Technology

Google: landmark antitrust deal leads to change in the ad business

This is the first time that Google has agreed to make changes to its huge advertising business, which brings in the bulk of its revenue

Google antitrust deal
Photo: REUTERS/Regis Duvignau
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  • Google has agreed to make changes to its ad business after a €220 million deal with France’s competition regulator;
  • The watchdog found that Google’s ad management platform for large publishers – Google Ad Manager – favored the company’s own online ad marketplace – Google AdX;
  • The deal with the French competition watchdog could help rebalance the power over advertising in favor of publishers.

Google said it would make changes to its global advertising business to ensure it did not abuse its dominance, bowing to antitrust pressure for the first time in a landmark settlement with French authorities. The settlement also fined Google €220 million ($268 million).

This is the first time the U.S. tech giant has agreed to make changes to its huge advertising business, which brings in the bulk of its revenue. The watchdog found that Google‘s ad management platform for large publishers – Google Ad Manager – favoured the company’s own online ad marketplace – Google AdX – where publishers sell space to advertisers in real-time.

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Ad Manager provided AdX with strategic data such as the winning bidding prices, while AdX also enjoyed privileged access to requests made by advertisers via Google‘s ad services, the authority said.

AdX, in turn, exchanged data more smoothly with Ad Manager than it did with other advertising management platforms, the watchdog added. Such platforms are crucial for publishers to manage and sell advertising space.

The deal with the French competition watchdog could help rebalance the power over advertising in favor of publishers, which held sway over the business in the pre-internet era but lost control with the rapid rise of Google and Facebook.

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“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.

Under the terms of the settlement, Google made commitments to improve the way Ad Manager services worked with rival ad servers and ad space sales platforms, the French watchdog said. Some changes would be implemented by the first quarter of 2022, it said, adding that Google would not appeal the decision.

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Google also said it had agreed to make it easier for publishers to use its data and tools. “We will be testing and developing these changes over the coming months before rolling them out more broadly, including some globally,” the company added.

Rightly sanctioned

Many publishers globally have been infuriated over the ad practices employed by the tech giants, whose success relies on the trove of data they have amassed over the years. The French antitrust authority said its decision opened the way for publishers who felt disadvantaged to seek damages from Google.

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Most of Google‘s sales come from search and YouTube ads. But last year about $23 billion was tied to helping publishers sell ads, drawing antitrust scrutiny to the connections between Google‘s businesses, plus calls from some critics to break up the company.

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