James Delahunty
16 Dec 2010 21:36
French regulators have sent a warning to Google Inc. to avoid exploiting its market position in relation to search advertising.
The French regulator said that Google's market power was not bad or illegal, but that its practices would have to be closely monitored to watch for an anti-competitive impact on the market. A 10-month investigation into Google's activities was carried out by Authorite de la Concurrence at the request of the French economy ministry.
The investigation examined Google's advertisement services that allow firms to buy targeted advertising based on search keywords, or when a user loads a webpage with Google ads that contains related content. These services generate the majority of Google's revenues.
The regulator wrote that while Google's position in the market results from a great deal of innovation supported by continuous investments, its search ads, "represent a specific market that cannot be replaced by other forms of communication, notably because it allows for very fine-tuned targeting, and because no other equivalent alternative offer exists in the eyes of advertisers."
Google argues that it is not a dominant company and that the regulator's analysis is too narrow. "Search ads are one of many options for advertisers. If the price of search ads rises, advertisers can and do switch to other formats, both online and offline. That is the sign of a competitive and dynamic industry," the company said.
The French parliament is also currently mulling a 1 percent tax on all online advertising that has been dubbed by the media as a "Google Tax".