Italian Antitrust Authority Investigating Adsense Payment Policy

Possible disclosure in payments calculations?

[darkyl]

The antitrust authority is investigating Google Adsense policies regarding the payments made to the publishers and the lack of transparency in how they're calculated.

After an initial review of Adsense Terms & Conditions, the authority outlined the following: (translation)
- Google is not obliged to comunicate how the payments are calculated;
- The payments are calculated exclusively from data that Google holds;
- Google can modify at any moment the price determination and payment structure at its discretion.

What if the authority forces Google to include its price determination structure in the Terms and Conditions, basically disclosing a lot of "secrets"?

Would Google comply? (finally revealing to the world of it really works?)
Would Google threaten to pull out of the country? (losing a very important market and facing the risk of having to withstand similar investigation in the rest of th EU?)

[martinibuster]

Not much online at the moment. Just found this on Reuters [reuters.com] and other sites that are republishing it.

[LifeinAsia]

I doubt Google would pull out of Italy. They might, however, just fire all their Italian AdSense publishers.

[AlexK]

I'd like them to disclose the currency rate/charges employed at payment. My money nosedived when the rates were changed from dollars to GBP.

[Lame_Wolf]

My money nosedived when the rates were changed from dollars to GBP.

Same here.
Coincidence ?

[AlexK]

Hi Lame_Wolf. Curious that, so far, no noise has been made of this.

It's perfectly sensible for Google to pay out in GBP; they will receive payments in GBP, so why suffer exorbitant currency transfer charges both ways? It would also seem reasonable for Google to make a charge--or pass on any charges that they suffer--on currency transfers. Then come the steps too far:

• No disclosure on charges.
  
• No disclosure on rates.
  
• No option of transfer from $$$ payments to GBP.

Is Google even licensed for currency conversion? I guess that there are rules enforced at a federal level on those that are, with the option for customers to choose another operator if dissatisfied with the rates offered. But not for us.

[HuskyPup]

My money nosedived when the rates were changed from dollars to GBP.

Interesting...I delayed however my EPC went up significantly BUT with the Pound depreciating by the hour I would have expected more this week!

[Lame_Wolf]

Curious that, so far, no noise has been made of this.

I am too, but may be we are late converters.

Today is piss-poor.

[Sally Stitts]

Can we get back on track? The original post is NOT about currency conversion - it is about compensation calculation.

. . . the lack of transparency in how they're calculated.
After an initial review of Adsense Terms & Conditions, the authority outlined the following: (translation)
- Google is not obliged to communicate how the payments are calculated;
- The payments are calculated exclusively from data that Google holds;
- Google can modify at any moment the price determination and payment structure at its discretion.

I have always wondered about this. Looking back to my Business Law class, I remember that a valid contract in California requires 2 things - a valid offer, and acceptance. Any valid offer MUST DEFINE what the consideration will be.
Google does NOT define what the consideration will be - therefore, Google does not have a valid contract with ANY AdSense publisher. Can you imagine the pandemonium that can result if ONE party to a contract is able to unilaterally change the terms, at will? The result = no contract. I think Italy is on to something here. I cannot understand why this has never been challenged in California ("we will pay whatever we feel like" is NOT defined consideration.)
Any thoughts?

[darkyl]

I have always wondered about this. Looking back to my Business Law class, I remember that a valid contract in California requires 2 things - a valid offer, and acceptance. Any valid offer MUST DEFINE what the consideration will be.
Google does NOT define what the consideration will be - therefore, Google does not have a valid contract with ANY AdSense publisher. Can you imagine the pandemonium that can result if ONE party to a contract is able to unilaterally change the terms, at will? The result = no contract. I think Italy is on to something here. I cannot understand why this has never been challenged in California ("we will pay whatever we feel like" is NOT defined consideration.)
Any thoughts?

That's exactly the point.
I can't imagine the antitrust authority deciding this "contract" is legally fair or valid.

I think it also has the power to force Google to disclose the mechanics of the comnpensation calculation, maybe even retroactively.

However it goes, it can lead to more transparency for publishers worldwide, italian or not.

Also, this will certainly raise the attention of similar institutions in other countries, epecially in the EU.

I understand most of the secrecy about adsense mechanics is in place to avoid illicit exploitation of the system, but in pratice I think it is too penalizing for honest publishers.

[walkman]

They can't pull out of Italy. Spain, France, Germany....Sweden etc might do the same to Google. Most of the laws are identical anyway in EU members so they must solve this issue

[farmboy]

I doubt Google would pull out of Italy. They might, however, just fire all their Italian AdSense publishers.

Yep. That's exactly what Amazon did, they fired all their Associates in 4 U.S. states. I was one of them. I support Amazon's decision.

Be careful what you ask for. Someone in another thread mentioned the squeaky wheel gets the grease. As I responded, sometimes the squeaky wheel gets replaced.


FarmBoy

[oddsod]

I remember that a valid contract in California requires 2 things - a valid offer, and acceptance. Any valid offer MUST DEFINE what the consideration will be.

Ditto UK law.

[JS_Harris]

Adsense is one of the MORE transparent companies and getting a ballpark figure on what percentage of ad revenue is given to affiliates isn't difficult. Google reports both gross adsense earnings and total affiliate payout (G's cut is under 20%, reasonable in my opinion).

[edited by: incrediBILL at 6:00 am (utc) on Mar 16, 2010]
[edit reason] edit per JS_Harris [/edit]

[lammert]

You might argue if there is a contract at all. As an AdSense publisher I didn't sign any documents, nor did I receive paperwork from Google with a signature. You can stop displaying ads at any moment by just removing the code from your site without having to notify Google. On the other hand Google can stop serving ads to your site without notifying you.

If there is no valid offer, no acceptance by the other party and no requirements for termination from either side, I wouldn't call it a contract. And if there is no contract, why should Google disclose any information about the rules of the contract?

[IanKelley]

but in pratice I think it is too penalizing for honest publishers.

Knowing how earnings are determined would not effect earnings in any way, nor would it get rid of any real or imagined penalty.

[Cancellara]

This is the biggest BS about AdSense. The revenue sharing should be set and publishers should have access to more data/stats. Publishers should be able to review/approve ads and set minimum CPM/CPC for every ad/advertiser.

Very simple, you want to show your ads on my website? Fine, just show me the ad and lets agree on a price for CPM/CPC.

[zeus]

hmm I think its ok to go agaist google regarding Privacy Policies/google earth bla bla - but regarding how they calculate there payments is there bizz, if some dont like it go some where els, why should they tell anyone how they calculate the Publishers earnings.

[farmboy]

Very simple, you want to show your ads on my website? Fine, just show me the ad and lets agree on a price for CPM/CPC.

Or else what?


FarmBoy

[darkyl]

Or else what?

Farmboy,
yes, publishers, unless they're really big ones, don't have much negotiation power with Google. Also Google has more than 90% of the online advertising market in many countries.
That's often called a dominant position.
And when a dominant position comes with a particularly unbalanced contract it gets the attention of antitrust authorities (more in the EU than US I think).

I'm not saying Google is evil or is doing anything particularly evil, but many may see its domination in the market and lack of transparency as something that may harm the market itsself.

[jkovar]

I wonder what sort of backlash there would be if it were discovered that Google is using their DART cookie interest-based advertising to show high paying keyword ads on sites with low paying subject matter, but still charging the high price for the keyword and paying out a much lower rate based on the publishers subject matter instead of the ads cost.

Not to say they are, but they could be.

[Cancellara]

Or else what?

Show my default ads. I would rather promote my other sites or even public ads over wasting page impressions in exchange for pennies from AdSense.

After all, thats why I only run one image ad (filling for unused inventory). No spammy AdSense text link ads on my sites.

[ChanandlerBong]

if you're not happy with the "terms", remove the code. There, that's even simpler, isn't it?

ahh, but you won't do that, will you?

[graeme_p]

@lammert and others:

There is a contract: there is an offer (you apply to Google to join Adsense), and acceptance (Google enrolls you in Adsense) and consideration (the Adsense earnings you get).

The fact that the consideration is conditional on earnings does not prevent it being consideration: otherwise everyone who sells stuff purely on commission would be able to argue that there is no consideration.

Italy seems out to get Google, which reflects a government headed by a man who owns TV companies, who wants to cut off the new media economy. I very much doubt the rest of the EU will follow: none of them followed Italy with regard to the last case against Google.

@darkyl, yes, they are a monopoloy, but it depends what evidence can be dug up on abuse of monopoly. Google are not doing any of the things MS did (they do not, for example, threaten to penalize me for also mixing Google and non-Google ads, as long as they look different, which is reasonable).

Personally, I favour much more rigorous competition law, but, given the need to prove abuse, I doubt Google will have problems outside Italy.

I can't imagine the antitrust authority deciding this "contract" is legally fair or valid.

In most countries the validity of a contract that is up to the courts, not the anti-trust authority.

[darkyl]

yes, they are a monopoloy, but it depends what evidence can be dug up on abuse of monopoly

Actually monopolies are often "hit" even if they are not abusing their position because they're considered bad for the market, no matter how they got there or what they're doing.

[kaled]

I barely use Adsense (it's only on one page that offers a fairly popular small freeware program) so I don't tend to worry about it too much however...

It seems to me that, in order for the contract to stand up to scrutiny in UK law, Google should, at the very least, inform you of the gross click income on your site as well as the amount you are paid. In the absence of this information, it is impossible to compare service providers, something which would normally be considered essential.

The surprise here is that no one has challenged this before now (and that Italy is the first to do so). If Microsoft and Yahoo were smart, they would jump in and publish the necessary information, thereby making Google look bad.

Kaled.

[HuskyPup]

It seems to me that, in order for the contract to stand up to scrutiny in UK law

Devil's Advocate!

What UK contract law would that be?

No one compels anyone to sign up to AdSense and all the T&Cs are clearly stated when one does agree to display THEIR customers' advertisements.

I'm not a Google FanBoy however the options are extremely clear to me. If you don't like them, remove them.

[graeme_p]

Actually monopolies are often "hit"

Example of cases or legislation please.

It seems to me that, in order for the contract to stand up to scrutiny in UK law,

Why? There is no law that says you have to be able to compare providers.

[edited by: graeme_p at 1:31 pm (utc) on Mar 16, 2010]

[farmboy]

...but many may see ...

That's the money quote.

Here in the U.S., if someone has a job for hourly wages, the employer must pay the employee 150% of the hourly wage for any time worked in excess of 40 hours in a week. Even if the employee wants to work extra for the regular wage and the employer agrees, government won't allow it.

I'm happy to put AdSense on my sites without knowing up front what percentage of their income they will pay me for clicks. I agreed to it with full knowledge when I first placed the code on my site 6+ years ago.

Yet there are people who could just remove the code from their site and be done with it, but won't. They pretend they know what's best for everyone - or don't care about anyone else but themselves.

AdSense doesn't seem to have much of a threat from direct competition. The biggest threat seems to be people who want to go whining and complaining to their nanny about something they could easily remedy themselves if they don't like it.

But that seems to be the way it is with humans and life. Some people find something they enjoy and like and a few disgruntled people manage to ruin it for everyone else.

Hopefully they won't manage to ruin AdSense.


FarmBoy

[farmboy]

Show my default ads. I would rather promote my other sites or even public ads over wasting page impressions in exchange for pennies from AdSense.

So do it already and be done with it.


FarmBoy