Google’s advertising activities are subject to a new procedure: the European Commission opened an investigation on Friday March 11 into the agreement concluded in 2018 by the American company and Meta (parent company of Facebook). The two leaders in online advertising are suspected of having distorted competition in this market. What they dispute.
This agreement, dubbed “Jedi Blue”, was able to “distort competition in an already highly concentrated market, to the detriment of competing advertising delivery technologies, publishers [de contenus] and, ultimately, consumers”said EU Competition Commissioner Margrethe Vestager in a statement.
Concretely, Google and Meta are accused of having distorted the real-time bidding system by which the display of advertisements is determined in real time. When a user visits a site or an application, the placements he can see are offered to the highest bidder through the dominant platforms, including that of Google. To counter the supremacy of the latter, present throughout the value chain and suspected of favoring itself in the auctions, publishers had started to join forces in an alternative system called “header bidding”.
Investigations in the United Kingdom and the United States
According to critics of Google, the agreement with Facebook was intended to prevent Mark Zuckerberg’s company from joining this coalition of Google competitors. And distorted the game. Facebook would have been favored in the auctions on the Google platform: additional information on the locations and a shorter response time, therefore a form of advantage compared to other buyers.
At the end of the investigation ” in depth “, the Commission will determine whether it will sanction Google or not. For the online search giant, this European investigation is in addition to others: this same Friday, the United Kingdom’s competition authority (Competition and Markets Authority) opened an investigation into the same “Jedi Blue”.
And in the United States, this deal is already in the sights of a coalition of states led by Texas. This group filed a first complaint against Google and Facebook in December 2020, then a new version of it in a New York court in January 2021.
In response, Google repeats this Friday by press release that “the allegations made about this agreement are false” :
“This is a pro-competitive, publicly documented agreement that allows Facebook Audience Network (FAN) to participate in our Open Bidding program, along with dozens of other companies. FAN’s participation is not exclusive and they do not receive any benefits that would help them win auctions. The objective of this program is to work with a range of advertising networks to increase demand for publisher advertising space, enabling these [derniers] to generate more revenue. Facebook’s participation in this program contributes to this. »
Facebook also ensures that its “non-exclusive agreement” with google “increases competition”. And promises, like the search engine, to cooperate with the authorities in the investigations.
Google held 28.6% of the global digital advertising market in 2021, just ahead of Facebook (23.7%), according to eMarketer.
“Double favoritism”
In June 2021, Google, already considered to be abusing its dominant position in online advertising, was fined 220 million euros by the French Competition Authority. The company, which owns both the main advertising server allowing publishers of mobile sites and applications to manage their ads (DoubleClick For Publishers, DFP) and the leading system for selling space through auctions ( AdX), had played its position on the seller side and on the buyer side: it had set up a “double favoritism”, had denounced the Authority.
Google then undertook to implement changes to ensure, in particular, a “equitable access to information on the conduct of auctions”. But this first decision was seen as a possible basis for the opening of investigations by the competition authorities of other countries.
In the process, Brussels had already opened a first similar investigation into the domination of Google, “present at almost all levels of the supply chain, as far as display advertising is concerned”. And the Bloomberg agency assured, in September 2021, that the US Department of Justice was preparing to launch a new procedure targeting the advertising activities of the Mountain View (California) company.
Google’s advertising business (which covers banner auction systems, but also ads on its search engine and on the YouTube video platform) is doing very well: the company achieved, in 2021 , a record profit of 76 billion dollars (69 billion euros), almost double that made in 2020.