18.104.22.168. Incentives to foreclose
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.
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.
Mixed bundling covers the strategies aimed at rendering DFP (or DFA) more expensive (or less performant) when used to serve ads on competing networks.
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.
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.
The notifying party claims that one of the objectives of the acquisition is to
Third-parties have claimed that the merged entity would have the incentives
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.
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