Another day, another antitrust investigation into Google’s ad tech business. This time the probe was launched by the European Commission (the “Commission”), which has already fined Google three times for engaging in anticompetitive conduct.
As readers of this blog are probably aware, Google’s practices in ad tech have captured considerable regulatory attention: the French Autorité de la concurrence earlier this month fined Google € 220 million for leveraging its market power in the ad tech stack, the UK Competition and Markets Authority (“CMA”) has published a notice of intention to accept commitments proposed by Google with respect to its Privacy Sandbox proposals, while in the US a coalition of US States led by Texas have sued Google in court for its conduct in ad tech.
I was thus not surprised to read that the Commission is launching its own formal investigation. This was more or less expected. Earlier this year it was reported that the Commission had sent lengthy questionnaires to hundreds of companies seeking information on Google’s ad tech business, and the case team at DG COMP reportedly comprises at least ten case handlers (a significant number). One may of course query whether at this stage there is any space left for the Commission to chart its own path, considering that other regulators have already taken action and in some cases issued decisions. My personal view is that such a criticism would be unjustified. Google has apparently engaged in so many prima facie problematic practices (and ad tech is so complicated) that there is ample room for further intervention. To keep things manageable, the French Autorité de la concurrence covered two specific practices of Google in its decision, while leaving others unaddressed in its decision.
The scope of the investigation
In what follows I shall comment on the scope of the investigation, providing my thoughts on what practices are likely to be covered by it (this is a bit speculative on my part, so please take this with a grain of salt). For convenience, I am pasting the relevant part of the Commission’s press release and inserting my comments in brackets and bold. It seems that the Commission’s probe will have a fairly broad scope, as it will cover:
- The obligation to use Google’s services Display & Video 360 (‘DV360′) and/or Google Ads to purchase online display advertisements on YouTube. [This is the well-known problem of Google tying its YouTube inventory to its own ad-buying tools DV360 and Google Ads, for which rivals have long complained. Note that Google justified its decision to cut access to YouTube inventory on privacy considerations, but the CMA rejected this argument in its seminal report on digital advertising.]
- The obligation to use Google Ad Manager to serve online display advertisements on YouTube, and potential restrictions placed by Google on the way in which services competing with Google Ad Manager are able to serve online display advertisements on YouTube. [This is another well-known problem – Google does not generally allow YouTube publishers to use a non-Google video ad server to serve ads on YouTube, presumably for GDPR compliance reasons. This may have hurt rival video ad servers like FreeWheel.]
- The apparent favouring of Google’s ad exchange “AdX” by DV360 and/or Google Ads and the potential favouring of DV360 and/or Google Ads by AdX. [One may think of this as similar to the practices examined by the French Autorité, albeit at a different level of the ad tech value chain. On DV360/Google Ads favouring AdX: we know from the French decision that Google Ads directs almost exclusively demand to AdX, whereas DV360 has actively sought to steer demand to AdX, so this could be part of what the Commission is looking at. On AdX favouring DV360/Google Ads: this could be similar to the Texas lawsuit, where it is stated that AdX shares additional information with Google’s own DSPs. This could also include the infamous Project Bernanke.]
- The restrictions placed by Google on the ability of third parties, such as advertisers, publishers or competing online display advertising intermediaries, to access data about user identity or user behaviour, which is available to Google’s own advertising intermediation services, including the Doubleclick ID. [This echoes the Italian investigation into Google’s ad tech business, which may thus come to a halt. Presumably, this would cover Google’s controversial decision to restrict the portability of the DoubleClick ID in 2018 from its buy-side tools, reportedly on GDPR grounds, but it could also cover earlier practices, such as hashing IDs per customer (a practice featuring in the Texas lawsuit).]
- Google’s announced plans to prohibit the placement of third party ‘cookies’ on Chrome and replace them with the “Privacy Sandbox” set of tools, including the effects on online display advertising and online display advertising intermediation markets. [It will be very interesting to see whether and how the Commission will coordinate with the CMA on this point, considering that Google has recently proposed certain commitments to the CMA which it intends to apply globally.]
- Google’s announced plans to stop making the advertising identifier available to third parties on Android smart mobile devices when a user opts out of personalised advertising, and the effects on online display advertising and online display advertising intermediation markets. [Google is following in the footsteps of Apple, which rolled out a similar policy change some years ago with respect to iPhones. I have not looked much into this, so at this stage will not make any further remarks.]
The press release makes no reference to the infamous Jedi Blue agreement concluded between Google and Facebook in 2018. According to the Texas lawsuit, when faced with the threat of Header Bidding, a rival technology, Google induced Facebook to curtail its Header Bidding initiatives in return for special privileges when bidding on its auctions. While Google has vehemently denied that its agreement with Facebook is anticompetitive, in its (improperly redacted) reply to the Texas lawsuit Google acknowledged a series of advantages granted to Facebook in its auctions (most notably, advantages in identifying users, which is crucial in advertising auctions).
So how should the absence of any reference to Jedi Blue in yesterday’s press release be interpreted? In my view (and this is speculative), the matter is probably still alive. Jedi Blue is an agreement between (actual or potential) competitors, hence it falls to be assessed under Article 101 TFEU (perhaps in addition to Article 102 TFEU). The Commission may thus want to open a separate investigation against both Google and Facebook. Only time will tell whether this is the case.
Privacy & competition
One of the most interesting aspects of the case is the interplay between privacy and competition. Indeed, Google has justified some of its practices covered by the Commission’s investigation (e.g., with respect to YouTube) on privacy considerations more generally or GDPR grounds more specifically. The Privacy Sandbox is perhaps the most notable example. It is interesting to see this getting more attention; as observed elsewhere, as we move forward privacy is likely to be the “all purpose” justification for potentially problematic conduct by digital platforms. And while privacy is very important, there should be certain limits to what a dominant company may do (e.g., it cannot use privacy as a pretext to exclude competitors). If anything, the CMA’s report suggests that Google’s privacy justification for YouTube does not hold water on closer inspection.
The relationship between privacy and competition is a thorny issue which the Commission will one day or another have to grapple with when enforcing competition law in digital markets. This investigation will give it the opportunity to reflect on these issues and take a stance.
[Disclosure: as noted in previous posts, Damien and I have acted for the complainant in the French decision against Google, and we are also involved in the CMA proceedings with respect to the Privacy Sandbox on behalf of a news media association. All views expressed in this post are mine and should not be attributed to any clients]