Analysis
18 November 2022

Recent sanctions against Google by the French Competition Authority: ad servers and related rights

In 2021, the French Competition Authority imposed several fines on Google for anti-competitive practices related, on the one hand, to the remuneration of the related rights of publishers and news agencies, and on the other, to the preferential treatment given to its services in detriment to its competitors and publishers. Some of these decisions are now being used as a basis for a class action in the Netherlands and the United Kingdom by European and British publishers.

 

In 2021, the French Competition Authority (“ADLC”) imposed sanctions on Google for engaging in anti-competitive practices (I).[1] The activity of the French regulator provided the basis for the launch of a class action in the Netherlands and the United Kingdom by European and British publishers (II).[2]

 

I. The sanction against Google for abuse of dominant position in the ad server market and its consequences

In June 2021, the ADLC imposed a penalty on Google for abusing its dominant position in the ad server market (A).[3] This decision would allow damages actions to be brought today in the United Kingdom and the Netherlands on behalf of publishers who have been harmed by Google’s anticompetitive conduct (B).

 

A. The sanction against Google for abuse of dominant position in the ad server market

In 2021, the ADLC sanctioned several Google entities for having abused their dominant position in the ad server market for publishers of online sites and mobile applications, in breach of Articles L420-2 of the French Commercial Code and 102 of the Treaty on the Functioning of the European Union.[4]

The ADLC was approached by several press publishers which monetize the content of their websites and mobile applications, claiming that Google favored two of its technologies: the ad server called Doubleclick for publishers (“DFP”), and the programmatic ad sales platform called Doubleclick AdExchange (“AdX”), at the expense of those of its competitors and of publishers.[5] It was alleged that the DFP server benefited the AdX SSP by informing it of the prices offered by competing platforms and that AdX used this information to vary the auction process it implemented and vice versa. The ad server enables the display of advertising on a site or application, and the supply side platforms (“SSPs”) are “marketplaces” where buyers of advertising space and publishers selling space meet.[6]

In a press release, the ADLC stated that Google, which has not contested the facts, has asked the ADLC to be able to benefit from the settlement procedure provided for in the French Commercial Code, and has undertaken to make certain changes to restore equality and competition.[7]

In particular, the company is committed to provide fair access to information on the auction process for the SSPs,[8] as well as the preservation of the contractual freedom of the SSPs allowing them to negotiate special conditions with certain publishers or to put buyers in competition with each other.[9] A third commitment is that AdX will no longer use its competitors’ prices to optimize its auctions.[10] Finally, Google has offered guarantees of technical stability.[11] The company also had to make technical changes on how to access AdX requests in real time.[12]

On the basis of these commitments, a settlement was reached between Google and the ADLC[13] providing for a financial penalty of 220 million euros.[14] The President of the ADLC herself underlined the importance of this decision by indicating that it “is the first decision in the world to address the complex algorithmic auction processes by which online advertising operates.”[15]

 

B. Damages claims against Google under consideration in the Netherlands and the United Kingdom

In a press article of September 2022, a Belgian law firm announced that it would be pursuing damages claims in the United Kingdom and the Netherlands on behalf of publishers who have been harmed by Google’s anticompetitive behavior.[16]

In particular, it will be alleged that Google’s behavior has caused them prejudice. Indeed, the Belgian firm claims that Google’s behavior would have allowed Ad Manager (the Google offer combining the DFP ad server and the AdX platform for selling advertising space) to charge a 20% higher revenue share.[17] Additionally, Google’s behavior would have reduced competition between ads.[18]

As a result, the firm announced that it will seek damages on behalf of its clients amounting to $25 billion. The Belgian firm explains that this claim is based on the calculation method set forth in the ADLC’s decision mentioned in the previous section regarding the ad servers’ case of June 2021.[19]

 

II. Google’s sanction regarding the implementation of the law on related rights

In November 2019, several unions representing press publishers and the Agence France-Presse (“AFP”) filed a complaint before the ADLC challenging the practices implemented by several entities of Google in the press sector, online public communication services and online advertising.[20]

It was argued by the plaintiffs that the implementation methods of the law on the creation of a related right for the benefit of press agencies and publishers by Google constituted an abuse of dominant position.[21] The purpose of this law is to establish conditions for balanced negotiations between publishers, press agencies and online public communication services.[22] Arguing its will to comply with that law, Google unilaterally decided to stop displaying article excerpts, photographs and videos within its various services unless the publishers gave their free authorization. The majority of the publishers then accepted this free license for the use of their protected content without any negotiation or remuneration.[23]

The ADLC found that Google was likely to hold a dominant position on the French market for generalist search services. Thereby, the ADLC considered that Google had abused its dominant position to circumvent the law on related rights, in particular by imposing on actors more unfavorable transaction conditions than before the entry into force of this law.[24] The ADLC noted the existence of a serious harm to the press sector, which, in a context of crisis in the sector, deprives the subjects of a vital resource to ensure the viability of their activities.[25] Thus, in a decision rendered on 9 April 2020, subsequently confirmed by the Paris Court of Appeal in October 2020,[26] the ADLC has issued precautionary measures; including an injunction to enter into negotiations with publishers and press agencies wishing to do so, regarding the remuneration of the reproduction of their protected content.[27]

On 12 July 2021, the ADLC issued another decision in which Google was sanctioned for failing to comply with the precautionary measures issued regarding the injunction to negotiate in good faith,[28] the injunction concerning the communication of information provided for in Article L218-4 of the Intellectual Property Code to publishers and press agencies,[29] the injunction requiring Google to respect neutrality regarding the way protected content is indexed, classified and presented on its services[30], and the injunction enjoining Google to respect the principle of neutrality in the negotiations on related rights and their outcome.[31] Consequently, the ADLC imposed a fine of €500 million on Google.[32]

In parallel to the proceedings on precautionary measures, the ADLC continued its investigation on the merits of the case. It made a preliminary assessment in which it identified unfair and discriminatory transaction terms and a circumvention of Law No. 2019-775 of 24 July 2019 on related rights.[33] Following this preliminary assessment, on 9 December 2021, Google submitted an initial proposal with a series of commitments to address these competition concerns.2.[35] Finally, on 21 June 2022, the ADLC accepted Google’s commitments to create a framework for negotiating and sharing information necessary for a transparent determination of the remuneration of related rights and made the commitments binding by ending the procedure.[36]

 

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