In many ways, online ads make the internet go around. Of the many services brought to you that are free at point of delivery, most are funded by their advertising revenue.
Well now, some mobile carriers are threatening to pull the plug on mobile ads- and they hope Google will sit up and take notice.
Google are said to rake in around 55% of worldwide search-based ad revenues. In 2014, eMarketer research told us that Google had made $38.42 billion (£24.72 billion) in ad revenue via their search engine. Total ad revenue amounted to $59.6 billion (£38.35 billion), a figure that grew 17% on the previous year. Given their total revenue stream for 2014 was just over $65 billion, it makes up a significant chunk of the online juggernaut that is Google and its many technological facets.
Certain arms of the tech industry are frustrated by Google’s control over the ad market, and now they’re looking to force through a shift in the way funds are distributed. First reported in the Financial Times, an unnamed mobile carrier is considering blocking ads from their user’s mobiles in the hope it will force Google around the negotiating table.
As to how to go about it, a couple of potential methods have been outed. The most likely appears to be an opt-in AdBlock service in a similar vein to what we see on desktop browsers today. The European carrier is said to have installed ad-blocking technology developed by Israeli start-up Shine onto their network. All that remains is to flick the switch, which could occur before the end of the year. An announcement is expected from a major mobile carrier in the coming months with regards to blocking ads on their network.
Also being considered is more a drastic and forceful action, whereby an entire block will be implemented across all its subscribers, bypassing any consumer choice in the process. It’s believed that a one-hour daily hiatus would be enough to see Google buckle and sit themselves around the negotiating table.
This latest twist comes amid an endless row between Internet Service Providers (ISPs) and companies like Google that offer services over the internet. Essentially, Google believe they are free to conduct themselves as they wish when harnessing the infrastructure of networks owned and maintained by these ISPs. If that includes harvesting billions of dollars via mobile advertising, so be it. That is unless you sympathise with the ISP position. They believe they should be compensated by Google (and the many other companies who enjoy similar success) for the role their networks play in generating substantial profit. This latest move, undertaken by a carrier which is said to hold tens of millions of subscribers, is indicative of a constant tug-of-war.
Google vs The Internet
A number of immediate issues spring to mind when considering the dangers of such a provocative move. One of which is net neutrality. Built on principles of fairness and equality, Internet Service Providers are meant to treat all online content justly and uniformly, offering no preferences based on source. That Shine’s software will not block out all online ads (it won’t block and ads from Facebook or Twitter from example) throws the whole concept into question.
That’s without considering the potential damage a number of sites could be dealt should their ads suddenly be blocked from consumer view. As mentioned in the opening paragraph, content-based sites and free online services rely on their ad-revenue to function profitably. Removing this cash flow hampers these sites in their efforts to provide the content their users love. Something Google mentioned in their reply to the FT’s original story:
“People pay for mobile internet packages so they can access the apps, video streaming, webmail and other services they love, many of which are funded by ads.”
Regardless of issues of morality, how might Google respond to such an obvious attempt at bullying them into sharing an ever more prosperous pie? As can be seen from the figures above, Google relies heavily on their ad-revenue to fund the multiple branches of their tech conglomerate. Converting this initial threat to actual negotiation will not come easy.
What are your thoughts on this controversial move? Are mobile carriers right in taking matters into their own hands, correct in their monetary demands for use of their networks? Or should Google, in spite of all their questionable practices, stand their ground? Let us know in the comments below.