An EU Competition law Analysis of Online Display Advertising in the Programmatic Age
by Damien Geradin & Dimitrios Katsifis
Online display advertising, whereby publishers display visual-based advertisements (e.g. texts, images or videos) on their website against remuneration, represents a large source of revenues for publishers, large and small, offering valuable content to Internet users. But for online display advertising, many such publishers would not subsist, and the Internet would be impoverished. Display advertising is also critical to advertisers, in particular when they seek to raise “brand awareness” among consumers.
Because of its vital importance to advertisers and publishers, healthy competition in the advertising ecosystem is desirable. Yet, despite the spectacular growth of online display advertising, the picture is not entirely rosy. In the “programmatic” era, where ad inventory is sold through computerized decision-making processes managed by “ad tech” intermediaries, the online display advertising sector is characterized by a high degree of opacity, and publishers and advertisers have expressed concerns about the so-called “ad tech tax”, i.e. the large and opaque fees applied by various intermediaries. Moreover, while the ad tech sector comprises a wide variety of intermediaries, its main segments are dominated by Google, with concerns being expressed that it may engage in both exploitative and exclusionary strategies.
It is thus not surprising that several national competition authorities are looking closely at the competitive dynamics in online advertising, and in November 2018 the French Competition Authority has announced that it would open proceedings in this area. Even so, at this stage, there is little information in the public domain regarding the competition issues that may arise in the display advertising sector and there is no scholarly paper devoted to this subject.
Against this background, the purpose of this paper is to explore the display advertising ecosystem and discuss the competition law issues that may arise in this sector as a result of Google’s control of the ad tech value chain. The paper describes the display advertising ecosystem with a focus on the technologies and tools comprising the ad tech market. It then identifies the competition law issues that may arise in the ad tech markets. It first discusses market definitions and shows that Google may be dominant on several ad tech markets, and then describes the way in which programmatic display advertising functions in practice. Finally, the paper identifies several Google conducts which may amount to abuse of a dominant position in breach of Article 102 TFEU.