On June 7, Isabelle de Silva, a little-known French regulator, made global headlines. After a painstaking investigation, which de Silva describes as the most complex she has been involved in, the French Competition Agency, or FCA, hit Google with a €220 million (£187m) fine. Google, de Silva ruled, had been using its already dominant advertising technology to further strengthen its position and outbid rivals.
But de Silva wasn’t finished. A month later, in a separate case, she fined Google again. This time Google had failed to negotiate copyright changes to its search results with media organisations. Google’s punishment? A €500m fine.
Such sums are smallfry to Google and its parent company Alphabet, which made $61.9 billion (£44bn) in the last quarter alone. But the FCA’s ruling on Google’s ad tech was headline-grabbing for another reason: Google didn’t fight it. The company agreed with all the facts in the FCA’s case and also agreed to make significant changes to how it operates. And these changes won’t just happen in France, but across the world.
In a single judgement, the regulator, known as the Autorité de la concurrence in French, managed to reshape how Google’s advertising technology works. The FCA’s ruling revolves around technologies within Google’s Ad Manager – a platform that helps companies buy and sell the adverts that are shown on billions of web pages. The FCA took particular issue with two elements of the Ad Manager system: the DoubleClick For Publishers ad server and a sales platform known as SSP AdX. The first allows the owners of websites to sell the adverts sitting around the content they publish, while the latter is involved in controlling the complex split-second auction process.
“Google ensured that the ad server favoured the platform for selling advertising space,” de Silva says. In addition, she explains, Google was using its knowledge about what happened on other ad platforms to its advantage by making its own pricing lower. “We were able to show in detail that not only did Google have information that the others did not have, because of its specific [dominant] position, but that they effectively used this information to have a better chance to win the bids,” de Silva says.
In short, Google used its power to give itself an advantage. Under competition laws in Europe, companies that have a dominant market position aren’t allowed to abuse their position. Tech giants are allowed to be big, but they shouldn’t use this power to make themselves stronger at the expense of rivals. Publishers of websites selling their advertising space lost out because of Google’s behaviour, the FCA ruled. And Google’s rivals in the advertising technology space also suffered because of Google’s actions.
Unlike three European Commission competition investigations, which fined Google more than €8.2bn, the company isn’t challenging the FCA’s ruling in court. In fact, Google didn’t dispute the FCA’s findings and proposed changes to its advertising technology itself. (It has made some changes in the European Commission’s three cases but is also challenging them legally.)
“It is the first decision ever in which the tech giants, and Google in particular, undertake such remedies to settle a case,” says Fayrouze Masmi-Dazi, a partner in competition law at French firm Frieh Associés, who was not involved in the Google case. “This is a very important decision. I think this shows that the French competition authority is both a very pragmatic authority and also creative in terms of solutions that can be found to address the issues that are identified.”
“The decision is completely transparent,” says Antoine Riquier, a commercial litigator for legal firm Hausfeld. The 101-page FCA ruling is littered with diagrams explaining how advertising technology bidding and servers work. “You have a lot of details, but it’s not too technical at the same time. There is a lot of work involved from the French competition authority on this.”