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 $260 million 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 organizations. Google’s punishment? A $594 million fine.
Such sums are small change to Google and its parent company Alphabet, which made $61.9 billion 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 agreed to make significant changes in 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 ruling revolves around technologies within Google’s Ad Manager—a platform that helps companies buy and sell the ads 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 ads 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 favored 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 behavior, the FCA ruled. And Google’s rivals in the advertising technology space also suffered because of Google’s actions.
Previously, three European Commission investigations fined Google more than $9.7 billion for anti-competitive behavior, and the company is challenging those penalties in court. But in this case, Google isn’t challenging the FCA’s ruling. In fact, it didn’t dispute the FCA’s findings, and it proposed changes to its advertising technology itself. (It has also made some changes in response to the European Commission cases.)
“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 the French firm Frieh Associés who was not involved in the Google case. “This is a very important decision. I think it shows that the French competition authority is both very pragmatic and also creative in terms of solutions that can be found to address the issues.”
“The decision is completely transparent,” says Antoine Riquier, a commercial litigator for the 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.”