We believe that Google has developed a system of automatic program and platform linkages, opt-ins and extensions that are opaque and costly for their advertisers. These systems are designed to extend Google’s Internet search dominance into commerce, advertising and apps on the Internet and mobile platforms, giving them disproportionate control of advertising inventory on multiple platforms

1. Google’s System to Control Advertising Inventory on Multiple Platforms Examples of Company Practices with Supporting Facts and Data PART 1: MOBILE Simon Buckingham April 14 th , 2010 PRIVATE AND CONFIDENTIAL

4. Google’s Strategic Direction and System We believe that Google has developed a system of automatic program and platform linkages, opt-ins and extensions that are opaque and costly for their advertisers. These systems are designed to extend Google’s Internet search dominance into commerce, advertising and apps on the Internet and mobile platforms, giving them disproportionate control of advertising inventory on multiple platforms : Mobile Internet Advertising, commerce and Apps Together Google and AdMob would have an estimated 75% of the in-app mobile advertising market (whilst Google’s program is still in beta and with no ads in most of its own apps. Unlike the Internet, Yahoo and Microsoft have no presence in the in-app ads space Internet Advertising System Google’s Product Set allows for complete coverage and control of Internet advertising. Products include AdSense, AdWords, DoubleClick, Mobile, Checkout, Search, Nexus One, Android, YouTube, Gmail, Affiliate Network, New separately auctioned Search Products (Sitelinks, Product Ads, Local/ Map Ads, Comparison Ads) Largest single provider of Advertising and Audience on the Internet Desktop Search and Keywords Estimated 75% Market Share

7. Automatic Extension of AdWords to Mobile On 8 th December 2008, Google extended their Internet products to the mobile platform simply by changing the default campaign settings for AdWords from Desktops and Laptops to Desktops, Laptops and mobile devices with full Internet browsers (smartphones), and this has remained the default ever since. The default AdWords campaign setting of “All Available Devices” which is “Recommended for new advertisers”. You must click on the “?” do you learn that “Desktop and Laptop Computers: Formerly the default setting for campaigns”: Google not only changed the default for new AdWords campaigns to automatically include smartphones, it also retroactively altered the campaign settings for all active AdWords campaigns to run across both platforms populating smartphone ad inventory with those campaigns

9. Automatic Extension of AdWords to Mobile There is a marked difference in both the presentation and results from a Google Search for “GPS” on a Laptop compared to a Smartphone: Searches conducted on 11/ 12 th April 2010

10. Launch of AdSense for Mobile Apps Program On June 29 th 2009. Google launched its AdSense for Mobile Applications in-app advertising program with the Beta designation. The program has remained in beta for nearly a year. Even in Beta, Google has signed up many top mobile app developers including National Public Radio, Concentric Sky, Textplus, Twitteriffic and Craigsphone. Google lists some of the other app developers it serves in-app ads for on its program page:

11. Automatic Extension of AdSense to Mobile On October 5 th 2009, Google extended its AdSense programs to high-end mobile devices (smartphones). Google would now automatically detect and run a larger ad optimized for high-end mobile devices, creating and populating yet more new inventory:

12. Automatic Extension of Checkout to Mobile On January 10 th 2010 for the Nexus One launch, Google automatically extended its Checkout payment service from Internet ecommerce stores to mobile transactions and commerce. Transaction fees for the Checkout payments program are linked to usage of the unrelated AdWords advertising program. When consumers browse a Checkout supporting website on their mobile device, they see the Checkout logo, after which they are automatically directed to the mobile version of Google Checkout:

13. Automatic Extension of YouTube ads to Mobile In March 10 th 2010, Google changed the default YouTube Internet ad campaign settings to automatically run the mobile version of its website: Information about this new ad program was published not on the Google YouTube Blog or the Google Mobile blog, instead it could only be found on the YouTube Business Blog

14. Automatic Extension of YouTube ads to Mobile In a test ad campaign on YouTube, mobile wasn’t mentioned at all during set up. After activating the campaign, it was necessary to go into “Edit your video” and at the bottom left corner click on “Syndication” where you can opt out of the ad showing on mobile and TV:

15. Automatic Extension of AdWords to the iPad On April 2 nd 2010, automatic serving of AdWords campaigns to the iPad goes live (the day before the device shipped to consumers). This was an extension to yet another platform. The iPad is considered a separate platform that is a hybrid device between a smartphone and a netbook computer. Google can and is delivering its ad programs to new Apple devices and platforms.

16. Automatic Extension of Site Search to Mobile On April 6 th , 2010, Google announced that any enterprise that uses the Google Site Search product on their website on the Internet will automatically now have site search with the same features when that website is visited from a mobile device:

17. Expanding Google Mobile Apps Portfolio In fact, Google has rapidly created mobile versions of its Internet products and services and extended from the Internet to mobile platforms at an accelerated rate: Of the 22 apps listed here, the following four are the most popular and pre-installed on smartphones and mobile devices: Google Mobile App, YouTube, Maps and Search. With the exception of Google Search, these apps have not yet been fully rolled out with in-app advertising

19. Implications Advertisers pay dearly when an ad that is designed for the Internet is automatically served on a smartphone. For example, a Lexus banner ad on the start up page of the ESPN Score Center iPhone app on Saturday March 6 th 2010 led to an error message due to the non-support of Flash on the smartphone. Clicks on the same ad on a PC browser however preserved the intended Flash based experience. Irrespective of whether the ads deploys properly, the advertiser pays for the click that leads to this ad.

20. Implications The process is not seamless for advertisers as stated by Google: “Note: We may truncate ad text when displaying ads on high end mobile devices”: It’s the advertiser who is left with the responsibility of sorting out what copy works on which devices and platforms. However, beyond this note, Google provides no specific information on which devices truncate ad copy or what length of messages will appear on which devices

21. Implications - Given its dominance of web search traffic, Google has been able to repeatedly increase the advertiser pool for a given search term by linking its programs on the Internet and extending those programs to mobile mostly without the advertiser’s knowledge or consent - In the case of mobile extensions, advertisers who were interested in mobile results were bidding against Internet advertisers whose ads were suddenly appearing on mobile devices because the Internet advertisers were automatically opted into mobile and were therefore unknowingly serving ads to mobile devices - Since fewer ads are displayed on mobile devices due to small screen sizes, competing with the newly enabled Internet advertiser pool pushed mobile advertisers down the list of search results, necessitating higher bids and CPC maximums to get the same traffic. All advertisers whether they wanted to only target desktops and laptops or target mobile devices only for services both ended up paying Google more for clicks - Advertisers are unlikely to notice that they were paying for mobile visitors because they have apparently been getting inaccurate mobile visitor tracking data from the Google Analytics tool that is built into Google’s ad products. This is because Google’s standard analytics packages use JavaScript technology for counting clicks which works on the Internet. However, since this technology format isn’t widely supported on mobile devices, it causes some mobile phones to crash, meaning the click may not get counted at all. One digital advertising specialist tested Google Analytics side by side with a specialist mobile analytics package and found that it only tracked 12% of the page views that a specialist mobile analytics package that didn’t have the JavaScript issue counted ( http://www.brysonmeunier.com/mobile-analytics-with-google-analytics/ )

22. Lack of Information Transparency It is a very opaque process to find out the important information needed to understand these program extensions and linkages, probably by design. There are at least 114 separate blogs are listed in the Google Blog Directory (as of 9 th April 2010). Distributing pertinent information across so many different blogs serves to make it difficult for advertisers and others to discover key information about new programs and changes that impacts them since there is no central location for this information:

23. Lack of Information Transparency Broken Link when requesting more information about the change in campaign serving default settings:

24. Lack of Information Transparency The first 6 months of data necessary to compare clicks, impressions, CTR [Click Through Rates] and other performance metrics for Internet vs. high-end mobile devices between the introduction of the new mobile default campaign targeting option on December 8 th 2008 until June 3 rd 2009 such there was no way assess or split how the addition of the mobile targeting was performing:

25. Lack of Information Transparency Because of the lack of information transparency, advertisers need to spend an inordinate amount of time overseeing changes that Google makes to its programs. For example, we run mobile campaigns but didn’t know that our Internet campaigns had been running on mobile devices until passing reference was in the fourth paragraph of a blog post made a year after the policy introduction: “ With this new option, you’re opted-in to show ads on the G1 and iPhone, and you’re also eligible to show on additional devices that use full Internet browsers as these devices enter the market”. “ If you currently have an AdWords campaign running, by default your campaign will show ads on desktop and laptops computers, as well as iPhone and G1”.

26. Contravention of its own Ad Program Terms Google’s Advertising Program Terms governing all advertising programs include the following statements: “ Customer is solely responsible for all: (a) ad targeting options and keywords (collectively "Targets") and all ad content, ad information , and ad URLs ("Creative"), whether generated by or for Customer; and (b) web sites, services and landing pages which Creative links or directs viewers to, and advertised services and products (collectively "Services"). Customer shall protect any Customer passwords and takes full responsibility for Customer's own, and third party, use of any Customer accounts.” With respect to AdWords online auction-based advertising, Google may send Customer an email notifying Customer it has 72 hours ("Modification Period") to modify keywords and settings as posted. The account (as modified by Customer, or if not modified, as initially posted ) is deemed approved by Customer in all respects after the Modification Period. Google retrospectively altered the ad targeting to include smartphones when they changed the default campaign settings which the customer should have been solely responsible for. Google also infringed the advertiser’s sole right to set all ad content and information given that Google states that “We [i.e. Google} may truncate ad text when displaying text ads on high end mobile devices.” ( https://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=107264 ) Additionally, Google did not send us as the Customer an email giving us 72 hours to modify the settings back to the default settings we had set our campaigns up to target. Furthermore, given that we did not modify our account settings, the account should have remained as initially posted

29. Contact Details Simon Buckingham Appitalism, Inc. 909 Third Avenue 28th Floor New York NY 10022 o: 212-451-9854 m: 917.573.6067 e: [email_address] w: http://www.appitalism.com Feel free to contact me with any Questions or Comments on this presentation: