Google has a dominant position in online search advertising that is susceptible to abuse, France’s competition authority has announced – the first finding of its kind by an antitrust watchdog.
Following a 10-month investigation into the online advertising market, the Paris-based Autorité de la Concurrence on Tuesday released a list of potential abuses stemming from Google’s dominance and warned the internet group to behave more responsibly.
The French watchdog’s conclusions are non-binding, but could lead to further investigations and remedies if abuse is formally identified. They will also be examined closely by the European Commission which launched its own full inquiry last month.
The conclusions are the latest sign of an intensifying regulatory clampdown on Google’s commercial practices. The French parliament, for example, is debating whether to impose a tax on online advertising, which some legislators see as a way to tax Google.
Google challenged the competition authority’s findings, saying its market analysis was too narrow. “Search ads are one of many options for advertisers,” it said. “If the price of search ads rises, advertisers can and do switch to other formats, both online and off line. That’s the sign of a competitive and dynamic industry.”
The French watchdog focused its inquiry on search-related advertising rather than display advertising. Google’s Adsense service allows advertisers to buy a key word, which, when typed in as a search query, produces a commercial link alongside the search results.
The authority concluded that this type of advertising – from which Google makes the bulk of its revenues – represented a “specific market that cannot be replaced by other forms of communication”. The watchdog said that this type of advertising was distinctive because it allowed for fine-tuned targeting close to the moment of purchase.
The authority said there were many other factors indicating that Google had a dominant position: Market share of searches (90 per cent in France); higher prices than rivals and a high profit margin.
The watchdog was careful to point out that Google had built up its dominant position through innovation, and that Google could in the future find itself challenged. But the authority said barriers to entry in the market were high.
The watchdog also identified “possible operational abuses, whereby the search engine apparently imposes exorbitant conditions on its partners or customers, treats them in a discriminatory manner or refuses to guarantee a minimum of transparency in the contractual relations it establishes with them”.
Following a 10-month investigation into the online advertising market, the Paris-based Autorité de la Concurrence on Tuesday released a list of potential abuses stemming from Google’s dominance and warned the internet group to behave more responsibly.
The French watchdog’s conclusions are non-binding, but could lead to further investigations and remedies if abuse is formally identified. They will also be examined closely by the European Commission which launched its own full inquiry last month.
The conclusions are the latest sign of an intensifying regulatory clampdown on Google’s commercial practices. The French parliament, for example, is debating whether to impose a tax on online advertising, which some legislators see as a way to tax Google.
Google challenged the competition authority’s findings, saying its market analysis was too narrow. “Search ads are one of many options for advertisers,” it said. “If the price of search ads rises, advertisers can and do switch to other formats, both online and off line. That’s the sign of a competitive and dynamic industry.”
The French watchdog focused its inquiry on search-related advertising rather than display advertising. Google’s Adsense service allows advertisers to buy a key word, which, when typed in as a search query, produces a commercial link alongside the search results.
The authority concluded that this type of advertising – from which Google makes the bulk of its revenues – represented a “specific market that cannot be replaced by other forms of communication”. The watchdog said that this type of advertising was distinctive because it allowed for fine-tuned targeting close to the moment of purchase.
The authority said there were many other factors indicating that Google had a dominant position: Market share of searches (90 per cent in France); higher prices than rivals and a high profit margin.
The watchdog was careful to point out that Google had built up its dominant position through innovation, and that Google could in the future find itself challenged. But the authority said barriers to entry in the market were high.
The watchdog also identified “possible operational abuses, whereby the search engine apparently imposes exorbitant conditions on its partners or customers, treats them in a discriminatory manner or refuses to guarantee a minimum of transparency in the contractual relations it establishes with them”.
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