European Telcos Combine for Adtech Joint Venture
European telecommunications operators DK, Orange, Telefonica and Vodafone have forged ahead with their plans to form a joint venture to create an advertising technology business, despite potential regulatory concerns.
The competition commissioner of the European Union has now ruled that the partnership to create the new venture, Open Sourcing Ad technology Framework, (OSAF) is not in breach of anti-trust rules.
What the decision means
The commissioner’s decision means that the telcos are free to form the joint venture, with an aim to creating an independent, neutral advertising technology ecosystem. The commissioner determined that the venture, proposal, which the telcos had submitted to them, was not likely to independently alter the market.
The proposed venture would leverage the existing telco infrastructure and capabilities, uniting the telcos’ data, technology and relationships with advertisers, publishers and media owners. Results of the venture was to include promoted individually tailored and relevant digital products and services.
Benefits of the Joint Venture
The joint venture is expected to bring the following benefits:
- A unified and comprehensive market opportunity, capitalizing on previous progress achieved and the collective expertise of the telcos.
- A neutral platform and the ability to scale quickly to the benefit of the entire advertising market.
- A trusted partner who will protect the privacy of consumers and comply with applicable data protection laws.
The joint venture is also expected to create value-added services to publishers and media owners, as well as ensure transparent and neutral access to the digital advertising market.
Conclusion
The proposed joint venture marks a major milestone for the telcos and the European digital landscape. It is the culmination of extensive due diligence and thorough engagement with the industry and the European Commission. With the green light from the Commission, the telcos are now free to move forward and work together on the venture.
European telcos Deutsche Telekom, Orange, Telefonica, and Vodafone recently announced their collaboration in the establishment of an Adtech joint venture. The joint venture, called ‘Purple’ will provide a single platform through which advertisers can buy digital advertising inventory from telco-owned media in Europe.
The newly announced collaboration raised concerns that the joint venture would reduce competition in the digital advertising market, including online search and social media – an issue addressed by the European Commission (EC).
The EC investigated the proposed venture, ultimately concluding that it does not constitute a competition concern. According to the official statement released by Executive Vice-President of the EC for Competition, Margrethe Vestager, “Purple is a joint venture whose activities will complement those of its competitors. It will not compete with them.”
The EC also concluded that the joint venture posed no threat to media independence or media plurality.
Vestager went on to say that the collaboration will “help to level the playing field with global companies, whose wide reach enables them to benefit from economies of scale,” and that the telcos involved “have committed to the highest standards of media independence.”
The move is seen as part of a broader push by telcos to diversify their business models, which have been heavily impacted by the rise of mobile data-enabled services now seen as essential to many customers.
Deutsche Telekom, Orange, Telefonica, and Vodafone are expected to benefit from the joint venture through increased revenue, as well as improved efficiency due to the economies of scale it will bring.
