Google’s adtech targeted by publisher antitrust complaint in EU

Google’s dominance of the online ad market has been targeted by another antitrust complaint filed in the European Union by a coalition of publishers.

This time it’s the European Publishers Council (EPC) — whose members include the CEOs of News UK, Condé Nast, New York Times, Axel Springer and The Guardian, among others — arguing that, beginning with its 2008 acquisition of adtech firm DoubleClick, Google has deployed “a barrage of unlawful tactics to foreclose competition in ad tech” which they assert has allowed Google to gain a “stranglehold” over press publishers and all others in the adtech ecosystem.

The EPC appears to be seeking to put pressure on the European Commission which, since last summer, has been probing Google’s adtech but which also — historically — waived through Google’s DoubleClick acquisition, paving the way for the search giant to become a powerhouse in online advertising.

Although the timing of this complaint also looks interesting given the UK competition regulator just accepted a set of behavioral commitments from Google that will allow it to continue to develop a stack of non-tracking based ad targeting technologies which it intends to replace cookie-based tracking. (Not to mention that, earlier this month, a key component of the current privacy-hostile adtech regime of tracking and profiling web users to target them with ads was found in breach of EU privacy rules, and given a six month deadline to reform.)

It’s also amusing to note that the EPC seems to have annoyed a bunch of reporters by moving its own embargo forward as the CMA’s announcement accepting Google’s Privacy Sandbox commitments hit. Hmmm!

In a statement on its complaint to EU competition regulators, EPC chairman, Christian Van Thillo, writes: It is high time for the European Commission to impose measures on Google that actually change, not just challenge, its behaviour — behaviour that has caused and continues to cause considerable harm, not just to Europe’s press publishers but to all advertisers and eventually consumers in the form of higher prices (including ad tech fees), less choice, less transparency and less innovation.

“Competition authorities across the world have found that Google has restricted competition in ad tech, yet Google has been able to get away with minor commitments which do nothing to bring about any meaningful changes to its conduct. This cannot go on. The stakes are too high, particularly for the future viability of funding a free and pluralistic press. We call on the Commission to take concrete steps right now that will actually break the stranglehold that Google has over us all.”

The EPC further summarizes its complaint by claiming that Google’s monopoly dominance of the ad tech “value chain” has enabled it to charge a very high commission of at least 30% on transactions it intermediates between publishers and advertisers — accusing it of actively suppressed competition from rivals, developing “unmanageable conflicts of interests” and systematically self-preferencing at the expense of its clients, “introducing features that depress press publisher revenue and increase its own”.

“This Complaint presents a unique opportunity for the European Commission to rectify the problems that have arisen as a direct result of its 2008 clearance of the Google/DoubleClick merger, by imposing effective remedies that will restore competition in ad tech, for the benefit of European press publishers, marketers, and consumers,” Van Thillo adds, avoiding a more direct swipe at the Commission’s now very long record of not blocking any big tech M&A at all.

The Commission confirmed receipt of the EPC complaint — which it told us it would assess “based on our standard procedures”, adding: .”The Commission investigation into whether Google has violated EU competition rules by favouring its own online display advertising technology services in the so called ‘ad tech’ supply chain, is ongoing.”

We also reached out to Google for a response to the EPC complaint and it sent this statement, attributed to a spokesperson:

“Online advertising underpins much of the content we enjoy and learn from online. It has enabled millions of small businesses to afford advertising for the first time, and for news publishers big and small, it’s created new opportunities and substantial new revenue streams that did not exist in the print age. When publishers choose to use our advertising services, they keep the majority of revenue and every year we pay out billions of dollars directly to the publishing partners in our ad network.”

In further background remarks, Google said it hasn’t yet seen the complaint — saying it therefore can’t comment in detail — but it noted it has been responding to European Commission antitrust oversight attached to its adtech for many months, in addition to what it couched as an open consultation process with the wider industry around its Privacy Sandbox proposals. It also told us it’s committed to continuing to answer the ecosystem’s questions on that.

In additional remarks, Google also claimed it faces plenty of adtech competition, and suggested its ad tools drive positive ROI for its clients — claiming that, on average, publishers receive €8 euro back in profit for every €1 euro they spend on Google ads.

It also claimed publishers keep the majority of the revenue from adtech, also suggesting that news publishers keep over 95 percent of the digital advertising revenue they generate when they use Google’s Ad Manager tool to show ads on their sites.

Adtech antitrust complaints, meet privacy…

While the EU’s competition division has brought a series of antitrust enforcements against Google under current chief, Margrethe Vestager — including one focused on search ad brokering (AdSense) — the Commission has had more of a blindspot on the broader issue of Google’s role in the adtech supply chain, only finally opening a formal investigation last summer into issues that other European regulators have already dug deeply into and, in some cases, acted upon.

Such as the $268M fine Google was hit with by France’s competition authority last year over self-preferencing in the ad market on both the demand and supply sides. (The French regulator also extracted an offer of behavioral commitments from Google, including around interoperability.)

While a market study into online advertising carried out by the UK’s Competition and Markets Authority (CMA), beginning in 2019, also ended in a final report in July 2020 which concluded that the market power of both Google and Facebook generates “wide ranging and self reinforcing” concerns.

Although the UK regulator has, so far, been wary of wading in with structural remedies to tackle the adtech duopoly — electing to wait for domestic competition reforms to bring in ex ante powers so that a new Digital Markets Unit will be able to proactively curtail abusive behaviors, via interventions tailored to each platform, instead of taking immediate enforcement action (despite consulting on potential remedies that included breaking up Google).

Since then, the CMA has intervened to extract behavioral remedies vis-a-vis another adtech complaint related to a Google’s Sandbox proposal to deprecate support for tracking cookies in Chrome in favor of alternative ad targeting technologies — accepting a series of legally binding pledges over how it will develop this so-called Privacy Sandbox proposal, as we reported earlier today, with the aim of allaying competition concerns while ensuring consumer privacy is not squeezed out by one-sided adtech market interests.

In recent months, Google’s Sandbox has been targeted by other complaints from the wider adtech ecosystem, too.

Just last month, a coalition of German publishers also petitioned the European Commission to act against it. They complained that Google’s proposal to migrate to a stack of novel ad targeting technologies — which the company claims will better protect web users’ privacy while still allowing publishers to target and measures ads and generate revenues — poses a threat to their relationship with site visitors and to their ability to ask people for their consent to ad targeting.

However, since that complaint landed a flagship mechanism which was devised and promoted by the adtech industry as a ‘GDPR compliant’ standard for obtaining and passing user consent signals for targeted advertising (aka the IAB’s TCF framework) has been confirmed to be in breach of the GDPR.

So, very clearly, there are quite a number of moving pieces to this story.

Certainly it’s a tug of war over market power — but also around how power is and/or should be obtained.

On the one hand, Google’s dominance of online advertising is a clearly drawn and evidenced concern; and there are substantial competition questions related to the current structure of the ad value chain that absolutely require regulatory interrogation (and action).

After all, the adtech giant is facing major antitrust challenge in the US, too — where a states lawsuit, led by Texas and filed back in December 2020, accuses it of operating an illegal monopoly in online advertising; and, more recently, eye-raising accusations from the suit have leaked into the mainstream press, fleshing out these antitrust concerns. (And that’s just one of the anti-competition charges Google is now facing on home soil.)

At the same time, there is — originating in, but not limited to, Europe — a need for the adtech market as a whole to evolve its practices beyond the tracking and profiling creepy status quo which has been shown to be damaging to and hated by consumers (who have flocked to ad-and-tracker-blockers); and, at least in the EU, it’s also been found to be operating illegally — where experts argue the model is fundamentally incompatible with the long-established legal framework of privacy and data protection by design and default.

EU lawmakers are also starting to take up the baton to call for privacy respecting ad targeting alternatives to abusive tracking. (See, for example, the European Parliament voting last month to put explicit limits on behavioral targeting into incoming digital regulations.)

Unfortunately, rather than spotting this very obvious trend away from tracking-based ad targeting — and seeking to press a solid-looking market structure antitrust case against Google (say by acknowledging the web-wide privacy abuse that its dominance of the ad value chain has entrenched and flipping to a reformist position that backs privacy compliant ad targeting alternatives) — the adtech industry (and some publishers) instead appears to be trying to tie Google by using antitrust claims to sustain an illegal abuse of privacy, just with less control for it and more chance for people’s data to flow through their own profiling machines.

Clearly increased competition at the expense of privacy is not reform, it’s just more abuse.

These complainants are also making their play right at a time when European competition regulators and privacy watchdogs have woken up to the need for nuanced joint working to effectively regulate the digital sphere. (See, for example, the joint statement put out last year by the CMA and the ICO, following close working on the Privacy Sandbox case.)

The CMA’s resolution of the Privacy Sandbox complaint — in the form of accepted commitments from Google — similarly bakes in joint working with the UK’s data protection watchdog to ensure consumers’ privacy protection standards are not forgotten in the name of increasing competition.

And when the Commission announced its probe of “possible anticompetitive conduct by Google” in the online ad sector last summer, it also made a point of publicly highlighting the need for digital advertising solutions to protect people’s privacy — saying it would “take into account the need to protect user privacy, in accordance with EU laws in this respect, such as the General Data Protection Regulation (GDPR)”.

“Competition law and data protection laws must work hand in hand to ensure that display advertising markets operate on a level playing field in which all market participants protect user privacy in the same manner,” the Commission also warned then.

Yet the EPC’s press release complaining about Google now does not make one single mention of privacy — with Van Thillo’s theory of consumer harm centering on higher prices (which he stipulates includes “ad tech fees”), as well as linking Google’s dominance of the ad market to reduced consumer choice, transparency and innovation.

In additional notes in its press release the coalition also writes:

“Absence of effective competition in ad tech causes considerable harm to press publishers, advertisers, and European consumers in the form of supra-competitive fees, lower quality of service, and less innovation. Less advertising revenue means press publishers have less resources to invest in news content and fulfil their socially important mission of informing the general public and holding those in power accountable. Supra-competitive ad tech fees are also borne by advertisers, which they may pass on to consumers in the form of higher prices for advertised goods or services. Everyone loses but for one company: Google.”

But Van Thillo’s statement is overwhelmingly silent on how current-gen adtech routinely — and, indeed, by design — means that consumers get less/no privacy and little/no data protection.

Which suggests (these) publishers are still missing in action when it comes to the key strategic fight over reform and the future of ad targeting — even as the UK’s antitrust watchdog gives the okay to a Google-shaped evolution of ad targeting.

And that looks incredibly dumb.

The wider adtech ecosystem appears to be pinning its hopes on EU regulators taking a different tack vs the UK.

Although the joint working that’s now going on on digital issues also extends to chatter between international counterparts, including between the UK and the EU, so it may well find there are far fewer schisms to exploit than it hopes.

Regardless, the tracking industry is not for turning.

Back in September, a coalition of (unnamed) marketers, adtech players and publishers — which self-styles as the “Movement for an Open Web” (aka MOW) — also complained to the European Commission about Google’s Privacy Sandbox.

And in a statement today, fast-following the CMA’s acceptance of Google’s Sandbox commitments, the group can be seen respinning its complaint from one that’s targeted at stopping Sandbox to broadly blasting Google in the hopes of summoning a more radical regulatory intervention — larding on the flattery with a claim that “all eyes” are now on Brussels (i.e. after the UK didn’t stop Sandbox), and going on to press the Commission for “swift and comprehensive action; addressing not only Google’s Privacy Sandbox Browser changes but also other issues throughout the ad tech ecosystem, on which publishers and society depend”.

“Google has a series of conflicting positions being both an ad buyer, a seller and owner of the largest ad exchange. It gives itself an inside track which it misuses for its own benefit, undermining free and fair competition — a position that demands regulation and remedies, as the European Publishers Council has highlighted,” MOW goes on, before entreating the Commission “and concerned parties” to acknowledge what it calls “the scale and depth of Google’s strategy of enclosing the Open Web”.

“Far from disconnected issues, the Privacy Sandbox and its recently announced Topics are both subject to the Commitments and such gatekeeper controls affect everything — requiring public interest oversight,” it also urges, echoing a piece of terminology the Commission’s Digital Markets Act (DMA) proposal for ex ante rules to curb abusive digital giants also uses (aka “gatekeeper”). Although the DMA isn’t likely to make it into EU law before 2023; plus, if the EU parliament gets its way, both the DMA and the broader Digital Services Act will bake in hard limits on behavioural advertising.

As with MOW’s missive today, the EPC complaint tries flattery on the Commission, with the publishers penning that the EU is “uniquely positioned” to act on their complaint — and implying the Commission can go one better than other local and international competition authorities, including by drawing on findings in the US States lawsuit.

That the adtech industry would be guilty of bundling legitimate competition complaints with an illegitimate desire to continue tracking and profiling everyone on the Internet should hardly surprise us.

That is, after all, their original sin.

Where exactly the industrial data complex is on the ‘denial, anger, bargaining, depression and acceptance’ scale of grief is interesting to ponder. Clearly they haven’t got to ‘acceptance’ yet — since they still haven’t realized their old way of doing business is fast going away.

Still, a direct appeal to the European Commission to take radical action against a US tech giant may soon deliver adtech into a deep depression, given Vestager’s long stated preference for accepting behavioral commitments and eschewing structural remedies. And the bloc’s record on antitrust enforcement and tech M&A which also makes clear that the US’ own antitrust enforcers will have to grapple with whether — and how — they might want to break up homegrown data empires.

So if the tracking industry has got to the point where it’s trying to bank on the Commission to save it from the privacy doom of its own making — opting for cynical complaints instead of good-faith engagement with a process of reforming an abusive business model — then this mob of mostly faceless data brokers, adtech entities, unknown marketers and a smattering of named publishers do kinda look like they’re drinking in the last chance salon.

Credit belongs to : www.techcrunch.com

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