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French Navx AdWords Banning Case – Comments

Monday, July 5th, 2010

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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