Arnaud Créput, chief executive of Smart AdServer, takes a look at how the French Competition Authority’s latest decision impacts Google and the world of adtech.
Last week, the French Competition Authority (ADLC) announced its groundbreaking decision to fine Google €220m for its anti-competitive behavior in the adtech sector. The importance of this decision resides in the fact that Google abused its dominant position through several anti-competitive tactics designed to foreclose rival intermediaries at the expense of publishers.
Google has not contested the findings of anti-competitive abuse as part of the authority’s decision and has offered a series of remedies designed to allow rivals to compete, whereby the tech firm commits to offer rival ad servers greater interoperability with its ad exchange. And this isn’t just applicable in France. Programmatic is a global market – this decision and resulting remedies will be felt across the world.
This decision comes at a critical moment when Google is being investigated for its adtech practices by a growing number of competition authorities, including the Italian Competition Authority, the UK Competition and Market Authority, and the European Commission, and is also subject to a lawsuit filed by the Texas Attorney General on behalf of a multistate coalition in the US.
The French Competition Authority found that Google engaged in two abuses, whereby its ad server favored its ad exchange and, conversely, its ad exchange favored its ad server.
Google used its ad server to favor its ad exchange, sharing with it the price offered by rival ad exchanges. Google’s Ad Exchange used this information to optimize its bidding, including varying the commission it charged publishers based on the competition it faced from rival ad exchanges.
Additionally, Google imposed technical and contractual limitations on the use of its ad exchange through a third-party ad server. The interoperability terms offered to third-party ad servers were, as a result, inferior to the terms between its ad server and its ad exchange, which penalized both third-party ad exchanges and publisher clients.
Beyond anti-competitive effects on rivals, harmful effects on publishers have also been laid out explicitly in the decision. These are wide-ranging and can involve complex auction mechanisms so that the net negative effects are not always visible to the publisher. They include, for example:
Degrading rivals SSPs’ performance against Google’s ad exchange, leading to Google’s ad exchange contribution looking bigger than it actually is while leading to poorer publisher revenue overall
Maintaining high prices in its ad exchange where competition was undermined by Google’s conduct
An in-depth analysis of optimization mechanisms allegedly benefiting publishers, which actually do not – e.g. the ADLC details instances where “Google’s ad exchange’s dynamic revenue share reduces not only the impression volumes won by rival SSPs, but also the total revenue of the publisher”.
This is an important first victory for the open web, but we expect to see many more battles to come as the decision of the French Competition Authority only addresses some of the anti-competitive tactics used by Google to undermine rivals. Some of these additional practices are already being investigated by other competition authorities, and also form part of the antitrust lawsuit filed against Google in the United States.
The commitments offered by Google if properly implemented, although insufficient, should benefit media publishers. By making its ad exchange interoperable with third-party ad servers, media owners will now be able to choose the ad server they want without the threat of losing revenue (from Google Ads, in particular).
Early movers will regain their independence. From a situation where publishers were forced to serve as Google’s subcontractor – producing content and sharing their exclusive data and audience with Google – they will now have the freedom to choose their technology partners and take back control of their most critical assets: content, data and audience.
This decision is a key milestone to re-energize competition and innovation within the adtech space, and publishers – who are the primary victims of Google practices – will ultimately benefit from it. But the battle is only just beginning.