Google settles FCA’s investigation on adtech abuses with €220m fine

GAFAM are tracked by competition authorities and regulators around the world.

On 7 June 2021, the French Competition Authority ("FCA") fined Google for abuse of dominance on the EEA market for ad servers for publishers of websites and mobile apps. Following a settlement procedure, the FCA imposed a €220m fine on Google which commits to amend its services.

The relevant markets are at least EEA-wide and the EU Commission would have appeared best placed to deal with this investigation. But the Commission has already run three long investigations in 10 years and the FCA was willing to take this investigation and has apparently been considered as well placed in light of its expertise developed in the online advertising sector in which it conducted a sector investigation in 2018.   

In addition, the FCA prides itself for several months to have created a dedicated unit with digital experts able to understand the massively complex functioning of algorithms in these markets. The FCA has clearly positioned itself as one of the more sophisticated competition authorities to deal with digital matters in particular in antitrust battle against the GAFAM.

Website and mobile app publishers can sell digital advertising spaces (ie "advertising inventory") to advertisers. The process involves a complex series of intermediaries:

• advertisers (ie buyers of advertising inventory);
• demand-side platforms ("DSP") which allow advertisers to manage multiple ad exchanges, to manage data exchange accounts, to participate in auctions organised by SSPs and to directly buy advertising inventory in some websites (eg Facebook, Youtube, etc);
• supply-side platforms ("SSP") which enable websites and mobile applications editors to manage their advertising inventory, fill it with adds and receive revenues. To select the advertisers, the SSPs use open and closed auctions or conclude direct agreements;
• ad servers for publishers which allow a website or mobile application publisher to manage its advertising inventory according to specific criteria defined by the publishers. Usually, editors use only one ad server; and
• website and mobile app publishers which offer advertising inventory for sale.

In this online advertising ecosystem, Google is particularly active and offers a wide range of services. Notably, after having bought DoubleClick in 2008, Google offers the Google Ad Manager ("GAM") which combines an ad server, DoubleClick for Publishers ("DSP") and a SSP, DoubleClick Ad Exchange ("AdX").

In June and September 2019, News Corp Inc., the Groupe Figaro (which dropped out of the procedure in November 2020) and the Groupe Rossel La Voix filed complaints before the FCA alleging that Google had abused its dominant position in the way it operates the GAM.

The procedure before the FCA went very quickly, with the FCA sending a statement of objections around only a year later. With Google deciding to engage in a confidential settlement procedure in March 2021, in total, the case has been resolved in two years with no appeal possible (except on the calculation of fines).

The theory of harm

The FCA found Google dominant on the EEA markets for ad servers for website and mobile app publishers and "preeminent" in the market for SSPs that are not related to online searches. It qualifies two different self-preferencing abuses which lasted from 2014 to 30 September 2020 and consist in:

• giving preferential treatment to its own SSP platform AdX to buy advertising inventory on its ad server DSP; and
• allowing better technical and contractual interoperability between AdX and DSP than between AdX and other ad servers.

The self-preferencing legal test applied by the FCA is drafted in quite a new way but seems directly inspired from the Commission's reported arguments before the General Court in the Google shopping case. The fact that it is a settlement decision with Google not challenging the statement (while not acknowledging the findings) deprives the decision from much details on the legal test applied and how it fits with EU case law. The test is articulated quite bluntly in three to four steps:

• the conditions offered by Google to its own services are more favourable and give advantages to Google's own services;
• these advantages have anticompetitive effects (eg degradation of the quality of competing services, higher prices for final customers, etc);
• restricting the services available to Google's competitors cannot be justified by competition on the merits¹; and
• such practices cannot be objectively justified.

This test will not be debated further as Google cannot appeal the decision but more clarity may be expected from the General court awaited decision in Google Shopping.

In the meantime, the decision is deemed to have a significant impact EEA-wide if not worldwide, in pending investigations in other countries including the US and in potential private claims from ssps and publishers.

A "win-win" solution for all parties?

Google has been fined €220m which some commentators have considered is low given the findings of the FCA and the relevant legal cap. However, this should be viewed in light of Google commitments which are potentially quite far reaching at EEA level and beyond since Google has indicated that it does not exclude to implement the commitments outside the EEA.

Google's commitments are the following:

• Google will offer third-party SSPs an interoperability modality with the Google's DFP server in order to allow competition between the Google's AdX and competing SSPs for the purchase of advertising inventory from publishers using the DFP server (commitments 1 to 4); and
• Google will change the configuration of the AdX to better allow the publishers using ad servers other than Google's DSP server to access AdX on demand "in real time" (commitment n°5).

The commitments may have to be revised upon Google's request and following negotiations with the FCA in case new factual and legal circumstances justify a change (eg the Digital Markets Act ("DMA") or a significant change of market conditions).

This decision seems to mark the regulators' strong push to intervene quickly to enhance competition where it see what it considers to be anti-competitive behaviours.  

In Europe, the draft Digital Markets Act which is expected to be adopted in 2022, targets so-called gatekeepers, ie large, systemic online platforms that meet specific criteria and have a strong intermediation position, and provides a list of do's and don'ts to be complied in the course of their activity, like allowing third parties to inter-operate with their own services under certain circumstances. Failure to do so would expose the gatekeepers to fines of up to 10% of its worldwide turnover without the need to delineate a relevant market, find a dominant position or examining the effects of the practices.

In that context, the decision is probably a "win-win" one for all stakeholders:

• the FCA has proven to be armed for analysing complex digital markets and practices while acting quickly and pragmatically;
• Google signals to the ad tech industry and more widely that it is willing to anticipate the upcoming regulatory changes like the one provided by the DMA; and
• publishers and SSP have leverage to negotiate with Google and may expect soon enhanced competition on the adtech markets.

¹This parameter was only examined by the FCA with regards Google's second practice.