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French Navx AdWords Banning Case – Comments

Posted July 5th, 2010 by Andrew Goodman

Google will appeal the French regulator’s decision in this Navx case… and I can see why.

There are so many products and services banned from advertising with Google, third parties have a field day documenting all of them. Google’s own help files keep evolving, and provide a real sense of the breadth of the issues they must consider when deciding whether to accept advertising.

The French decision appears harsh in that it claims Google “abused its dominant position” to shut off an advertiser account. Yet if Google leans too far to the permissive side, it has to worry about being liable for facilitating violations of the law.

Due to its size, Google will inevitably face claims of favoritism and caprice when it comes to banning advertiser accounts (or in practice — the way it normally plays out — allowing Landing Page and Website Quality scores to sink so low that the final keyword quality scores are very low, which may affect not only minimum bids but “eligibility” for each and every potential keyword auction). The only way to avoid such claims is for Google to keep publishing its policies, and to be as transparent as possible as to what’s banned, and what isn’t.

Unfortunately Google has been transparent about around 50% of the process, and opaque about the other half. The various deceptive and discouraged practices Google refers to in its Landing Page and Website Quality guidelines are very much open to interpretation.

Despite Google in some sense bringing this type of scepticism on itself, the question remains as to whether they have indeed “abused their dominant position” in any given case. On the whole, its stock price is high because Google is able to exploit its dominant position generally, to keep ad prices high under an auction regime that is tuned to extract de facto reserve prices.

In attempting to solve several distinct classes of problems — economic issues, user experience issues, legal and policy issues, enforcement issues, etc. — by tossing them all into the same Quality Score cauldron, Google has in some sense made some problems (appear to) disappear from view while guaranteeing that they’ll keep coming back to life, like any undead life form you try to bury. As it turns out, you can’t take a subjective policy decision on whether to accept an advertiser’s money, hope the industry will uncritically accept your characterization of it as a “largely technical” calculation of “quality score,” and have the resulting debate and due process just disappear.

That being said, there is a flaw in the French regulator’s attitude and approach, insofar as it seems to rely on excessive due process being required of a publisher in its advertising policy decisions. All publishers might be second-guessed as to their decisions to accept or not accept certain advertisements. The law here can be quite complex, and it usually leans towards the publisher having the right not to take certain advertisers’ dollars, unless the refusal can be taken as overtly discriminatory or anti-competitive.

But was it so in this case? In this case, presumably Google was acting in good faith to refuse advertising from a service that helped users contravene traffic laws. They do much the same on many similar issues, including products that help people beat drug tests.

Google (or any publisher) will miss the mark on some of these calls: that’s only normal. As a private company, they shouldn’t be assigned the burden of creating an excessive layer of regulatory bureaucracy in their private dealings, given that there are plenty of regulators on the outside to fulfill that role.

Perhaps the French regulator is happy that the nation’s investment in traffic cameras will now be negated, and public safety further jeopardized by people playing with their smartphones in their cars. Maybe that’s their call. But Google banning ads because they thought they were for something prohibited hardly counts as abusing one’s “dominant position” as a publisher.

The European regulator’s reaction is unsurprising, however. Silicon Valley companies think more than anyone else in the world about “scale,” which means sucking unnecessary extra steps out of all business models. I’ve begun to write about how Google necessarily plays a role as a quasi-regulator of many things, and I’ve termed that role “the guvernment“. The “guvernment” of Google attempts to run cheaply to scale; Google always tries to ensure that it can quantify and codify what it can to remove capricious judgment and excess steps (and cost) from the process of passing editorial (etc.) judgment.

That model is not well understood by old-school regulators, who relate better to government in its more cumbersome, weighty role. Surely, though, part of it is professional jealousy. Google has gotten pretty good at exacting a hefty “tax” from advertisers who run afoul of “the guvernment”. Abusing its dominant position? It takes one to know one.

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2 Responses to “French Navx AdWords Banning Case – Comments”

  1. Andrew, three points.

    1. It is an interim and not final ruling. It is like an injunction and the regulator required “Google to restore Navx’s account within five days and has given the search engine company four months to clarify the conditions of the AdWords service, which it said “lacked transparency”.

    2. The lack of an internal appeal process was important. “The company had been a customer of AdWords for three years, spending up to €40,000 a month on the search advertising service, but found it impossible to get Google to review the decision.”

    3. Further, there was apparently little or no notice from Google about its decision. “Google barred Navx from its services after deciding that it no longer would promote radar detection devices, which are illegal in France. However, Navx argued it did not sell such devices, it simply provided information on the locations of speed cameras. It was also given insufficient notice of Google policy change.”

    Lack of transparency, no meaningful review, and capricious changes in policy will land the dominant player in trouble in any country.

  2. Andrew says:

    Hi Michael,

    All with respect:

    On (2), you can see why it would be in a company like Google’s interest to defer and avoid the creation of a formal internal review process for such cases. First and foremost, it’s because they are not legally required to have one, so in principle, no private company constructs a quasi bureaucracy just because some customer (in this case, a customer they turned away) thinks they should. That’s what courts and regulators are for. The main problem with formalizing the appeals process(es) is that it would attract an immense volume of similar complaints. Google has banned a large number of advertisers in the AdWords program. It has imposed unfavorable quality score conditions on an even larger number of them. It has banned a large number of publishers from the AdSense program. It has imposed unfavorable actuarially-based ‘Smart Pricing’ on clicks for which it shares revenue with publishers, in an even larger number of cases. On the organic search side, the algorithms make editorial judgments that affect tens of millions of businesses, and again there is no formal appeal or review process. That is not to rule out more of this type of review and appeal infrastructure being built in the future, but the question is how big will it become, and based on what principle will a private company build a “complaints department” that is specifically directed to help out a subset of partners and customers who are in fact not “good customers” but 99% of the time “bad customers” the company is trying to penalize or ban.

    Notice? So what? I’m not up to speed on laws relating to “notice”.

    As for your final statement, it is quite broad. Lack of transparency will land the dominant player in trouble in any country? How about, in hardly any country?

    Providing the benefit of the doubt here, Google is attempting to align its advertising policies with local laws. Companies breaking laws or helping customers break laws might not be *happy* about not being allowed to advertise or to have their advertising regulated, but then, cigarette companies aren’t happy about this either. Let alone companies who manufacture weapons of mass destruction. They can’t advertise on Google, either.

    It’s true that Google’s policies have sometimes seemed capricious. In some cases they’ve turned down advertising based on the owners’ moral preferences as opposed to legal stipulations. They’ve also built in “user experience” guidelines such as no pop-ups. They also factor page load times into their organic and paid search algorithms. As you can see, Google has a lot of opinions. So far, courts have not done anything significant to overturn Google’s right to its opinion on who to do business with, and how. Because some forms of discriminatory pricing are legal, and others not, there remains a huge amount of case law that should emerge from all of this. For now, Google’s just working through individual complaints wherever they may arise.

    All of the above is by way of saying: outside regulators and courts will have the final say in individual cases like this. And Google is likely to resist trying to prejudge how to head off *capricious* (to use that word) interventions by regulatory bodies, by (let’s say) building an elaborate internal regulatory structure it turns out not to need. In the French case, I would predict that Google will provide as much information as it can about how its programs work, but is going to resist making any significant changes to its operations, for the simple reason that a blanket statement like “you lack transparency” is more like random bullying than actual regulation. It almost looks like an attempt to build new law. Google is like any other company – it’s not going to guess at the laws and it’s certainly not going to create costly organizational structures in response to non-laws or random complaints. In this case it looked like Google was trying to follow the laws of the land, whereas its customer — the advertiser — was helping consumers break the law. Therein lies the gray area of what “doing the right thing” means as the publisher. As sure as Google finds out definitively what that right thing is, I’m sure they’ll be more than happy to do it… unless it means creating a “meaningful dialogue” with whole classes of banned advertisers, publishers, and would-be partners, in which case they’ll likely continue to resist.

    One thing above anything else that I’ve learned in dealing with major search engine companies: as an individual user or customer, they don’t have to get back to you. About anything. But as customers, we definitely appreciate (and would demand, if we had the power) when they do enter into meaningful dialogue. In many individual cases, Google has passed a certain judgment that certain customers do not merit that meaningful dialogue, so they clam up.


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