After Google was fined a record €2.4 billion by the EU due to its search engine prioritising Google’s own price comparison sites, the rumour is that Google will soon be facing an even bigger fine over its Android phone software, possibly within the next month.
You’d be forgiven for assuming that after this, the dust will settle for the tech giant a little in terms of payment hits. However, if anything this mega penalty shows that the stream of fines is unlikely to die down anytime soon. So what could be next?
Google is now in danger on two fronts with DoubleClick. Firstly – its recent attempt to apologise for ad fraud by offering money back – decided through a secretive formula – is already creating noise as expectation Google is to be all-knowing, all-seeing and all-giving in identifying ad fraud and repaying brands and advertisers. Never mind that programmatic as an industry has no deterministic solution for ad fraud, Google should be doing more! It has to be noted that Google isn’t paying back the full amount, it’s only refunding the “platform fee” – around 7-10% of the cost of placing the ad. It is working on a way to prevent ad fraud in the future – but you can bet that there will be a less-than-sweet reaction from unforgiving regulators that sit outside the tech industry.
Secondly, the advertising service has been criticised in the past for misleading users by offering an opt-out option that is effectively useless, particularly given their very quiet change of terms regarding cookies last year. In addition to this, the implementation of an ad blocker in Chrome, where Google is in effect in control of which ads do – and do not – get seen, sits very close in ethos to the issue raised around Google Shopper that ended in the previously mentioned fine.
“Fines aren’t the answer”
Now for the elephant in the room – what better revenue stream for government regulators than another crack-down on the hugely profitable Google? If anything, Alphabet’s reaction by taking the hit on their profits made them even more of a target, by making the fine a victimless cost. That’s why you can bet your life the fines aren’t going away in a hurry. Of course, you argue, Google is a giant and should know better than to make all these terrible mistakes. But why do we ask so much of Google, while simultaneously decrying it for monopolistic practices? The industry likes to get indignant about the fact that Google and Facebook dominate the market – but the reality is that in this space, the majority of innovation is coming from Google. This does not mean it deserves to be chased down and fined – it’s an indicator that other companies need to step up and work harder to provide effective competition – and VCs with relevant investments need to ethically, as well as financially, consider where their businesses’ new homes should be. Targeting one successful company with fines to bring it down a peg or two, whilst simultaneously asking it to police the entire marketplace, is insane.
Google is ahead because it works hard to innovate and transform the marketplace. Its dominance should be a signal to the industry that we need to start having better ideas and more conviction if we want to disrupt market share. We also need to assume Google probably can’t be expected to do everything right all of the time and start looking into other third parties that can help ameliorate issues within the industry. Monopolistic practices are not good for anyone, and that includes Google, but fines aren’t the answer; we are. The ad industry, thanks to its investment in technology holds some of the sharpest brains in digital and I’m confident that we could find a way to be more competitive, to regulate ad fraud and data, to police the space and to open up revenue streams that are currently locked down due to marketers lack of investment choices outside of Facebook and Google.
To create parity with a giant, our industry needs to study itself, perhaps look to other industries – and question why we expect Google to step down, when we give no concrete evidence of our ability to step up.