New Google advertising formats could test Brussels’ resolve

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How much freedom will Google have to come up with new advertising formats after its anti-trust settlement with the European Commission?

That question looks like being tested sooner than you might think. The ink isn’t even dry on the settlement yet, but Google is already trying out new forms of advertising that will reveal how well the regulators have done their job.

Last week, the Search Engine Land blog uncovered a trial in which Google was running advertising alongside results from its Knowledge Graph. These are the factual boxes that appear in the right hand column in response to queries: ask Google about Barack Obama, and a box appears with basic information about the US president.

When launched in 2012, this was billed as a key development in Google’s ambition to answer users’ questions directly. So the advertising that eventually runs alongside it will be a big deal.

The advert in the Search Engine Land post looks a little like the product listing ads (PLAs) that are covered by Google’s settlement with the Commission. But it is subtly different.

In PLA boxes, merchants bid to show off products that they think are relevant to a Google search. Rival comparative shopping services argued that this was unfair and robbed them of traffic from Google.

So in response to pressure from the Commission, Google has said it will include what it calls “rival links” inside the PLA boxes: links that other comparison shopping services can bid for to get in front of potential customers.

What happens when you search for a specific product and the Knowledge Graph returns a fact

In the example in the blog post, Google has tested an advert running at the top of the right hand column. Unlike a PLA, this ad – for a book – doesn’t contain multiple links that merchants have bid on. Instead, there is a link to one named bookstore, Barnes & Noble, and a link to view “all stores and prices”. The box is labeled “sponsored”, suggesting that it has been drawn from Google Shopping. box about it?

At this stage, this is still only a test. And there’s no guarantee this will ever make its way to Europe. But if it does – or when, inevitably, other new formats emerge – will Google still be bound by its deal with Europe?

Gary Reback, a Silicon Valley lawyer representing some of Google’s rivals, claims that the company will be under no obligation to put rival links in Knowledge Graph ads, making a mockery of the whole anti-trust deal.

His argument is based on a close reading of Google’s third (and supposedly final) offer to the European Commission, which has yet to sign off on the settlement.

Essentially, this stipulates that rival links are required when Google includes anything on its search results pages that “is displayed and ranked… based on mechanisms that do not apply in an equivalent manner to links to non-Google websites”.

In other words, if Google gives preferential ranking to one of its own services (like putting a PLA advertising box at the top of its search results) it has to include the rival links.

Except that’s not how Mr Reback sees it. “Ranking”, he says, means making a choice about where to place an item based on the circumstances, moving it up or down as the situation changes. But the PLA boxes aren’t “ranked” in this way at all, they’re hard-wired to the pages in prominent positions.

So on this reading, the Knowledge Graph ads would fall outside the scope of the settlement. In fact, all future advertising format changes would escape the provisions.

The settlement is written in a way that is meant to deal with adaptations like this, however. The requirements for current advertising formats (which will have to show the rival links) will also apply to new formats as Google comes up with them.

Mr Reback’s response to this is that even current formats aren’t technically covered by the “ranking” definition, so future ones can’t be either. (That raises a separate question of why the current formats are covered by the settlement at all. His answer: because they’re explicitly listed in an annex.)

But even if he’s right, is it conceivable that Google would try to take advantage of a highly technical loophole like this to escape European regulation, deeply embarrassing the Commission after four years of investigations and negotiations?

There are other aspects of the settlement that would also come into play. For instance, an anti-circumvention clause has been included that explicitly bars Google from deliberately trying to get around the terms of the deal.

The search company also has to clear proposed changes to its ad formats with an independent monitor, and the Commission has said that it stands ready to fine the company if it fails to comply with the deal. Last year, it fined Microsoft 561m euros over a breach of that company’s EU anti-trust settlement

All of this makes it seem highly unlikely that Google would risk challenging the Commission directly. But, as the Knowledge Graph test shows, Google’s ad formats don’t stay set in stone for long.

After the long and tortuous negotiation it took to come up with the draft settlement, it looks like the company will soon be locked in further discussions with the independent monitor about how those principles should be interpreted in the years ahead.

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