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?)

[graeme_p]

1) I am a Google fan (because the alternatives are worse - see my recent thread on Bing).

2) I do think Google is too powerful, and would love to see them lose some ground to a fresh new entrant.

3) I think that they are probably legally in the clear on this particular issue.

[drall]

OK lets says Google is forced to show your cut. And you find out they take 95%. So what can you do about it? How will it change anything?

It wont and I suspect for a good many small publishers this percentage would be more accurate then the overall split they release in quarterlies. Those numbers are really fubar due to the large volume sites sweetheart deals.

[kaled]

In UK law, a contract may be deemed invalid if it is unfair. You may think this is nuts, but it doesn't change the fact that if a court were to rule that Adsense terms and conditions were unfair then, in theory, Google would have little choice but to make changes.

As to what constitutes fair, that's debatable, however, if the contract does not provide sufficient information for comparison and allows payment rates to be changed without notice, without even being notified at all, etc. then the chances of a court ruling that the contract is fair (and therefore valid) are vanishingly small.

Kaled.

[oddsod]

That's right, kaled, and the fact that you can opt out any time may not impact at all on whether a court sees the original contract as fair. The Unfair Contract Terms Act [johnantell.co.uk] had holes which the European Unfair Commercial Practices Directive sought to fill. If a test case went to court, I wouldn't put money on the outcome.

[Sally Stitts]

Since "fair consideration" cannot be defined here, maybe we should say we have an "agreement" with Google, and not a contract.

The agreement seems to be -
- Google can make a lot of money by using our content, and
- We may be paid a lot, a little, or NOTHING, based upon Google's secret determination, which they need not explain.

Yeah, sounds fair. Interesting agreement.

[HuskyPup]

Unfair Contract Terms Act 1977

26 International supply contracts

(2) The terms of such a contract are not subject to any requirement of reasonableness under section 3 or 4: and nothing in Part II of this Act shall require the incorporation of the terms of such a contract to be fair and reasonable for them to have effect.

IMHO this act has nothing to do with our agreement with Google. We have all willingly accepted their T&Cs, there are other suppliers one can use if one does not like their "contract".

[Visi]

So google is made to come clean...states it gives publishers 5%...what changes? Nothing if that 5% is more than I can make elsewhere. Doesn't matter what percentage they pay, only how much it is relative to viable alternatives.

Next discussion will be can we believe what they tell us even if they were to lose in court? Probably not under today's accounting principles or lack thereof:)

[kaled]

International supply contracts is reach and then some. For one thing, no commodity (real or virtual) is being traded. This is about reimbursement for a service. My company is registered in the UK, I am paid in GBP by a company that (I believe) has an incorporated presence in the UK. I'm not trading in timber with Malaysia or anything like that.

It would undoubtedly require a judge to rule on this, but I cannot see it going Google's way (unless they get in quick and bung the Labour party a few quid before the election).

Kaled.

[inactivist]

The Google AdSense publisher contract is a form of Adhesion Contract [en.wikipedia.org]. Take it or leave it. Note that I didn't say it was ethical or "not evil" -- just that these kinds of contracts have existed for a long time, and what Google's doing probably isn't unique.

And indeed, a contract can be binding without signed paperwork. All that's necessary is acceptance of benefits conditionally offered.

Though if trends continue, a lot of small AdSense publishers will be able to claim the contract is void for lack of consideration! (Or is the mere *possibility* of being paid someday sufficient consideration?)

[graeme_p]

@Kaled, there is nothing I know of in the Act that applies in this situation. It prevents exclusion of liability for negligence that causes death or injury (as far as I know Adsense has not killed anyone) and it requires that some other exclusions for liability are reasonable.

There are some added protections for people dealing as consumers (an Adsense publisher is clearly not).

If I am wrong, please point out the relevant section of the Act.

Or is the mere *possibility* of being paid someday sufficient consideration?

Yes. The consideration can even be purely symbolic. In the UK it is traditional to make a one sided agreement into a binding contract by stating that a consideration of one peppercorn will be payable on demand. Of course it is never demanded, so nothing is ever actually paid. Hence the term "peppercorn rent".

[kaled]

I have a lot to do today so I don't plan to get bogged down in an academic argument, however...

3 Liability arising in contract

(1)This section applies as between contracting parties where one of them deals as consumer or on the other’s written standard terms of business.

(2)As against that party, the other cannot by reference to any contract term—

(a)when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or

(b)claim to be entitled—

(i)to render a contractual performance substantially different from that which was reasonably expected of him, or

(ii)in respect of the whole or any part of his contractual obligation, to render no performance at all,

except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness.

In other words, Google cannot revise it's payment rates downward unilaterally since this could be regarded as a substantially different performance. Clearly, this implies that Google need to be transparent with respect to Adsense earnings, otherwise performance cannot be established in the first place.

Kaled.

[Lame_Wolf]

Even if they were transparent, and you didn't like it. What are you going to do ?

We are Adsense whores.

If you don't like what you earn, then leave.
If you think that they are not paying enough, then leave.

That's all I have to say on the matter.

[cien]

Farmboy, you have a really corrupt and immature way of seeing the world. World doesn't work like that. There are laws for a reason. In this case is to protect innocent parties from these corrupted giants. You could be the next whiner and victim.

Adsense agreement is a joke and a disgrace. I'm usually against government involvement but I hope US government does the same as Italy on Google. Big G. is evil, BERY evil.

[edited by: cien at 11:52 am (utc) on Mar 17, 2010]

[walkman]

Read the original post again and notice that what Italy is doing is fair. Why should you one month get 60%, the next 55% and the next 72%...all without knowing WTH is going on and for no reason but Google's desire? Maybe they keep the rate steady, but how do you know?

[netmeg]

If you don't think that Google has already paid out beaucoup beaucoup bucks for lawyers to figure this stuff out for every country in which they operate, and craft the entire program to Google's advantage, you're just not thinking.

I suspect this investigation by Italy will lead to nothing. And I don't expect Google to change its policies. But on the off chance that it *does* go Italy's way, Google will just fire the Italian publishers. And the Italian advertisers will have a fit, and probably get the ruling overtuned.

AdSense is what it is. All you have to do is place a tiny piece of code on your site and watch the money roll in. You don't have to go out and find advertisers, design a delivery system, set a price, bill them - Google does all that hard work for you. In exchange, you give up a lot of control and transparency. That's the deal. You should have known that going in (God knows there's a ton of information - and complaints - about it), and once in, if it doesn't suit, there's absolutely nothing keeping you from removing the code, and doing the work yourself.

As mentioned above though, people rarely do, because it's a ton of work to do it yourself. I'm not sure Google is as much an advertising monopoly as it is an *easy* advertising monopoly.

[darkyl]

If you don't think that Google has already paid out beaucoup beaucoup bucks for lawyers to figure this stuff out for every country in which they operate, and craft the entire program to Google's advantage, you're just not thinking.

You surely are not thinking about Microsoft, which was hit multiple times by antitrust authorities in different countries over the years.
And don't tell me MS doesn't spend on lawyers.

[inactivist]

@netmeg:

I suspect this investigation by Italy will lead to nothing. And I don't expect Google to change its policies. But on the off chance that it *does* go Italy's way, Google will just fire the Italian publishers. And the Italian advertisers will have a fit, and probably get the ruling overtuned.

I agree that it's unlikely anything will change as a result of Italy's actions.

Q: What does an 800 lb. gorilla do?

A: Whatever it wants.

Just in case anyone's wondering, I'm squarely on the side of those who point out that webmasters can opt out whenever they like, that we don't have to participate, and therefore, we volunteer for the treatment. I do not support these kinds of lawsuits. And I am fully aware of the 'one-sided' nature of my relationship with Google.

But I'm also aware that Google is pretty much unstoppable right now, and to think that Google's going to change its modus operandi seems a bit naive.

For all I know, Italy's trying to put the squeeze on Google. In which case, you can expect some kind of back-room deal to 'make it go away'.

[netmeg]

You surely are not thinking about Microsoft, which was hit multiple times by antitrust authorities in different countries over the years.
And don't tell me MS doesn't spend on lawyers.

Sure I am. Google learns. Don't forget - the pioneers were usually the ones with the arrows in their backs.

[IanKelley]

Adsense agreement is a joke and a disgrace.

No doubt I'm wrong in this case, but I read these kinds of responses as "for a while I made an absurdly large amount of money with Adsense, and now I don't".

That's because the PPC market has stabilized, there was a bit of a bubble there for a while.

Knowing the exact payment calculations is not going to bring back your lost earnings.

I'm not sure Google is as much an advertising monopoly as it is an *easy* advertising monopoly.

Good point. And in fact there are quite a few other easy options, they just don't pay as well.

But they dont't pay as well transparently!

Note for anyone that switches to one of these options: don't go buy a big house based on those earnings either. ;-)

[darkyl]

Sure I am. Google learns. Don't forget - the pioneers were usually the ones with the arrows in their backs.

These antitrust lawsuits happens all the time to estabilished market GIANTS in every sector.
Intel, Microsoft, Monsanto, Apple, Amazon, Mastercard, Peugeot, France Telecom, just to name a few of them.

The fact they have money to spend on lawyers doens't mean they're immune to antitrust laws and surely they can't foresee everything.

[netmeg]

Heh, that's the same thing that most people have said who've come in here complaining about Google and monopolies and anti-trust over the past five or six years that I've been here. I guess hope springs eternal.

[Cancellara]

So do it already and be done with it.

Thats what we do, adsense is 1% of our revenue and we are just keeping small amount of impressions available to AdSense to keep the account running (since 2003) because we are hoping they will get it right one day so no need to close the account.

[graeme_p]

or on the other’s written standard terms of business.

That is consistent with what I said. The addition protection just for consumers is in the sections on unreasonable indemnity clauses and on consumer guarantees.

In other words, Google cannot revise it's payment rates downward unilaterally since this could be regarded as a substantially different performance

No. Read a bit further The guidelines for reasonableness in Schedule 2 include:

(c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties);

It is made crystal clear that the percentage is a secret and may be varied, so it fails this, at least,and probably this:

(b) whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having to accept a similar term;

And (d) and (e) are not applicable, so that leaves (a) which is dubious at best, and not really enough by itself.

Finally, there are a lot of Adsense publishers in the UK, a lot of whom have problems with Google. Has a single one brought a successful action claiming it is an unfair contract? Any of them could have, if you were right.

[graeme_p]

Intel, Microsoft, Monsanto, Apple, Amazon, Mastercard, Peugeot, France Telecom

How many of them had to make significant changes to how they do business as a result? They mostly get sued when they know it might be illegal, but decide its worth the risk.

[kaled]

Graeme - you have your view, I have mine. This is why lawyers, courts and judges exist. Also, changes to the nature of business require legislation to be tested, clarified and/or amended from time to time. It would appear that this process is beginning in Italy with respect to Adsense terms and conditions.

Kaled.

[IanCP]

Finally, there are a lot of Adsense publishers in the UK, a lot of whom have problems with Google. Has a single one brought a successful action claiming it is an unfair contract? Any of them could have, if you were right

Graeme you could not possibly be serious.

Could you imagine even the largest UK AdSense publisher having the financial resources taking on Google?

Let alone the little publishers?

Only a dedicated government with clout has the resources. Maybe that's what Italy is doing.

[kaled]

If UK publishers are dissatisfied with Adsense, there are three alternatives...

1. Lump it - i.e. do nothing
   
2. Quit
   
3. Find a few other publishers that are equally dissatisfied and write collectively to the DTI

Kaled.

[farmboy]

Farmboy, you have a really corrupt and immature way of seeing the world.

Corrupt and immature? I was thinking I had more of a live-and-let-live/libertarian worldview. But thanks for letting me know.


FarmBoy (corrupt and immature)

[HuskyPup]

FarmBoy (corrupt and immature)

Does that make you a fully paid-up and eminently qualified politician then? :-)

[leadegroot]

I would like more data from Google, because it would let me operate better and more efficiently. I'd be able to make more money for both of us.

If they told me when I was smart priced, and gave me some sort of numeric indicator eg 'you're at 50% of your potential advertiser costs!' then I could work to improve that number, thus making more for both of us. Right now I don't know whether I am smart priced and have no way to judge any changes.

I'd like to know who is advertising on my site, how often they are clicked and what the cost was.
Why?
Two years ago my ctr and ecpm dropped 40%. I was at my wits end to figure out why and wasted a lot of time examining things and trying different things - it was all just pointless.
It turned out (I now believe - but I don't know!) that a particular advertiser had previously been spending a lot on that site, but had severely reduced their budget. If they had just stopped advertising, I would have noticed, but they were just there a lot less (they are gone completely now).
I didn't need to waste all that time - if I had a report where I could see advertisers and clicks I could have easily seen that their pageviews were down and the corresponding income was down.
I'll never get that time back, trying to figure out what was wrong with my site.
(The counter argument that who advertises on my sites is proprietary information is just silly, as I can *see* huge numbers of them.)

More information will make me more valuable to Adsense, and to me.