variations (even significant) for ad serving tools would trigger significant switching between ad networks162.
(that is to say bundling of DFA or DFP with intermediation
through AdSense) is likely to be unprofitable. While the margins earned on additional sales of the bundle would exceed those lost on sales of the ad serving tools, the strategy is likely to be unprofitable in view of the switching this might entail. As discussed above, the ability and freedom to input instructions are key dimensions of the quality of the ad serving tool. Any restriction of this ability would amount to a degradation of the product (either through bundling or refusal to serve ads from competing networks) likely to trigger switches from current customers to alternative ad serving tool suppliers. As a third-party recognizes, such strategies would also have long-run implications as degrading the quality of DFP (or DFA) to current customers would lead to fewer publishers and advertisers wishing to install DoubleClick products in the first place.
With respect to the "tweaking" strategy, one third-party has expressed
concerns that the merged entity would discontinue the neutrality of the ad arbitration algorithm used by DFP. After the acquisition of DoubleClick, Google would be in a position to alter the internal workings of DFP, including those governing ad arbitration, in such ways that more ads would be served through AdSense (relative to the pre-merger situation where the algorithm would have selected another network or direct sales).
However, there seem to be several disincentives to doing so. Firstly, this
strategy would constitute a breach of the merged entity’s contractual obligations towards its customers. Indeed, the notifying party submitted that such a use of DoubleClick's ad server algorithms would constitute fraud to the detriment of its customers because the data that publishers enter into DFP, including priority levels and selection criteria used to select which ads to serve, belong to the publisher and reflect the publishers' view of the best way to optimise its inventory. The strategy would imply overriding these instructions and may constitute a breach of contract. Secondly, such strategy, if carried out on any meaningful scale, would probably be detected. Indeed, a detailed description of the ad arbitration mechanism suggests that such "tweaking" against the instructions of the publisher could not remain undetected for long.
The terms agreed between publisher and advertiser in their contract (such as
The same argument could be made on the advertiser side as the new entity may have incentives to sell DFA in combination with AdWords (participation in AdWords by advertisers gives access to the inventory of publishers participating in AdSense). As the sales margins derived from the sale of ad space far exceed the sale margins on ad serving tools, offering intermediation and tools as a bundle would be profitable if it attracted more advertisers towards the Google network. While our analysis suggests that switching is likely to be limited, in the case of advertisers, an additional benefit might arise from increasing the cost of serving ad on competing ad networks as advertisers may consider search and non- search ads to be substitutes. In this context, some substitution towards Google's search advertising might potentially slightly increase the profitability of the strategy relative to a similar strategy applied to publishers.
This strategy has similar effects as refusing to serve ads from competing networks with DFP.