Ad Blocking Raises Alarm Among Firms Like Google
Xavier Niel, the French technology entrepreneur, has made a career of disrupting the status quo.
Now, he has dared to take on Google and other online advertisers in a battle that puts the Web companies under pressure to use the wealth generated by the ads to help pay for the network pipelines that deliver the content.
Mr. Niel's telecommunications company, Free, which has an estimated 5.2 million Internet-access users in France, began last week to enable its customers to block Web advertising. The company is updating users' software with an ad-blocking feature as the default setting.
That move has raised alarm among companies that, like Google, have based their entire business models on providing free content to consumers by festooning Web pages with paid advertisements. Although Google so far has kept largely silent about Free's challenge, the reaction from the small Web operators who live and die by online ads has been vociferous.
No Internet access provider "has the right to decide in place of its citizens what they access or not on the Internet," Spiil, an association of French online news publishers, said in a statement Friday.
The French government has stepped into the fray. On Monday Fleur Pellerin, the French minister for the digital economy, plans to convene a meeting of the feuding parties to seek a resolution.
Free's shock to advertisers was widely seen as an attack on Google, and is part of the larger, global battle over the question of who should pay to deliver information on the Web — content providers or Internet service providers. An attempt to rewrite the rules failed at the December talks of the International Telecommunication Union in Dubai, after the United States and other nations objected to a proposal that, among other measures, would have required content providers to pay.
Mr. Niel declined to comment on Sunday, through a spokeswoman, Isabelle Audap.
But he has often complained that Google's content, which includes the ever expanding YouTube video library, occupies too much of his network's bandwidth, or carrying capacity. "The pipelines between Google and us are full at certain hours, and no one wants to take responsibility for adding capacity," he said during an interview last year with the newsmagazine Nouvel Observateur. "It's a classic problem that happens everywhere, but especially with Google."
Analysts said that French regulators would probably not oppose an agreement between Free and Google aimed at smoothing traffic flows and improving the quality of the service, as long as competitors were not disadvantaged. But they said regulators would probably not allow an Internet access provider to unilaterally block content.
When it comes to blocking ads, though, disgruntled consumers do not have to rely on their Internet service providers. Consumers already have the option of downloading software like Adblock Plus to do the job for them.
Free is the second-largest Internet access provider in France, behind Orange, which is operated by France Telecom and has 9.8 million Internet customers. Because Free seeks to be a low-cost competitor, the company may feel itself particularly vulnerable to the expense of providing capacity to meet Internet users' ever-growing demand for streaming and downloading videos, music and the like.
Ms. Pellerin, the digital economy minister, expressed sympathy for Free's position in an interview with Le Figaro, published Saturday. "There are today real questions about the sharing of value between the content providers — notably in video, which uses a lot of bandwidth — and the operators," she said.
"In France, and in Europe," Ms. Pellerin added, "we have to find more consensual ways of integrating the giants of the Internet into national ecosystems." And in a subsequent Twitter message, she said she was "no fan of intrusive advertising, but favorable to a solution of no opt-out by default."
Google, which is currently engaged in delicate antitrust negotiations with the European Union, has been largely silent about the Free episode, appearing content to let other aggrieved parties take the lead. Al Verney, a Google spokesman in Brussels, said Sunday, "We are aware of Free's actions and are investigating the impact." He declined to comment further.
Free's ad-blocking campaign began last week when it rolled out a new generation of hardware and software that enables users to block Web advertising. Free has set the ad-blocking software as the default option.
Numerama, a news site, thundered in an editorial that the move "demonstrates the power that Internet service providers can have on the content of Web sites, and the risk it represents to democracy." Free, it said, "penalizes thousands of sites that can only make it through online ads," including Numerama itself. Affected sites can either "join in a game of cat and mouse with Free to escape the filter," it said, or "change their business models."
Jean-Baptiste Fontana, founder of Frequence-sud.fr, a news site, argued that smaller Web sites were being left to suffer the collateral damage, in Free's fight with Google.
On Atlantico, an online news site, Mr. Fontana wrote: "Numerous Web sites, and particularly the online press, have worked out a moral contract with their readers: You get valuable information, we don't make you pay, because the advertisers pay for you."
But "should either the reader or the Internet service provider break that contract, the entire system collapses," Mr. Fontana continued. "It brings us back to the economic model of the press: who pays for information?"
If nothing else, the dispute has been a publicity coup for Mr. Niel, who is the majority shareholder in Iliad, the publicly traded company that operates Free. He is also half-owner of the French daily Le Monde.
Iliad reported third-quarter revenue of €819 million, or about $1.1 billion. The company's shares have gained more than 36 percent over the past year.
Mr. Niel's online business background dates to the days of the Minitel, the French precursor to the Internet in the 1980s. Then, a decade ago he upended the market with the introduction of an inexpensive broadband package offering Internet access, fixed-line telephone calls and television. Last year Iliad entered France's mobile telephone market, shattering the cozy dominance of the three established carriers with ultra-low-cost service.