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Comment by GeneralMayhem | Hacker News Reader

Google's AdSpam/fraud/bot-prevention team was, when I worked there, world class and fairly well funded, took their job seriously, and had access to all the data. It's an existential threat to the ad business, because if Google gets a reputation for being full of bots/spam, then the advertisers will bid lower per click/conversion to compensate, which means that legitimate website publishers will get paid less and go to other networks, which is a feedback loop that leads to the entire market collapsing (see also: https://en.wikipedia.org/wiki/The_Market_for_Lemons). It's absolutely worth refunding/zero-rating huge amounts of advertiser spend to avoid that situation, and they do.

It's not that they're not trying, it's just a very hard problem.

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Problem 1: Buyers cannot tell if a product is good or bad, so they offer less money and good sellers may leave.

Suppose 50% of used laptops are good and worth $1,000, while 50% are bad and worth $400. Since you cannot tell which one you are buying, the average value is 0.5x1000 + 0.5x400 = $700, so you will not want to pay more than about $700.

But owners of good laptops may refuse to sell for $700, so more good laptops leave the market and the chance of buying a bad one increases. And the only guy selling for $700 is the lemons.

Problem 2: The theory assumes buyers already know how many bad products are in the market, but in real life they often do not.

Its obvious this market for lemons can’t be true

I don't understand what point you're making.

Your "point 1" is literally the argument of the paper. If that scenario arises, the market collapses and no further sales can be made. That's the whole problem. As someone who takes a percentage of every sale, you want to keep the lemon-sellers out even though in the short run they make you extra money.

Your "point 2", if it's meant to be a rebuttal, isn't much of one. Buyers don't need to accurately know exactly what fraction of sellers are fraudulent; if they believe that it's 50-50, the same thing happens, even if the true rate is 80-20 in favor of good sellers. Conversely, if buyers are overly optimistic about quality, the market can persist despite a level of fraud that's higher than should be tolerated. But in any case, things like reviews and external reporting should eventually give them good information.

All markets have lemons and don’t collapse. Work just fine. By that paper logic even 1 lemon collapses the market

Fair, I retract my cynical conjecture

Cynicism is fine. They don't have to believe in any sort of ideal to do this. They just have to be thinking more than a couple months ahead to realize the math favors quality.

Just to be clear, this is different to the problem of Google ads that link to malware and fake banking websites and promotion of cryptocurrency scams isn't it?

Related in that some of the same organized groups tend to be carrying out every kind of attack at once, but operationally a different thing.

In the ad marketplace there are four participants: the advertiser, the user, the network (Google), and the publisher (also Google for AdWords, other websites for AdSense and so on, and effectively the channel owner for YouTube).

In the click spam or botnet case, the bad actor is the user, who is usually associated with a publisher trying to get extra money (although not always - there's reasons like auction manipulation where some advertisers run click bots too). In the bad-ads case, the bad actor is the advertiser.

At Google, each of those problems has their own well funded team, but they do also share some data to help catch rings of bad guys.

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