France’s competition regulator, Autorité de la concurrence, said a preliminary probe into the powerful and growing economy of online advertising has shown the need for further investigation into the sector, with the focus on tech giants.
Online ads are now the “leading form of advertising” in France, recently beating out television, according to the regulator, and corporate spending on the platform hit an estimated 4.2 billion euros in 2016. Spending in the space is growing by about 12 percent a year in France, and online ads are gaining popularity there for the same reasons they’re popular elsewhere, namely the ability of companies like Facebook and Google to collect and utilize consumer data and target placements.
“This major upheaval in the advertising sector has led to the development of an entire ecosystem,” the regulator said in a new report. “While very few stakeholders have entered the online advertising market and been able to capture part of its value, the sector’s competitive equilibrium is fragile, since stakeholders are confronted with competition from global stakeholders, present at several levels of the value chain (publishing, intermediation), with Google and Facebook leading the pack. “
The regulator noted that Facebook and Google “generate most of their revenue” through the sale of online ads and related services to publishers and companies, and that their services are “based on their processing of the colossal volume of information they have gathered through the popularity of their sites,” according to the report.
“Both globally and within France, most of the revenue in this sector is generated by these two operators,” the regulator said.
Facebook and Google share some competitive advantages, like popularity and vertical integration, but the regulator found through its investigation that many other entities trying to compete in the space may suffer by being unable to access such mass amounts of user data that the tech giants use for “custom advertising.” Even if they do have sources of data, the regulator found that people are becoming “more and more doubtful about the use of their data” and are employing programs and software that limit its collection as they use the Internet.
Beyond the sheer popularity of Facebook and Google possibly prohibiting any real competition for online advertising in France, the regulator said the companies may also be leveraging their size to exert control over the “supply of advertising services and of services for the use of advertiser data.”
“Certain publishers and intermediaries are of the opinion that they are subjected to different treatment by stakeholders they consider dominant in the advertising intermediation sector,” the regulator said in its report.
Those participating in the online advertising industry also complained to the regulator of “restrictions” around collecting and accessing some data, including supply information based on impressions, research statistics for brands and even in some cases data generated by a publisher’s own ads.
Although the Autorité de la concurrence stressed that its findings did not constitute any sort of formal accusation, its head Stanislas Martin is continuing a preliminary investigation based on the information collected so far, focused on Facebook and Google, to determine whether a more formal and extensive probe is needed. If initiated, that would lead to a court review of the findings and a decision regarding whether the companies are in violation of France’s antitrust laws.
Representatives of Facebook and Google could not be reached for comment, but neither company is a stranger to antitrust investigations in Europe.
Facebook has been hammered over the last few years by France, Germany and the European Union’s regulator, the European Commission, for its collection and use of user data, as well as its disclosures around its 2014 WhatsApp acquisition, leading to fines related to alleged antitrust law violations in the hundreds of millions. Meanwhile, Google was on the receiving end last year of a record fine from the commission for allegedly suppressing competition in its shopping search result platform. Google has appealed the commission’s decision, but that is a process likely to drag on for years.
For More, See: