Mobile networks plan to block online ads in Europe to target Google, says report

Mobile networks in Europe plan to start blocking online ads to target Google’s stranglehold on digital ad revenue, according to a report in the Financial Times.

The newspaper says that “several” carriers have installed ad-blocking software — developed by an Israeli company called Shine — in their data centers, and plans are afoot to switch the technology on by the end of the year. The software stops most ads from loading, though “in-feed” ads like the ones you find on Twitter or Facebook aren’t affected.

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Citing a source at one European carrier, the report suggests that the network will introduce an opt-in ad-free service initially, but is also considering extending it to its entire network automatically. It’s not clear whether this would be a paid or free offering, but ultimately it’s designed to target the major online ad companies such as Google.

Why?

Why would mobile networks wish to block ads? It all comes down to leverage — the companies could then ask Google and other ad-serving companies to pay to “unblock” ads and ultimately give a share of its revenues. And such a scenario isn’t entirely without precedent. Back in 2013, French Internet service provider Free started blocking ads after arguing that Google didn’t pay its fair share when ISPs were forced to increase their infrastructure investments to run bandwidth-intensive services such as YouTube. The move was quickly reversed following political intervention.

Whether blocking ads is ethical or even legal is a perennial bone of contention, but a German court recently ruled in Adblock Plus’s (a popular ad-blocking service) favor following a legal challenge from German publishers Zeit Online and Handelsblatt. And prior to that, news emerged that Adblock Plus’s parent company was being paid by the likes of Google, Amazon, and Microsoft to let some ads slip through its filters. So this pretty much supports the notion that ad-blocking is perfectly legal.

Online advertising hit $141.2 billion worldwide in 2014, so to call this latest report significant would be something of an understatement. Just this week, U.S. telecom giant Verizon acquired AOL for north of $4 billion, and many speculate that the move was very much about tapping AOL’s ad-serving technology. It’s big business.

If this report proves correct, it could set a whole new precedent for ad-blocking and would likely upset many apple carts in the advertising realm. But it would also open a whole new can of worms from a legal perspective, given that net neutrality legislation requires network operators to treat all traffic equally. If it were demonstrated that the carriers were effectively blackmailing Google or other companies, then the initiative could fall flat on its face.

That said, such a move would at least garner the attention of the big online ad companies — a serious display of intent to block their ads could give them some real bargaining power.

[FT, via TNW].