X hits on this document

251 views

0 shares

0 downloads

0 comments

82 / 98

7.3.1.2. Incentives to foreclose

311.

The various strategies that have been put forward by third-parties raise the

question of the merged entity's incentives to engage in such strategies. This section discusses in particular the incentives to increase the price (degrade the quality) of DFP/DFA when used with competing ad networks, to "tweak" the ad arbitration process or engage in input foreclosure.

159

In particular, the economic advisors of two complainants indicated that Google's intermediation margins on AdSense are significantly higher (about 8 times) than those realised by DoubleClick on ad serving.

160

Mixed bundling covers the strategies aimed at rendering DFP (or DFA) more expensive (or less performant) when used to serve ads on competing networks.

161

Google's AdSense partners that use DFP generate average revenues of about EUR […]* on AdSense while they generate average revenues of about EUR [11% of this figure]* for ad serving. However, the bulk of the AdSense margins are generated in search intermediation (AFS) where average margins are EUR […]* million whereas non-search intermediation (AFC) generates average margins of EUR [0.23% of this figure]* i.e. the same as DoubleClick's margins. Search intermediation (AFS) does not require DFP to serve ads (as this is done by Google) and therefore, any mixed bundling strategy involving DFP would not affect search intermediation.

314.

With respect to mixed bundling160

, the parties have provided margin

information for DFP customers that also use AdSense. It appears that average revenues on AdSense are significantly higher than those on ad serving. However, the relevant revenues (i.e. those served on AFC) are about the same as those from ad serving services161. The figures provided by the parties suggest that DFP customers spend relatively limited amounts on Google's AdSense non- search platform and therefore, the incentives to offer a mixed bundle might be limited as margins earned on additional sales through AdSense would merely (if at all) compensate the opportunity cost of reducing the price of DoubleClick tools (or offering it for free). In any case, even if the intermediation margin was substantially larger, it is in fact unlikely – as discussed earlier – that price

render DFP more attractive to customers in order to achieve one of the major rationales of the merger (i.e. use DoubleClick's customer relations to expand its intermediation services in particular for inventory that is currently unsold). While the merged entity's incentives to attract additional traffic to its own platform are clear, the incentives to engage in the foreclosing strategies put forward by competitors are less straightforward.

312.

The notifying party claims that one of the objectives of the acquisition is to

313.

Third-parties have claimed that the merged entity would have the incentives

network

to

engage

in

the

foreclosing

strategies

described

above

because

intermediation

competing networks) would be minimal relative to the additional margins earned

incentives to retain DFP customers and attract them to the through the pricing and bundling strategies described above.

AdSense

profit

margins

are

significantly

higher

than

margins

from

selling

ad

serving

tools159

.

The margins lost on DFP sales (that is to say from serving ads from

on intermediation through the AdSense network. switching costs are high, third-parties conclude that

Under the

assumption

that

the merged

entity will

have

82

Document info
Document views251
Page views251
Page last viewedThu Dec 08 04:40:31 UTC 2016
Pages98
Paragraphs2084
Words46734

Comments