German competition regulator to explore online advertising

The formidable German cartel office or Bundeskartellamt, effectively the competition regulator, has begun a “sector enquiry” into online advertising. It is worried about the way online advertising is being manipulated by large US multinational internet businesses, like Google and Facebook, and how this may lead to more advertising fraud, create less brand safe ad spaces and create an environment where data about advertising is held in proprietary databases, not open to be widely viewed by all the industry participants.

Andreas Mundt, President of the Bundeskartellamt said when he launched the initiative, “Online advertising has experienced an extraordinarily high rate of growth in the last 20 years. The market volume in Germany alone is estimated at over €5 billion. Due to the great economic importance of this sector for advertisers and content providers active on the Internet and in view of discussions about the difficult competitive environment in this market, we have decided to examine this sector.”

The outcome of a Bundeskartellamt sector enquiry does not lead to an attack on a specific player or players in the market nor suggest a method for market correction. That’s really the role of a European Commission enquiry and once this report is published, if the Bundeskartellamt finds a market distortion, that may be the next step. At present this enquiry is restricted to Germany and is not Europe wide.

It kicks off by holding discussions with various companies from the advertising community to gain deeper insight. Questionnaires will be sent out to market participants in the Spring and the results compiled into a report.

One of the major concerns highlighted at the enquiry set up is the emergence of Accelerated Mobile Pages (AMP) which took off about 30 months ago. Google got some European publishers together to define elements of HTML that can slow down page loads on a mobile and tried to eliminate them. An AMP page is one that loads a lot faster on a mobile, and increasingly it is being given higher status on the Google search engine.

The worry is that Google is essentially controlling the technology for delivering and ranking adverts on phones (although AMP is notionally open source), and Facebook has introduced its own technology referred to as Facebook Instant Articles which can be viewed entirely within a Facebook page. This phony war is perhaps seen by the Bundeskartellamt as a way of disadvantaging the rest of the German advertising industry and a war between Facebook and Google.

AMP pages are rendered more quickly on a Google browser on mobiles and there is a worry that AMP enabled delivery of sites via Google’s servers could lead to advertisers being tied to Google and in return get a higher search rank. Essentially AMP HTML is a subset of HTML with some proprietary restrictions and it uses a particular JavaScript library and a specialized cache.

But the larger concern are the walled gardens of data that Google and Facebook own, which helps select the right targets to push particular adverts to, and there is a move to want to see this in the hands of independent third party players to ensure a level playing field across advertising.

This leads to the very heart of the matter – should a company which knows all your intimate search criteria be able to use that data to serve you with advertising or should a social media site which knows who all your friends are be the right company to select adverts for you. Or should all that data which is after all yours, be available to anyone (or no-one) who wants to serve you adverts.

The Bundeskartellamt says it will examine the significance of different technical services and the way in which they function including options for measuring visibility, data collection and preventing fraud as well as services more on the level of the actual marketing and procurement of ad spaces, such as programmatic marketplaces.