‘Trust Me, I’m Fair’: Analysing Google’s Latest Practices in Ad Tech From the Perspective of EU Competition Law

47 Pages Posted: 16 Oct 2019 Last revised: 16 Dec 2019

See all articles by Damien Geradin

Damien Geradin

Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws

Dimitrios Katsifis

GERADIN PARTNERS

Date Written: October 7, 2019

Abstract

In a first paper released in January 2019, we explained the mechanics of online display advertising and real-time bidding with a focus on the tools and technologies comprising the ad tech market. We identified Google as the leading, and most likely dominant player across the ad tech value chain and expressed the concern that it engages in prima facie anticompetitive conduct, in that it uses its leading ad server to favor its ad intermediation business and exclude competitors. We also explained how the lack of competition across the ad tech value chain enables Google to exploit advertisers and publishers by charging hidden fees for ad intermediation on top of its disclosed commissions. In March 2019, Google announced that it would switch to a first-price unified auction by the end of 2019, arguing that its move would help create a fair and transparent market for everyone. Meanwhile, online advertising has attracted significant regulatory interest in the EU, the USA and Australia. In this new paper, we analyse whether Google’s switch to a unified auction has addressed the concerns we expressed in our first paper. We conclude that this is not the case. Google’s latest switch does nothing to increase auction transparency. Worse, it seems to strengthen Google’s ability to extract hidden margins from its customers, while undermining the competitive pressure exercised by header bidding. If substantiated, Google’s conduct could result in significant welfare losses for publishers, advertisers and ultimately consumers. We conclude our paper by suggesting various structural and behavioral remedies that could help restore competition in ad tech should our concerns be substantiated.

Keywords: online advertising, display advertising, advertisers, publishers, auctions, ad exchange, header bidding, AMP, digital platforms, ad tech, big data, Google, competition law, abuses of a dominant position, exploitation, vertical foreclosure, self-preferencing.

JEL Classification: K21, L12, L41, L86

Suggested Citation

Geradin, Damien and Katsifis, Dimitrios, ‘Trust Me, I’m Fair’: Analysing Google’s Latest Practices in Ad Tech From the Perspective of EU Competition Law (October 7, 2019). TILEC Discussion Paper No. DP 2019-029. Available at SSRN: https://ssrn.com/abstract=3465780 or http://dx.doi.org/10.2139/ssrn.3465780

Damien Geradin (Contact Author)

Tilburg Law & Economics Center (TILEC)

Tilburg, 5000 LE
Netherlands

University College London - Faculty of Laws ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

Dimitrios Katsifis

GERADIN PARTNERS ( email )

Avenue Louise 475
Brussels
Belgium

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