Antitrust Examining Google Dominance on Web Advertising

Move comes after Israel’s Artimedia files complaint against search giant

File photo: The Google logo is seen on a door at the company's office in Tel Aviv January 26, 2011.
Baz Ratner / Reuters

For the first time ever, Google has come into the crosshairs of Israel’s Antitrust Authority, which has begun examining the implications of its dominance of the internet advertising market as a possible restraint of trade.

The authority, which confirmed it has begun looking into the matter, has until now refrained from doing so because it never received an official complaint nor has it found any indication that the law was violated. As a result, Google has never been declared a monopoly nor have any restraints been placed on its ad business.

Now, however, Artimedia, an Israeli platform for video advertising has filed a complaint.

According to the complaint, which was filed by attorney Uri Baram, deals specifically with banner ads on the internet. Artimedia, which like Google didn’t confirm the report, claims that Google online-advertising services “illustrate Google’s tremendous conglomerate power, which extends across the digital advertising continuum in all its forms.”

“[It] sheds light on Google’s varied and sophisticated ways of exploiting its status to push competition away,” the complaint says.

Consumers know Google best as a search engine as well as for its Youtube videos, email services, Android operating system and Waze navigation service. But a key part of its business is selling advertising through online exchanges.

Its dominance is particularly strong in so-called programmatic ads, which are bought automatically through an online exchange that matches advertisers with the demographics they are seeking. When a Web page is being loaded and has the space for an ad on it, information that’s been gathered about both the user and the kind of Web page being loaded is sent back and forth to an ad exchange. The space gets auctioned off to the highest bidder, all in the space of milliseconds without the user experiencing any delay in uploading the page.

Google operates two services – one called Google Display Network, and another called DoubleClick for Publishers, which offers a technical service of helping Web publishers manage their ad inventories and upload ads.

In principle, DFP operates independently and offers ads from GDN and rival services, like Sikendo and Positive Mobile, but Artimedia asserts that DFP gives preference to GDN “in a malicious and sophisticated way.” Rivals can’t access from DFP all the information they need to manage ad inventory.

In June, the European Union fined Google a record 2.4 billion euros ($2.7 billion) in the first of three investigations into the company’s dominance in searches and smartphones. The ruling opens the door for further regulatory actions against more crucial parts of Google’s business, including online ad buying.