Google practices on the online advertising market under review by the French Competition Authority

17 September 2010

Claire Hellich-Praquin

On 30 June 2010, the French Competition Authority (“FCA”) issued an interim measures decision ordering Google to modify its policy for its online advertising service AdWords.

The complaint against Google was lodged before the FCA by a start-up company named Navx, which specialises in the supply of online radar databases (for example, the localisation of fixed and mobile speed cameras) for GPS navigation devices and smartphones. Navx exclusively relies on the online sale of its databases and 85% of Navx’s communication expenses are related to online advertising via AdWords. AdWords provides advertising space based on a bidding process for the purchase of key words by advertisers.

In 2008, Google decided to restrict the content policy of its AdWords service for devices aimed at evading road traffic speed cameras. However, the database product sold by Navx was not clearly prohibited and allowed Navx to sell databases containing the locations of radar speed cameras which could be loaded into GPS receivers and used to warn drivers when they approached a speed camera (this differs from illegal devices such as radar detectors). Nevertheless, in mid-November 2009, Navx found its AdWords account suspended without any explanation from Google.

Navx complained to the FCA about the sudden termination of its contract and alleged discriminatory treatment by Google. 

The FCA considered that even though Google is free to determine its policy in relation to the content admitted on its AdWords service, the implementation of such a policy has to be transparent, objective and non discriminatory. In other words, Google was free to prohibit Navx products so long as its policy for doing so was clear and applied to all advertisers without discrimination.

The FCA held that the AdWords content policy carried out by Google was pursued without objectivity or transparency and was discriminatory, as it was applied differently to the radar databases suppliers.

Moreover, the FCA considered that Google’s practices suddenly and significantly affected Navx’s income, and also its growth potential. In view of these elements, the FCA decided to grant several interim measures and ordered Google to re-open the AdWords account of Navx. It also directed Google to clarify in an objective, transparent and non discriminatory manner the scope and impact of the AdWords conditions applicable to devices aimed at evading traffic speed cameras. Finally, the FCA directed Google to clarify the AdWords processes which might result in the suspension of an advertiser's account.

On July 13 2010, Google proposed four commitments for a three-year period:

1. Clarification of which products are prohibited by the AdWords policy (in particular if speed camera warning systems and speed camera databases are concerned or not);

2. Clarification of the scope of the prohibition (only keywords and products, or entire websites);

3. Publication of any modifications relating to Google AdWords policy; and

4. Specification of the consequences attached to the violation of its policy.

The commitments are under review by the FCA who will decide whether they are sufficient to address competition concerns.

Source: http://www.autoritedelaconcurrence.fr/pdf/avis/10mc01.pdf