history of relationships with customers shows that customers notice even small changes in ad delivery algorithms165.
The ad arbitration mechanism indicates that the probability of detection of such tweaking would be quite high. Given that "neutrality" is a key quality of the ad serving tool, the merged entity would unlikely have the incentive to engage in a practice that, even with a modest risk of detection, might strongly affect its business in the long-run by inducing customers to switch from DFP altogether or to exclude AdSense from their list of intermediaries. Reputational costs would also be likely to be large if the new entity was discovered to engage in such fraudulent conduct.
With respect to the possibility of input foreclosure, it would appear that incentives are limited. The issue is whether the cost of refusing to sell (or increasing the price) of DoubleClick tools to competing ad networks would outweigh the benefit of increased intermediation sales. However, it is unlikely that such a price increase or refusal to sell would trigger a significant increase in the inventory sold through AdSense as ad networks would have other ad serving suppliers to turn to (or they could develop their own in-house solution) and moreover, competition in intermediation is fierce. In this context, it is unlikely that the strategy would result in competing ad networks becoming more expensive thus triggering a (profitable) switch towards AdSense.
18.104.22.168. Anticompetitive effects of the merger arising from foreclosure strategies
The discussion above has illustrated that the new entity is unlikely to have
the ability and incentives to foreclose variety of price and non-price strategies.
However, even assuming that all these strategies were to be implemented by the merged entity and succeeded in attracting inventory sales from rival networks to its own ad network, it remains questionable whether rivals would be marginalised and customers would be harmed in the long run, or in other words, whether the overall impact on competition would be negative, taking efficiencies into account.
Firstly, post-merger, the new entity would continue to compete with a number of platforms offering the same product combination (bundle competition). As a result of a recent wave of acquisitions, the market has evolved to a situation where "bundled" platforms (intermediation + ad serving tools) now coexist with independent suppliers of inputs for online advertising (ad networks and ad exchange offering intermediation only and suppliers of stand- alone ad serving tools). In response to bundling strategies by the new entity, the competing platforms could respond by offering similar bundles. As discussed
For instance, a software update recently introduced a bug into DoubleClick’s ad decision algorithms,
causing a change in the serving ratios of time-based pre-emptible ads. [>100]* customers noticed the change in DoubleClick’s ad decision algorithms and filed numerous high-urgency support requests both in North America and Europe. DoubleClick customers similarly would notice a revenue reducing change that favoured AdSense and would respond in a comparable time frame.