Euro telco majors form ad tech JV
February 13, 2023
By Colin Mann
Deutsche Telekom, Orange, Telefónica and Vodafone are to form a joint venture for the implementation of a privacy-by-design digital marketing technology platform in Europe that they say could benefit consumers, advertisers and publishers alike.
The creation of this new entity has been approved by the European Commission, pursuant to the European Union Merger Regulation.
The four companies will take equal 25 per cent stakes in a newly-formed joint venture holding company, to be based in Belgium and run by independent management under the oversight of a shareholder-appointed supervisory board.
The joint venture is the outcome of a project launched by Vodafone and run by the four operators to develop a technological solution for digital advertising in Europe. The platform has been designed from the outset to be compliant with European data protection policy such as GDPR and the ePrivacy directive. The partners have already initiated a trial in Germany. Other trials are being considered in France and Spain to further develop the platform and it is intended to make it available to any operator within Europe.
The trial platform requires affirmative opt-in consent by the consumer to activate communications from brands via publishers. The only data that is shared is a pseudo-anonymous digital token that cannot be reverse-engineered. Consumers are free to opt in or deny consent with a single click, as well as revoke any other consents given either on the brand’s or publisher’s website, or via a dedicated, easily accessible privacy portal.
The platform is specifically designed to offer consumers a step change in the control, transparency and protection of their data, which is currently collected, distributed and stored at scale by major, non-European players.
The trial run by Vodafone in 2022 successfully tested the platform on Vodafone’s and Deutsche Telekom’s networks in Germany, together with online publishers and advertisers. This enabled the four operators to evaluate the platform’s ease-of-use in providing consumers with greater control and transparency over how brands communicate with them. Furthermore, the initiative has examined how consumers’ personal data is used and their privacy protected in the online advertising ecosystem, while upholding the principles of a free Internet.
The joint venture will outline its vision and strategy in due course, including its plans for adopting the trial technology commercially.
The European Commission said it approved the JV “unconditionally”, concluding that the transaction would raise no competition concerns in the European Economic Area (EEA).
Based on its market investigation, the Commission found that the transaction, as notified, would not significantly reduce competition in French, German, Italian and Spanish markets for: (i) the supply of digital identification services for targeted advertising and/or site optimisation; (ii) the retail supply of mobile telecommunications services; (iii) the retail supply of fixed Internet access services; (iv) the retail supply of audio-visual (AV) services; and (v) the supply of online advertising space.
During its investigation, the Commission examined:
- The vertical link between the four companies’ activities as retail suppliers of mobile and internet access services and the joint venture’s digital marketing and advertising services. The companies provide the joint venture with a digital code with which it provides its digital identification services for digital marketing and advertising activities. The Commission found that, following the transaction, there would be sufficient alternative input providers for the same purpose. Similarly, the Commission found that the companies’ rivals would be able to supply inputs to the joint venture and/or rival suppliers of digital identification services.
- The vertical link between the four companies’ activities as customers of online display advertising and the joint venture’s activities as supplier of digital identification services for targeted advertising and/or site optimisation. The Commission found that: (i) the joint venture will not have the ability or incentive to exclude other advertisers and rival providers of mobile telecommunications services by restricting their access to digital identification services, and (ii) the companies would not have the ability to exclude rival providers of digital identification services.
- The conglomerate links between the companies’ activities as distributors of TV channels and the joint venture’s activities as supplier of digital identification services for targeted advertising and/or site optimisation. The Commission found that the companies would not have the ability or the incentive to force TV broadcasters to subscribe to the digital identification services offered by the joint venture given the limited common customer base between these two different products.
- Finally, the Commission found that the joint venture would not increase any risk of coordination between the four companies, in view of the extensive common activities that they will retain outside the joint venture.
The Commission therefore concluded that the transaction would raise no competition concerns in the EEA and cleared the case unconditionally. During its investigation, the Commission has been in contact with data protection authorities. Data protection rules are fully applicable, irrespective of the merger clearance.