Entelligence files against Google SA

PRESS RELEASE
FOR IMMEDIATE RELEASE

Issued on 29 August 2008

Contact Person: Sean Riley (Managing Director) | +27 (0) 83 455 1074 | sriley@entelligence.co.za

Formal complaint filed with the Competition Commission against Google South Africa

Cape Town – Entelligence Limited today filed a formal complaint against Google South Africa with the Competition Commission of South Africa for abuse of dominance in terms of Section S8(d)(i) of the Competition Act 89 of 1998, which prohibits a firm from “requiring or inducing a supplier or customer to not deal with a competitor”.

In June 2008 Entelligence was awarded a one year contract with TDS Directory Operations (Pty) Ltd. to provide online marketing services for the Yellow Pages website. This contract includes the provision of services to manage a Google AdWords advertising campaign on behalf of Yellow Pages.

Entelligence is a Qualified AdWords Company and in order to acquire and maintain this status with Google, Entelligence manages a minimum of USD 100,000 of advertising expenditure on Google’s AdWords platform every 90 days.

On 25 June 2008 Entelligence met with Google South Africa to discuss the maximization of traffic to the Yellow Pages website. Clear actions were agreed upon to jointly cooperate in increasing advertising performance. However, that evening Google South Africa edited the Cost Per Click for every Yellow Pages advertisement from 60 cents to R 2.00 without notifying Entelligence in advance. This unauthorized and unethical behaviour jeopardized ad performance and the net effect of this action on Google’s part was to drive expenditure on the Yellow Pages account upwards.

On 26 June 2008 Entelligence rectified these changes on the Yellow Pages account and voiced their concerns with the Country Manager of Google South Africa. Google South Africa remained unapologetic and quiet about the incident. This single event led to a relationship breakdown between Google South Africa and Entelligence.

Entelligence then discovered that Google South Africa was directly pitching for the account to manage the Yellow Pages advertising on Google’s AdWords system. Google South Africa announced that Yellow Pages is in fact a “named account” that they intended servicing directly as part of their greater strategy within South Africa. If Yellow Pages is indeed a “named account”, this should have been disclosed by Google South Africa to Entelligence upfront so as to ensure competition on an equal and fair basis. Instead Google South Africa took Entelligence into their confidence, encouraged discussion around Entelligence’s strategy with respect to Yellow Pages, and allowed Entelligence to demonstrate their proprietary technology developed to manage Google AdWords specifically for Yellow Pages.

Google South Africa has continued to engage with Yellow Pages and attempted to solicit them to cancel their AdWords services with Entelligence and allow Google South Africa to manage this account directly. The Managing Director of TDS intervened on 14 August and sent a very clear request to the Country Manager of Google South Africa, requesting that Google South Africa respect the agreement in place between TDS and Entelligence. Google South Africa’s response has been to ignore this request, and furthermore they have indicated that the contractual relationship between TDS and Entelligence is of no relevance to Google South Africa.

Google South Africa has now informed Entelligence that they will inhibit our ability to continue servicing Yellow Pages by refusing to renew our accounts held with Google and that they will prevent us from creating any new accounts in an attempt to service Yellow Pages. Google South Africa have abused a position of market dominance within South Africa and have now created a situation where Entelligence’s accounts used to service Yellow Pages with Google South Africa will not be renewed. Google South Africa are effectively making it impossible for Entelligence to service its customer so that they can win the account by default. This act clearly falls within the Competition Act’s governance relating to a competitor (Google) “requiring or inducing” TDS to no longer deal with Entelligence.

Google South Africa’s bullying tactics and ruthless approach towards winning desired accounts do not ring true to our historical interactions with Google internationally. Google South Africa did not win the Yellow Pages account and have now abused their position of power by switching off Entelligence’s accounts used to service Yellow Pages.

Google is the dominant search engine and Pay Per Click advertising medium worldwide, but even more so in South Africa. Entelligence estimates that Google holds at least a 90% market share of search engine traffic in South Africa and approximately 98% of all revenue relating to Pay Per Click search advertising in South Africa is spent on Google and the Google Content Network.

Entelligence and many other search engine marketing agencies have represented Google for years in South Africa. Google South Africa is now cherry-picking customers with high expenditure at the expense of companies that have historically supported and grown Google’s client base within South Africa. Entelligence supports fair and honest competition, and would happily bid directly against Google South Africa for future business, but when Google manipulates accounts and abuse their power to win customers the line of fair competition has been crossed.

Sean Riley
Managing Director of Entelligence Limited