I don't understand how that is illegal.
> Starting in 2006, Google included exclusivity clauses in its contracts. This meant that publishers were prohibited from placing any search adverts from competitors on their search results pages. The decision concerns publishers whose agreements with Google required such exclusivity for all their websites.
Even if the search result and some ads were provided by Google, requiring exclusivity for search adverts was too much.
Which completely ignores why ad networks have those restrictions.
At one point it was common for crummy web pages to sign up for every ad network. All of them. Because every one you signed up for was more money. Then the whole side of the page would be ads from different networks.
The obvious problem is that the advertiser is paying the website for eyeballs, but nobody is ever going to look at all of those ads. It's hard enough to get anyone to look at your ad box when it's the only one on the page. So you're paying for eyeballs and then not getting them. It was like buying a TV ad spot and discovering that the TV network had put it in the middle of an uninterrupted two hour block of just other ads. No surprise that the ad networks then required sites to stop doing that.
Instead, they consciously choose themselves to be a monopoly.
Exclusivity contracts give way too much power to Google at the expense of everyone else, if we could simply leave it to Google to decide which websites they want to place advertisements on.
It's like having a retail electronics store placing bad products from company B next to good products from company A. We don't really let A bully the store into exclusivity either, if A doesn't want to be associated with the store they can simply end their contract.
Rather, they are specifically locking everyone on their platform.
I do not completely understand your "de facto" vs "de jure" distinction. Unless of course you don't see any other ways of dealing with your clients but a binary yes/no.
Even trying to price just based on how many other ad networks there are is problematic. For each additional ad network the value of each ad goes down. Even adding a second one may cut the value more than in half compared to exclusivity, because if the user sees the other network's ads first and they don't appear relevant they may not even look at yours, and a user who sees a larger number of ads may not look closely at any of them.
If the price offered for any non-exclusive placement is more of a reduction over the price offered for exclusivity than the amount gained from the other ad network(s), how is that any different in practice than requiring exclusivity?
Is it?
It seems pretty simple to audit your 10,000 largest ad-spend domains and check to see if they're actually just ad fraud. You'd need maybe 300 person-hours to do so, at an overhead-in cost of, let's high-ball it, 100$/hr, which puts you at a cost of $30,000.
If you mean the process is impossible to automate, then don't try to automate it. You can catch 99% of fraud with very low-effort manual review in most industries. That Google doesn't do it doesn't speak to the inability to get it done. It speaks to their unwillingness.
In short: exclusivity is there to choke out other ad networks.
>If the price offered for any non-exclusive placement is more of a reduction over the price offered for exclusivity than the amount gained from the other ad network(s), how is that any different in practice than requiring exclusivity?
The comparison you're making in the last paragraph is a common mistake in examining competition scenarios. The comparison isn't between pricing between the market leader and the incumbents following the anti-competitive behavior. It's the comparison between the prices we would have had no anti-competitive behavior existed in the first place.
You're figuring 10k domains in 300 hours, or 1.8min per domain. It's way more expensive than this, and it's an adversarial system. If you have rules about how spammy a site can be and still show your ads many sites are going to try and get as close to the boundary as possible without going over. This means it takes substantial effort to figure out which side of it they're on.
Then, the spammier sites run many different domains with multiple accounts, which means they're not that likely to show up as top domains. Spammy sites also can "cloak" so they show up one way to a reviewer at the ad network and another way to a real site visitor.
Manual inspection is definitely a valuable tool, and is something that ad networks use, but that a process like you described would catch 99% of fraud is massively optimistic.
(Disclosure: I work at Google on ad stuff, but not this sort of ad stuff. Speaking for myself and not the company.)
Sure, but I've overstated the hourly costs by an order of magnitude. You can get body shops to do this work very inexpensively.
Making a call as to whether or not they're over the line isn't difficult; you flag the clear bullshit calls and leave the borderline ones after making the contractual terms more conservative than your in practice review would accept.
>Then, the spammier sites run many different domains with multiple accounts, which means they're not that likely to show up as top domains
Sure, but we both know your distribution of revenue isn't difficult to parse, nor is auditing methodology difficult.
We have active fraudsters at the top of the iOS and Play stores. The issue isn't that you don't know how best to cast the net to grab everyone. It's that you don't cast it at all to grab anyone.
>but that a process like you described would catch 99% of fraud is massively optimistic.
Not really. Most fraudsters are terrible. Sure a few will slip through the cracks, but that's the case in every industry. That's not an excuse to do nothing. It's especially not an excuse when the dichotomy being pushed here is that the difficulty underlies a need for illegal anti-competitive behavior.
What apps are you thinking of? My guess is that they're apps that are being really careful to stay just inside the bounds of the store policies.
> That's not an excuse to do nothing.
I'm confused why you think ad networks are doing nothing?
> the dichotomy being pushed here is that the difficulty underlies a need for illegal anti-competitive behavior.
I wasn't trying to defend that. I just saw your "it's pretty simple to..." and as someone close to the issue wanted to explain ways it's not that simple.
Oh, I thought you were the original poster I was replying to. Sorry about that. Regardless, it's not actually all that complicated at all. Catching all fraud is almost impossible. Catching 90-99% is dead simple. If you don't like my quick and dirty breakdown, make another - the problem's size needs to be 4 orders of magnitude larger before the cost implications become a concern.
That said, there's a very consistent pattern at play here: Organizations and groups that refuse to take action on the basis that they can't catch everything are consistently those that intentionally look the other way in respect of fraud, and digital advertising has a bad rep in this area for a reason: most networks ignore as much fraud as they can get away with.
In any event, locking out other networks doesn't change the fact that the excuse provided for exclusivity is about how many containers are around, not how many networks can bid on that inventory. The rationale for the illegal activity doesn't address the problem at all.
It's not just a matter of fraud. The website could be CNN, but if they're filling their pages with a thousand different ads, none of the individual ads is going to be worth paying for, even if the page also contains legitimate content.
And the thing that's impossible to measure is content volume. If you have one morsel on the page that drives traffic to it, you can easily add arbitrarily more to the bottom that is arguably "content" in order to make the ratio of ads to "content" be whatever you like. At that point you're trying to measure content quality, which is inherently subjective.
> The comparison you're making in the last paragraph is a common mistake in examining competition scenarios. The comparison isn't between pricing between the market leader and the incumbents following the anti-competitive behavior. It's the comparison between the prices we would have had no anti-competitive behavior existed in the first place.
That's not what I'm saying.
Suppose we do a test. If a page has one ad on it, 0.5% of page visitors buy the product. If it has two ads on it, 0.2% of page visitors buy each advertiser's product, because the extra clutter causes people to pay less attention to both of them.
So then your ad network prices that way. If the site puts your ad on their page with no others, you pay them 5 credits. If they put your ad on their page with someone else's, you pay 2 credits. If they want to use three ad networks then you pay 1 credit and it goes down from there. Just paying proportional to the value of the ad to the advertiser.
Now nobody is going to put two ad networks on the page, because they'd get 2 credits from each ad network (total of 4) instead of getting 5 credits from one. Even if it was 4 vs. 2, you might as well save yourself the transaction costs of using the second network.
The reason exclusivity is worth more isn't that there is less competition so you can charge more, it's that if you clutter up the page with more ads, their value falls off faster than their volume makes up for it.
Moreover, suppose that isn't the case. Showing more ads would produce more value, at least until some threshold number of ads is shown. Then the first ad network would just offer to display more ads on your page and pay you appropriately more for them.
You still end up with only one ad network -- whichever one will pay you the most per unit. The only way two ad networks end up on the same page is by reaching the point that the highest paying ad network knows showing more ads won't produce more advertiser value, and then scamming them by showing more anyway.
>Google has abused this market dominance by preventing rivals from competing in the online search advertising intermediation market.
>Based on a broad range of evidence, the Commission found that Google's conduct harmed competition and consumers, and stifled innovation. Google's rivals were unable to grow and offer alternative online search advertising intermediation services to those of Google. As a result, owners of websites had limited options for monetizing space on these websites and were forced to rely almost solely on Google.
This just doesn't make sense to me. So Google offers the website search functionality. It then says "If you want to run ads, you have to use our ads" a few years later Google says "If you want to run ads, you have to give us the best N spots, and all other ads have to be approved by us." Because of this the EU concludes "rivals were unable to grow and offer alternative online search advertising intermediation services."
I am really trying to read the logic some other way but the logic appears to be as follows
1) Google let people set up search pages on individual websites.
2) Google set the terms for ads on those search pages so that Google had exclusive/best ad spots on those search pages.
3) 2 limited competitors ability to develop an alternative to 1.
4) Because Google had a dominate market position, 3 is illegal and should be fined.
This honestly feels pants-on-the-head crazy to me because I do not see how this logic doesn't apply to Google.com. Should Google be forced to let Bing run adds on "google.com/search?q=shoes"? No! Yet if it is "ShoeReviews.com/search?q=shoes" suddenly Google is required to let Bing run adds on it.
Edit: Formatting
The exclusivity deal might have been fine were it not for Google's dominant position.
If you use market dominance in one market, to stifle competition in another market, that's anti-trust!
The one market is Search, the other is Advertising.
You couldn't just use Google Search and accept ads in those search results a cost of use. This sounds rather like abuse of a dominant position in one area to squash competitors in another.
Can I get a link or a quote to support that? If that is the case then yes, it crosses a line but I didn't see any in the linked article to support that view.
Edit: I reread the article and I think you are wrong. It specifically says on search pages. From the article
>In 2006, Google started to include "exclusivity clauses" in contracts which stopped publishers from placing ads from Google rivals such as Microsoft and Yahoo on search pages, the Commission said.
>From 2009, Google started replacing the exclusivity clauses with "premium placement" clauses, which meant publishers had to keep the most profitable space on their search results pages for Google's adverts and they had to request a minimum number of Google adverts.
Antitrust law, despite the name, isn't limited to abuses of monopoly power. It includes the use of dominant market positions in one market to reduce competition in another.
https://techcrunch.com/2017/06/27/google-fined-e2-42bn-for-e...
"Evidence shows that even the most highly ranked rival service appears on average only on page four of Google’s search results, and others appear even further down. Google’s own comparison shopping service is not subject to Google’s generic search algorithms, including such demotions."
Google is Walmart, offering all kinds of products. Carrying Kellog’s cereals (and many others).
Recently it started producing its own brand, Cerealify. Once it started producing its own brand, it’s the only brand you can now buy at Walmart. It’s also the only brand featured in marketing materials (catalogs, flyers, posters). Kelloggs, and other brands, can only be found in a warehouse 5 miles away.
How’s that for competition?
I understand the desire of playing Devil's Advocate here, but it's difficult to stomach. Google has been such a force for positive change globally that it's hard to see the EU as the good guys in this case.
Google is like yellow page, not Walmart.
Walmart is a store, and sells things. Best Buy is also a store, and sells many of the same things Walmart sells. They are competitors in the market for selling electronics. Competition between them is good, and so they aren't required to advertise each others' stores.
Google is a search engine. Bing and Yahoo Search are also search engines. They crawl and search the same websites. Competition between them is good, and so they aren't required to advertise each other's search engines.
Google Mail is not a search engine. Google News is not a search engine. YouTube is not a search engine. Google Play is not a search engine. These are all different products from Google Search. Thus, Google giving preferential treatment to these products in its market-dominant search engine would be a textbook example of an antitrust violation: using a dominant market position in one market to interfere in the another market. (It depends on the jurisdiction's specific antitrust laws, but it may not matter where the competitors' products show up in the search results if Google is giving preferential treatment to its own competing products in searches for those products or the search terms that would list those products.)
It's not hard to see these line of fines against Google for what they are: Money-grabbing attacks. With no knowledge on the matter, as an external observer, I wish this doesn't lead Google to de-prioritize its offerings in Europe.
I'm not sure what reasoning you're using, but it appears you aren't grasping the complexity of the argument.
For starters, Google search placement is a fundamental part of the search product, and is a wholly different product from Google Ads (which don't show up alongside search results). Search results and display ads aren't just different products--they're different markets (for example, print ads and tv ads are also advertising but are wholly separate forms of advertising from each other and from display ads and from search placement). So paying for placement in search results isn't an antitrust issue.
On the other hand, if buying search placement was contingent on also buying Google Ads, that would be a textbook example of antitrust abuse because Google's dominance in the search engine market is being used to leverage and interfere with the display ads market.
It's interesting to see how many people are shocked abuse of dominant market position remedies. I think enforcement has been so lax that many people casually assume anti-competitive behavior is the de-facto norm.
If you want to make a general argument about Search placement that is conditioned on plainly wrong assumptions (Google _never_ prioritizes organic search results based on buying Google Ads) then, sure, go right ahead.
Sounds uncompetitive to me.
Product A: dominant search product
Product B: non-dominant advertising product.
If you want to use product A, you need to also use product B. That alone is sufficient to create an antitrust violation. It's almost literally the textbook example of an antitrust violation.
But Google didn't stop there--they required exclusivity for product B for several years, and even after that ended they still required premium placement. Either way, they just compounded the severity of the antitrust violation.
Product B is display ads, which are displayed on other (almost always non-Google) websites. No searching involved...
I don't see how they're even remotely the same product. They're similar in the sense that their forms of advertising, but they're very different forms of advertising. Search placement is intentional advertising (in the sense of targeting prospective customer's "intent" to use/buy) while display ads are awareness advertising. The proof is in the very different rates: search engine placement terms can cost several dollars per search. That same amount could buy hundreds or even millions of display impressions.
Do we want to subsidize it? Or just let it die as the free market works?
So, do we want to subsidize it? No, because it's a private product offered for profit.
Should we let it die? Sure. Google's not the best search engine anymore, just the biggest. If it has to face some competition, they'll start improving the product again, which benefits everyone. And if it doesn't improve the product, it deserves to die.
Its current embodiment is only 10 years old so they are at the stage where they are required to make a point. If its too vague, which would fit your observation, challenge it and see what the venues for appeal or courts are in that supernational government.
If you're a libertarian, you would think that's fine, but in a libertarian world one company would have 97% of the market, and if you wanted to use their electricity, you would be forced to buy your food from them.