30 June 2010 : Online advertising market

Published on June 30, 2010

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The Autorité de la concurrence orders Google to implement in an objective, transparent and non discriminatory manner the content policy of its AdWords service

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The Autorité received a complaint against Google, coupled with a request for interim measures, from Navx. Navx markets online databases for GPS navigation devices. These databases include the localisation of fixed and mobile speed cameras as well as the fuel prices implemented by service stations. Navx alleged that Google was implementing anticompetitive practices on the online advertising market.

In its interim decision, the Autorité considers that Google holds a dominant position on the advertising market related to online searches. Its search engine enjoys a wide popularity and currently totals around 90% of the web searches made in France . Moreover, there are strong barriers to entry for this activity. Finally, its AdWords online advertising service, which is linked to its search engine, meets a specific demand from advertisers.

Pending a full investigation and a decision on the merits, the Autorité is also of the view that Google has implemented the content policy of its AdWords service in a way which lacks objectivity and transparency, resulting in a discriminatory treatment of speed camera database suppliers. The Autorité has therefore decided to grant interim measures.
 

Navx exclusively relies on the online sale of radar databases

Navx is a start-up created in 2005, which markets point of interest databases for GPS and smartphones, mainly in a package (“Navx Trio Pack”) including the localisation of fixed and mobile speed cameras as well as the fuel prices implemented by service stations. It sells its products either directly to individual customers (two-thirds of its turnover) or to GPS manufacturers such as TomTom or Garmin, who integrate them into their own navigation devices (one-third of its turnover). For the sale of speed camera databases, Navx is in competition with GPS manufacturers and with other independent businesses.

85% of its communications expenses are related to online advertising via AdWords, a service offered by Google. Google operates an Internet search engine, within which Adwords provides online advertising space. AdWords is based on a bidding process for the purchase of keywords. In practice, advertisers bid on keywords (for instance in the present case, “speed camera database” or “speed camera warning systems”), in order for their commercial link to appear next to or above the results of Google search engine, when these keywords are part of the request made by an Internet user. The advertiser then pays for every "click" made on its commercial link.

Online advertising is a favourite sale channel for Navx, which markets digital files, due to the fact that there exists a strong continuity between the act of browsing the Internet and the act of purchase: commercial links appear on the screen as a result of the search and customers can then reach directly the commercial website and buy the product at stake in a few minutes.


Navx’s complaint

Navx complains in particular of the sudden breaking off of its contract and of a discriminatory treatment on part of Google.

In 2008, Google decided to modify, in a more restrictive fashion, its content policy for devices aimed at evading road traffic speed cameras (1). The wording of its general conditions however lacks in clarity regarding the possibility that is open (or not) to manufacturers of speed camera databases to continue to advertise. Whereas until the beginning of November 2009, advertisements subject to automatic cancellation had been restored on simple request from Navx t, Google finally decided unilaterally to suspend Navx’s account. It is only 4 days after this suspension that Google informed Navx in writing, on 17 November 2009, that advertising for speed camera databases and warning systems was contrary to its content policy.


If, in principle, Google remains free to define its content policy for admission to its AdWords service, it is important to implement this policy in a transparent and objective fashion, that does not result in a discriminatory treatment of some market operators

The facts brought to the knowledge of the Autorité, at the current stage of the investigation, evidence a lack of objectivity and transparency concerning:

  • the scope of the ban: the conditions do not specify clearly whether speed camera warning systems and speed camera databases are concerned or not;
     
  • the impact of the ban: advertisers do not know with sufficient certainty if the ban concerns only the use of keywords and the advertising of products in the text of the announcement or on the page accessible via the commercial link, or if it also concerns further pages accessible from the latter;
     
  • the process applicable in case of a change in the conditions: advertisers are not informed upfront of a change, nor of the date on which it becomes applicable; moreover, Google reserves the right to fine-tune its interpretation of the conditions via bilateral discussions, without changing the general conditions themselves;
     
  • the proceedings followed in case of a suspension: it can occur without any true advanced notice.


The discrimination, that flows in part from the content policy’s lack of objectivity and transparency, is evidenced by the differences in the treatment applied to radar databases suppliers:

  • between GPS manufacturers (TomTom and Garmin), which may promote the supply of these databases on their website without being excluded from the AdWords service, and speed camera warning system and speed camera databases manufacturers (SCDB, Coyote, Navx, AlerteGPS), that cannot;
     
  • in the level of information available to the advertisers: some are informed in writing and in advance of the exact impact of the conditions and interpretation thereof, so as to avoid suspension, while others are informed in writing only after the suspension of their account has occurred (case of Navx).


The interim measures granted by the Autorité

Discriminatory practices may harm competition when they have for object or for effect to foreclose a competitor from the market but also when customers of a company holding a dominant position find themselves disadvantaged in the competition on their own market.

Google’s practices have suddenly and significantly affected Navx’s income, but also and essentially its growth potential. This has made it very difficult to organise a second fund raising. Consequently, it has rendered very unlikely the continuation of the B2C activity of the company, which represents approximately two-thirds of its turnover.


In view of all these elements, the Autorité has decided to grant several interim injunctions.

1) It orders Google Ireland and Google Inc. to clarify, within a four months period following the notification of its decision, the scope and impact of the AdWords conditions applicable to devices aimed at evading traffic speed cameras:

- as regards behaviours forbidden to advertisers (keywords, text of the advertisement, destination pages, cross-references, etc.);
- as regards authorized or forbidden devices, in particular speed camera warning systems and databases.

These elements must be made available to advertisers in an objective, transparent and non discriminatory fashion. In addition, the date from which the modified conditions will be applicable to advertisers must be specified.

2) It orders Google Ireland and Google Inc. to clarify, within a four months period following the notification of its decision, the AdWords processes that may lead to an advertiser’s account being suspended.

3) It orders Google Ireland and Google Inc. to restore, within a five days period following the notification of its decision, the AdWords account of Navx. Google may nevertheless apply in a non-discriminatory way to Navx the AdWords conditions and procedures as clarified according to the present decision.


(1) Unlike radar detectors or jammers, that are illegal, the solutions sold by manufacturers of navigation devices and speed camera databases do not violate the law. They may be either legal or illegal depending on whether or not they are likely to “reveal” or “jam” radars: detectors and database are only relying on information broadcasted by the State services and supplemented by the users. However, Google reserves the right to be more restrictive than the legislation.

(2) For the competitive of the discriminatory pratices, see § 181-186 of the decision

> For more informations, please consult the full text of the decision 10-MC-01

> Contact : Ingalill d’Armaillé Tel : 01 55 04 01 82 / Mel