France Fines Google $268M for Adtech Abuses | Interoperability Commitments

Google Fined €220 Million by French Competition Authority

France’s competition authority, L’Autorité de la concurrence, has imposed a fine of up to €220 million (approximately $268M) on Google. This penalty stems from concerns regarding self-preferencing practices within the adtech market.

Investigation Triggered by Publisher Complaints

The investigation was initiated by L’Autorité in response to complaints lodged by several French publishers. These publishers voiced concerns about Google’s conduct in the digital advertising ecosystem.

Google proposed a settlement, acknowledging the facts of the case and offering specific ‘interoperability’ commitments. The regulator has accepted these commitments, which will be legally binding as part of the final decision.

A First-of-its-Kind Probe

The watchdog highlighted that this action represents a global first in examining Google’s intricate algorithmic ad auctions. This signifies a novel approach to regulating complex digital advertising processes.

Statement from L’Autorité’s President

Isabelle de Silva, president of L’Autorité, stated that the decision is groundbreaking. It is the first worldwide to delve into the complexities of algorithmic processes governing online display advertising.

She further explained that the investigation revealed how Google leveraged its dominant position in ad servers for websites and applications to favor its own technologies over those of competitors. This practice negatively impacted competition and allowed Google to strengthen its market dominance.

De Silva emphasized that the sanction and commitments will help restore a fair competitive landscape, enabling publishers to maximize revenue from their advertising space.

Preferential Treatment of Google Ad Manager

The core issue revolves around Google’s preferential treatment of its own proprietary technologies, marketed under the Google Ad Manager brand. This advantage was applied on both the demand and supply sides of the adtech market.

Specifically, the watchdog identified preferential treatment through the operation of the DFP (DoubleClick For Publishers) ad server, which facilitates ad sales for publishers, and the SSP AdX sales platform, which manages the auction process for advertising inventory.

Harm to Competitors and Publishers

L’Autorité determined that Google’s preferential practices caused detriment to both competitors and publishers operating within the adtech sector.

Google’s Response

A Google spokesperson directed inquiries to a blog post authored by Maria Gomri, a legal director for Google France. Gomri stated that Google has agreed to commitments aimed at simplifying data utilization and integration of its tools with other ad technologies.

The post details the specific steps Google has pledged to undertake to fulfill these commitments.

Original Complainants and Content Licensing

The initial complaints against Google were filed by News Corp Inc., the Le Figaro group, and the Rossel La Voix group. However, Le Figaro withdrew its referral last November, coinciding with the signing of a content-licensing agreement with Google related to the Google’s News Showcase product.

Ongoing Scrutiny of Content Reuse

France’s competition authority previously mandated Google to negotiate with publishers regarding compensation for the reuse of their content. This directive followed the implementation of updated, pan-EU copyright regulations extending neighboring rights to publishers’ news snippets.

Consequently, Google’s operations continue to be subject to scrutiny on this front as well.

Google Agrees to Interoperability Modifications

Google has consented to enhancements in the interoperability of its Google Ad Manager services with solutions from third-party ad servers and advertising space sales platforms, according to L’Autorité. Simultaneously, the company will cease practices that provide preferential treatment to itself.

The regulatory body states in a press release, translated from French, that “the practices in question are particularly serious as they disadvantaged Google’s competitors within the SSP market and publishers of websites and mobile applications.”

Impact on Publishers

This negatively impacted press groups, including those who initiated the referral to the Authority, especially given the weakening of their economic models due to declining paper subscriptions and associated advertising revenue.

L’Autorité has formally accepted Google’s commitments, making them legally binding through its decision. These commitments will be enforced for a duration of three years, as stipulated in the agreement.

The offered commitments from Google align with operational details revealed during a Texas antitrust lawsuit also focused on Google’s adtech stack.

Project Bernanke Details

Documents from the lawsuit indicated that Google operated a confidential program, ‘Project Bernanke’, utilizing data from prior bids in its digital ad exchange. This was allegedly done to provide its own ad-buying system with an advantage over competitors, as reported by the WSJ.

Crucially, this program was not disclosed to publishers who utilized Google’s exchange for ad sales.

Data Access Commitments

Regarding data access, Google has pledged to L’Autorité to develop a solution ensuring equal data access from auctions for all buyers using Google Ad Manager to participate in its ad exchange.

This aims to facilitate efficient ad space purchases from publishers, particularly for those employing ‘Header Bidding’ – a technique allowing publishers to auction ad space across multiple exchanges.

Currently, Header Bidding participants may face a data disadvantage compared to those using Google’s platform directly.

Addressing Header Bidding Disadvantages

Google acknowledges that identifying participants in Header Bidding auctions is “usually not technically possible,” hindering data sharing with those buyers.

However, the company is now committed to creating a solution that grants equal data access to all buyers a publisher collaborates with, including those utilizing Header Bidding, regarding Ad Manager auction outcomes.

Specifically, Google will provide information on the “minimum bid to win” from previous auctions, addressing a key blind spot for publishers seeking increased ad revenue through off-platform methods.

Enhanced Publisher Flexibility

Another commitment involves increasing flexibility for publishers using Google Ad Manager.

This includes enabling custom pricing rules for ads in sensitive categories and implementing product changes to improve interoperability with third-party ad servers.

Google also reaffirms its stance against limiting Ad Manager publishers from directly negotiating terms and pricing with other sell-side platforms (SSPs).

Furthermore, it commits to maintaining publisher controls for including or excluding specific buyers when using its product.

Transparency and Adtech Opacity

A third set of commitments centers on transparency, a long-standing criticism of the adtech market due to its complexity and potential for anti-competitive practices.

L’Autorité previously fined Google $166M in December 2019 for “opaque and difficult to understand” rules within its Google Ads platform, applied in an “unfair and random manner.”

Preventing Bid Data Exploitation

Google pledges not to utilize data from other SSPs to optimize bids in its own exchange in a way that other SSPs cannot replicate.

It also reiterates its commitment to refrain from sharing any bid from Ad Manager auction participants with other participants before the auction’s completion.

Additionally, Google will provide publishers with at least three months’ notice for significant changes requiring substantial implementation effort, excluding those related to security, privacy, or legal requirements.

Geographic Scope of Commitments

The commitments made to L’Autorité initially apply to Google’s adtech operations within the French market.

However, Google intends to extend these changes more broadly.

“We will be testing and developing these changes over the coming months before rolling them out more broadly, including some globally,” Gomri stated in a blog post.

Historical Context and Regulatory Scrutiny

L’Autorité’s action follows years of scrutiny directed towards the online advertising market.

A 2018 report highlighted competitive advantages held by Facebook and Google, stemming from their leadership positions, vertical integration, and data collection practices.

The UK’s Competition and Markets Authority has also conducted an online ad market study, informing ‘pro-competition’ regulatory reforms targeting tech giants.

EU Antitrust Enforcements

The European Commission has issued multiple antitrust enforcements against Google, including a $1.7BN fine related to AdSense in 2019 and a $2.7BN penalty for Google Shopping in 2017.

EU regulators are reportedly continuing to investigate Google’s adtech practices, potentially leading to further interventions.

However, the Commission’s approach of imposing general requirements without specific remedies has been criticized for its limited impact on Google’s market dominance.

The Digital Markets Act

This experience has informed the pan-EU Digital Markets Act, establishing ex ante rules for digital ‘gatekeepers’ to preemptively prevent market abuse.