United States: Antitrust Treatment Of Online Advertising Markets

As online advertising continues its rapid growth, online ad revenues become an ever more important opportunity (and/ or threat) for many TMT businesses. How these growing markets are treated by antitrust agencies can be critical to strategy – either in terms of M&A or defending business models from the actions of other market participants. This article looks at some of the issues that online advertising markets raise for antitrust agencies and how these issues have been considered to date.

Online markets: issues for antitrust agencies

Many online services are offered free of charge. These services are either funded directly by advertising or in return for more diffuse benefits such as supporting growth of a platform or operating system. Since antitrust agencies traditionally attempt to analyse markets via effects on pricing; free services make it more difficult to define markets and assess market power. They make it even more difficult to assess effects of a deal or commercial practice on diffuse dynamic factors such as platform growth.

Second, speed of innovation/growth. Online markets have evolved enormously in recent years and their development continues at a rapid pace. This speed exacerbates the risk associated with the traditional 'error types' facing antitrust agencies. Type 1 error refers to intervention when the perceived problem may not exist; or the market left to its own devices may fix the perceived problem quickly. Type 2 error refers to intervention that comes not at all or too late and the market has irreparably changed (eg 'tipped' in favour of a particular network or platform).

Third, antitrust decisions are legal decisions – they require evidence and create precedent. Even if antitrust laws are flexible enough (and most courts/ agencies think they are), cases themselves are necessarily backward-looking since the evidence used to support them reflects the past. A prediction of the future can play a part in assessing evidence – but a prediction isn't enough to issue a fine or block a deal. Precedent is also an issue. Despite the fact that market assessments are not supposed to carry precedential value – in practice, what has happened before has a big effect on how the individuals involved treat similar issues in future.

Market definition

The familiar starting point for antitrust assessment is market definition. This exercise sets the frame of reference in which most antitrust issues are analysed.

The Commission has found a number of product market distinctions in online ad industries. It long ago distinguished between online and offline advertising. This approach was recently reaffirmed in Viacom/Channel 5 Broadcasting [2014] where the Commission stated that the specificity of online advertising continues to set it apart from less targeted forms of advertising used offline. In the offline world, separate markets tend to be found for each advertising medium (print, TV etc – see News Corp/BSkyB [2010]).

Within online advertising, there is a distinction between search-based and non-search-based display advertising. The justification for this is that search-based allows targeting of adverts on a real-time expression of interest (Google/DoubleClick [2008]). Within search, separate markets have been found for general internet searches and vertical internet searches (which focus on specific segments of online content, ie legal, medical etc – see Microsoft/Yahoo! [2010]). A product market has also been identified for intermediary services related to online advertising (Google/DoubleClick). A further distinction between mobile (search and non-search) and static (PC) online advertising has been considered but not yet formally recognised as separate markets (Facebook/ WhatsApp [2014]).

Despite the Commission's continued separation between online and offline advertising, there is a recognition that convergence is happening. For example, the German antitrust authority has recognised a competitively significant convergence between in-video-streaming online advertising with TV advertising (GU ProSiebenSat.1 Media AG/RTL interactive Gmbh) [2011].

The current subdivision of advertising into number of antitrust markets has a number of consequences. It makes mergers and agreements between players in traditional advertising markets (TV, print, radio etc) more difficult – despite the fact that ad revenues in all these media have been disappearing online for years now. Within online advertising, dividing into narrow product markets may also have hindered agencies' ability to see the effects of a transaction on the overall online advertising system.

Network effects

Beyond market definition, network effects have been a common feature of antitrust assessment in ad-funded online markets. Network effects occur when the value to the user of the product increases based on the number of other users of the product. The Commission has found network effects to exist in social media platforms and mobile operating systems (Facebook/WhatsApp, para 115; Microsoft/Skype, para 91); but has not found strong network effects in search engines (Google/DoubleClick).

The existence of network effects affects antitrust agencies' perception of the risks of intervention. In markets with strong network effects, there is often an argument that antitrust intervention must come early – before the network effect causes markets to 'tip' in favour of one company/platform etc. However, even here, the fast pace of change and risk of disruption has been used as a successful defence (Facebook/WhatsApp, paras 130-132). In Microsoft/Skype [2011] the Commission found usage shares as high as 80- 90%, even with a recognisable network effect, these were not indicative of market power because the voice over IP (VoIP) services market was growing so rapidly and there was space for further innovation and disruption.

All roads lead to Google

Ultimately, many of today's antitrust issues in online advertising lead to Google and its role at the heart of the complex online advertising and online ad tech industry.

The Commission is currently investigating Google for allegedly abusing its dominant position in the market for general internet search services by favouring its own comparison shopping products in its general search results pages (Google Search). The Commission needs to find that Google holds a dominant position in the market for general internet search services. Google's large market share would traditionally make this straightforward but search services are offered free of charge to those users and users are free to switch to an alternative search provider (Bing, Yahoo! etc) with no cost and with minimal effort. Google argues that it invests heavily in the technology that sits behind its search engine. This functionality is what drives the high number of users, if that declined consumers would quickly and easily switch away.

Google's dominance is sometimes said to derive from the fact that Google is able to collect and store a large amount of data on its users. This enables Google to offer highly targeted advertising capabilities to its advertising customers leading to a higher advertising pricing/revenues – and is something that it is difficult or impossible for competitors to match.

Once dominance is established the Commission must show abusive practice. On this, a recent UK High Court decision seems to support Google. Preferential treatment of Google Maps at the expense of a competitor, Street Maps, was deemed to help competition rather than hinder it and did not constitute abuse (Streetmap.eu Ltd v Google Inc & ors [2016]). Similarly, a German court came to the conclusion that the display of Google's 'Weather OneBox' at the top of weather forecast searches in preference to other results was a legitimate practice encouraging innovation.

Watch this (online) space

The outcome of the Google investigation will have a substantial effect on both Google and how antitrust agencies consider online markets in future cases. Whichever way the Google cases go, however, the antitrust assessment of these markets will continue to develop and change – if always lagging the changes in the underlying industry.

Applicant v Google Inc and Google Germany GmbH [2013] 408 HKO 36/13 (Landgericht Hamburg)
COMP/M.7217 Facebook/WhatsApp [2014]
COMP/M.4731 Google/DoubleClick [2008]
COMP/39740 Google Search
Case B6-94-10 GU ProSiebenSat.1 Media AG/RTL interactive Gmbh (Bundeskartellamt, prohibition decision 17 March 2011)
COMP/M.6281 Microsoft/Skype [2011]
COMP/M.5727 Microsoft/Yahoo! [2010]
COMP/M.5932 News Corp/BSkyB [2010]
Streetmap.eu Ltd v Google Inc & ors [2016] EWHC 253 (Ch)
COMP/M.7288 Viacom/Channel 5 Broadcasting [2014]

Originally published by The In-House Lawyer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.