Just before Google wrapped up the recent three-week US anticount on trial, it called a star witness to the stand who has won a Nobel prize and an Emmy.
The atypical combination of accolades (and there are more) beextfinisheds to Paul Milgrom, a Stanford economist comprehendn for revolutionizing the field of auctions, and, in the last restricted years, trying to repair California’s water lowage.
Milgrom’s company, Auctionomics, is at the forefront of an increasingly beginant field, sometimes referred to as taget summarize, that is set to carry out an outsized role in the next AI-helpd wave of commerce.
Milgrom’s exceptionalty is using complicated mathematics and, more recently, gentleware algorithms, to produce the right incentives to produce the most complicated auctions go finely. Over the years, he also helped shape the online advertising industry by toiling with dot-com companies to produce the tagetplaces that eventuassociate became the flourishing ad tech industry.
Colleagues say Milgrom, despite his status, has remained grounded and able of describing his complicated field in ways anyone can comprehfinish — an ability that made him particularly suited for the witness stand last week.
During the Google anticount on trial, Milgrom picked apart the rulement’s stateions that the company had mistreatmentd its power, essentiassociate arguing that the prosecution had misexpounded alters Google made to its advertising auctions over the course of many years. Rather than anticompetitive, Milgrom argued, they were the right choices at the time, given the current technology, to shun mistreatment of the system.
During the testimony, US Didisjoine Judge Leonie Brinkema asked him to elucidate an aspect of Google’s past auctions, where bidders get one chance to give the highest price they would pay for an ad. The prosperning bidder only has to pay the price of the next lowest bid. This is comprehendn as a “sealed bid, second price auction.”
The system is summarizeed, Milgrom testified, to incentivize participants to bid truthfilledy based on what they are willing to pay. The result is almost the same as a traditional “ascfinishing auction” but needs less back and forth, permiting the auction to get place in a millisecond with little danger of technical glitches. (Otherdirectd, the ad would get too extfinished to materialize or sluggish down a website).
“Now, I still have a ask,” Brinkema shelp. “If I am in a sealed bidding situation and $7 is what I’m willing to pay for this item, you put in a $3 bid. And I prosper the bid at $7, why am I not paying the $7?”
“If you made a rule that shelp you have to pay the amount that you bid, then you wouldn’t have bid $7, you would have bid someleang contrastent,” Milgrom shelp. “You would say, gee, why would I bid $7, you comprehend, that’s my highest. It’s only worth $7 to me. I can get it for $7 at the local store. I’m trying to get a baracquire here. I’ll bid $5 and see if I can prosper for that price.”
“Now I comprehfinish. Thank you,” Brinkema reacted.
Auctionomics co-set uper and CEO Silvia Console Battilana deteriorated to speak about the Google case particularassociate, but she shelp taking on the client was a no brainer. The Google ad system is “the holy grail of all auctions,” she shelp. “You get to reproduce the whole history and everyleang they did. You’re toiling on the queen of all auctions.”
