Alphabet’s Google has agreed to change some of its widely used advertising practices after France’s antitrust watchdog slammed it with a $270 million fine.
The authority also slammed a huge fine on the Mountain View, California-based company 220 million euros ($267.48 million) after a probe found it abused its market power in the intricate ad business online, where some of its tools have become almost essential for large publishers.
The French watchdog’s decision is an attempt to rebalance the power struggle over online ads in favour of publishers, which held sway in the business in the pre-Internet era, but lost considerable ground with the rise of Google and Facebook.
The antitrust watchdog said the decision opens the way for publishers who felt disadvantaged to seek damages from Google. Many publishers globally have expressed unhappiness over ad practices employed by the tech giants.
“The decision to sanction Google is of particular significance because it’s the first decision in the world focusing on the complex algorithmic auction processes on which the online ad business relies,” said France’s antitrust chief Isabelle de Silva.
De Silva said the fine was reduced because of the settlement, but she did not give specifics.
A spokesperson for Google – the world’s largest search engine declined to give comment on the fine but said that Google wouldn’t appeal the decision of the antitrust watchdog in court.
The investigation focused on the tools that Google offers publishers online to sell and manage online ads. The settlement reached with Google shows the firm is willing to bend to antitrust pressure and make operational changes to some of its most popular ad business tools, whose success relies on the trove of data it has amassed over the years. The watchdog found that Google Ad Manager, the firm’s ad management platform for large publishers favoured AdX, its own online ad marketplace, where publishers sell space to advertisers in real-time. It did so notably by providing AdX strategic data such as the winning bidding prices. The watchdog also said Google AdX offered Google Ad Manager superior interoperability features than for rival so-called sell-side platforms (SSP), the crucial technology that allows publishers to manage advertising spaces available for purchase, fill them with ads and receive revenue.
Google’s commitments will be binding for three years, the authority said.
“We have agreed on a set of commitments to make it easier for publishers to make use of data and use our tools with other ad technologies,” said Maria Gomri, Google’s legal director in France in a blog post. “We’re committed to working collaboratively with regulators and investing in new products and technologies that give publishers more choice and better results when using our platforms,” she said.
The French Competition Authority has said that Google’s tool to help websites and apps sell ads gave Google’s online ad auction system an advantage over rival exchanges, the people told the newspaper.
Google offered to settle the matter by removing obstacles that it puts up against competitors, the newspaper reported.
The settlement could be among the first resolutions in a wave of investigations or lawsuits targeting Google’s ads business, which generated $147 billion in revenue last year, more than any other internet company. Leading to fears among business analysts and industry pundits of the possibility of a monopoly as its model has greatly disrupted the ads revenue stream for traditional publishers who enjoyed it prior to the internet era. Many publishers are now forced by the ads duopoly of Google and Facebook to introduce paywalls to keep their heads above water in the brick and mortar publishing business.
The French Competition Authority said it did not comment on ongoing cases.
In December 2019, the Authority fined Google 150 million Euros ($183 million) for abusing its dominant position in the search advertising market, saying the operating rules of its Google Ads advertising platform were “opaque and difficult to understand” and were applied in an unfair and random manner.
Most of Google’s sales come from search and YouTube ads. But about $23 billion last year was tied to helping publishers sell ads and the connections between Google’s duelling businesses are drawing antitrust scrutiny, including calls from critics for a break-up.
The French case also alleged other forms of self-preferencing in the advertising side of Google’s business, the people told the Wall Street Journal.
Google spokeswoman Leslie Pitterson did not comment on the reported settlement but said that the company’s third-party ad tech products work with both Google’s partners’ and competitors’ products.
“We continue to take in feedback and make updates to better serve users and the wider ecosystem,” she said in an official statement.
Texas, supported by other U.S. states, filed a lawsuit against Google in December accusing it of breaking the antitrust law in how it runs its online advertising business in a case that appears to be similar to the French allegations.
Google also is fighting lawsuits in the United States from several advertisers, rivals and publishers around the same issues.
Google reaches billions of people daily and no publishing platform comes close in terms of reach which has made many brands prefer to directly advertise on it and Facebook as well rather than place their adverts in these platforms which is a great disruption in the advertising world. Facebook is also currently facing antitrust issues all over the world with some commentators calling for its immediate break up.