenue.
    - treis 6y ago
      Is anybody making much money selling AdWords? AFAIK, the real value comes from collecting data and selling your own ads.
  - brandonmenc 6y ago
    > How are Chrome, Gmail, Maps, et al going to be able to support themselves Start providing value in exchange for cash.
    - m0zg 6y ago
      TBH I think if major browsers ceased development for 5 years with the exception of bug and security fixes, the web would only get better. Right now it's a race between their "improvements" and ever more complicated web frameworks. You don't ever get to really _master_ the web platform.
    - DaiPlusPlus 6y ago
      G-Suite (Gmail) costs money. Google Maps for Business use is prohibitively expensive (for me) - we use Azure Maps instead. Chrome is a weird thing, though.
  - sixothree 6y ago
    The same way competitors to those products survive.
    - quintushoratius 6y ago
      What competition is there for any of those services? Bing, whatever MS brands Hotmail as these days, Yahoo, Firefox & Opera? They're all small potatoes. Apple mail and maps isn't really competition, either. Similar problem in Asia, I believe, just different players.
      - unionpivo 6y ago
        That was the point. If google free tire goes away, there can actually be competition. And google ads/search can still pay chrome like it does for Firefox
Mountain_Skies 6y ago
>such that the exchange operator (e.g. Alphabet, NYSE) cannot also be a participant in the traded assets. If I recall correctly, ICE, which owns the NYSE, is itself traded on the NYSE. Obviously their position is small compared to that of Alphabet on the ad exchanges but I wonder if things go against Alphabet, would that force ICE off of the exchanges it owns?
- BobbyJo 6y ago
  I think it would only be equivalent if ICE did something like HFT using information they gather through running the exchange.
kolbe 6y ago
I would like to point out that most exchanges do not operate this way, and that even in equities, dealers have eschewed rules by not technically being an exchange, but functionally doing so. All banks have trading desks, and the vast majority of the the trading they do is engaging in a private contract with themselves and their customers. Citadel/Jane Street both use ECNs to simply tally a trade that they do privately, and in markets where Citadel has to use an exchange, they get extremely (suspiciously) good rates and preferential treatment. I do want exchanges and dealers to be separate entities, but I would also prefer it if this justice were doled out fairly—not just when it’s politically convenient to pursue it.
soared 6y ago
There are competitors who do this right now, so the larger problem is political and business. The trade desk is effectively a mostly neutral ad exchange. They self regulate very effectively and that is a big reason advertisers like it.

by gen220 6y ago

jeffbee 6y ago

Of all the crazy stuff that has been proposed on HN under the umbrella of "breaking up Google", excising the ad exchange might be the least technically challenging, and also one of the few that are economically practical.

treis 6y ago
I don't see how it's economically practical. How are Chrome, Gmail, Maps, et al going to be able to support themselves without the ad cash cow?
- easton 6y ago
  Sell AdWords space just like everyone else, right? The tight integration between Search and Ads might be lost though, since they wouldn't be able to talk to each other the same way. I'd imagine that'd take a chunk out of revenue.
  - treis 6y ago
    Is anybody making much money selling AdWords? AFAIK, the real value comes from collecting data and selling your own ads.
- brandonmenc 6y ago
  > How are Chrome, Gmail, Maps, et al going to be able to support themselves Start providing value in exchange for cash.
  - m0zg 6y ago
    TBH I think if major browsers ceased development for 5 years with the exception of bug and security fixes, the web would only get better. Right now it's a race between their "improvements" and ever more complicated web frameworks. You don't ever get to really _master_ the web platform.
  - DaiPlusPlus 6y ago
    G-Suite (Gmail) costs money. Google Maps for Business use is prohibitively expensive (for me) - we use Azure Maps instead. Chrome is a weird thing, though.
- sixothree 6y ago
  The same way competitors to those products survive.
  - quintushoratius 6y ago
    What competition is there for any of those services? Bing, whatever MS brands Hotmail as these days, Yahoo, Firefox & Opera? They're all small potatoes. Apple mail and maps isn't really competition, either. Similar problem in Asia, I believe, just different players.
    - unionpivo 6y ago
      That was the point. If google free tire goes away, there can actually be competition. And google ads/search can still pay chrome like it does for Firefox

Mountain_Skies 6y ago

>such that the exchange operator (e.g. Alphabet, NYSE) cannot also be a participant in the traded assets. If I recall correctly, ICE, which owns the NYSE, is itself traded on the NYSE. Obviously their position is small compared to that of Alphabet on the ad exchanges but I wonder if things go against Alphabet, would that force ICE off of the exchanges it owns?

BobbyJo 6y ago
I think it would only be equivalent if ICE did something like HFT using information they gather through running the exchange.

kolbe 6y ago

I would like to point out that most exchanges do not operate this way, and that even in equities, dealers have eschewed rules by not technically being an exchange, but functionally doing so. All banks have trading desks, and the vast majority of the the trading they do is engaging in a private contract with themselves and their customers. Citadel/Jane Street both use ECNs to simply tally a trade that they do privately, and in markets where Citadel has to use an exchange, they get extremely (suspiciously) good rates and preferential treatment. I do want exchanges and dealers to be separate entities, but I would also prefer it if this justice were doled out fairly—not just when it’s politically convenient to pursue it.

soared 6y ago

There are competitors who do this right now, so the larger problem is political and business. The trade desk is effectively a mostly neutral ad exchange. They self regulate very effectively and that is a big reason advertisers like it.