Google Is Dominating This Hidden Market With No Rules

Ms. Srinivasan is an antitrust scholar and a consultant with the Texas attorney general’s office on its case against Google.

Last month, Gary Gensler, chairman of the Securities and Exchange Commission, asked Congress to consider the idea of regulating cryptocurrency exchanges the way the federal government has long regulated stock exchanges. While his comments drew fresh attention to the unregulated markets for cryptocurrency, they reminded me of another long unregulated exchange marketplace: the market for digital advertising.

Each time you click on a website or an app, in the milliseconds it takes for it to load, the empty ad space on the page is auctioned off through specialized trading venues called ad exchanges. Alphabet Inc., which owns Google, operates the largest of these venues. It works “just like a stock exchange,” as Google explains, complete with brokers mediating transactions between sellers and buyers. Today, the billions of daily transactions on advertising exchanges owned by tech companies rival the number of trades happening on Wall Street.

To protect the public and promote fair competition in stock market transactions, Congress created the Securities and Exchange Commission and vested the agency with the power to issue rules and manage conflicts of interest between the exchanges, brokers and other industry players. For example, S.E.C. rules require companies that offer trading venues, or act as brokers on behalf of clients, to wall off those businesses. This prevents abuses of nonpublic information and helps curb market concentration. No similar authority polices online advertising, turning it into an opaque space rife with conflicts of interest.

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