Google Overhauls Global Ad Model After French Antitrust Fine
(Bloomberg) -- Google agreed to pay 220 million euros ($268 million) and change the way its business works across the world after settling a France probe that struck at the heart of its power over online advertising.
France’s antitrust agency said Monday the U.S. tech giant used its dominance over ad sales and purchasing on its platforms to distort the market to its own advantage, hurting publishers such as News Corp.
“Google took advantage of its vertical integration to skew the process,” Isabelle de Silva, who heads France’s Autorité de la concurrence, said at a Paris press conference on Monday. She described Google’s behavior as “particularly serious.”
The decision is a rare look inside the black-box of online advertising where Google automatically calculates and offers ad space and prices to advertisers and publishers as a user clicks on a web page. Google also entered a pledge to remedy the situation by making sure its Google Ad Manager services work more smoothly for third parties.
The French authority criticized Google for favoring its DoubleClick for Publishers ad server where publishers sell ad space and its AdX or DoubleClick Ad Exchange where publishers sell page impressions to advertisers.
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De Silva said that Google intends to apply some of these commitments at a worldwide level.
Shares in Alphabet Inc., Google’s parent, were little changed at 10:05 a.m. in New York.
With separate cases into Google, Apple Inc. and Facebook Inc., French antitrust regulators are starting to rein in anti-competitive behavior in online advertising. While Google’s case ended with a fine, Facebook last week tried to avoid that by making commitments to placate regulators.
Google said in a blog post it’s “committed to working proactively with regulators everywhere to make improvements to our products.” The company said it will be testing and developing behavioral changes agreed as part of the settlement over the coming months.
The case sprang from a study the French Competition Authority published in 2018 after conducting a sector inquiry into online advertising, which put the spotlight on the power of Google and Facebook.
News Corp., the group behind French newspaper Le Figaro and media firm Groupe Rossel la Voix SA followed up with a complaint to regulators the following year.
Le Figaro group decided to withdraw from the case in November 2020. Meanwhile, Google and News Corp. also ended hostilities earlier this year, reaching a three-year agreement in which the search company will pay for news.
“We haven’t been involved in the case in France since we concluded our deal with Google in February,” News Corp. said in a statement. “But we remain pleased by the progress of our global partnership, and are hopeful for a long and fruitful relationship in the years ahead.”
Google has already attracted French antitrust scrutiny over online advertising in the past, with a 150 million-euro fine in 2019. The search engine also risks a penalty in the coming weeks over suspicions it failed to comply with an order relating to its news service.
French Finance Minister Bruno Le Maire said on Monday it’s “essential” tech giants heed the country’s competition rules. He pointed out that Google’s behavior “impacted” media groups whose “economic model is strongly dependent on advertising revenue.”
De Silva said that “for years there was a fear of taking on these platforms because they were too powerful.” She added that she fully expects damages requests to be lodged following the regulator’s decision.
The French settlement is the latest in a series of efforts to crack down on Silicon Valley’s market dominance across the continent. Last week, Google’s news service was targeted by a German probe. The EU and the U.K. also opened investigations into Facebook over how it uses some information from advertisers.
Ahead of the weekend’s landmark G7 tax agreement, tech firms have also faced intense scrutiny over their tax affairs, amid criticism that they don’t pay their fair share, despite racking up massive sales in the region.
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