European mobile operators 'plan to block ads' to pressure Google into giving them money

Mobile network operators don't seem to like the role that they've grown into - that of simply pushing data back and forth, while other companies bring in huge profits by using the networks that carry their data. For carriers - which invest huge sums in expanding their mobile network infrastructure - it's a very undesirable state of affairs, and it seems they're not prepared to let it stand any longer.

According to The Financial Times, several carriers are planning to block ads across the web on their mobile networks. An unnamed executive at one European operator said that numerous carriers intended to begin blocking ads later this year, initially offering an opt-in ad-free service to customers.

But a more extreme option is also under consideration, referred to as 'the bomb', which would kill all advertising at a network level for all customers at the same time. Under either option, only ads in web pages and apps would be affected, but not ads embedded in feeds, like those used by Facebook and Twitter.

But what's the point of all this? Well, it's not happening out of the goodness of the carriers' hearts. In fact, it appears to be just a power play by network operators, who are keen to show their teeth to Google, Yahoo and other mobile ad giants, in an effort to convince these firms that they can't simply enjoy the benefits of mobile network growth without sharing in the enormous costs associated with expanding the physical infrastructure as needed.

The carriers are said to have acquired blocking technology developed by Israeli firm Shine, a company funded in part by the venture capital fund owned by Li Ka-shing, who's also a major stakeholder in Hutchison Whampoa, owner of the Three network. Shine's chief marketing officer, Roi Carthy, acknowledged that the mobile ad-blocking plan "could have a devastating impact on the online advertising industry."

It could also have a serious effect on companies that rely on advertising to pay the bills - if carriers are blocking ads at a network level, those ads will be displayed on far fewer screens, potentially leading to a significant drop in revenues for online publishers.

The carriers hope that Google, in particular, will be sufficiently spooked by the threat of blanket ad-blocking to enter into negotiations to share some of its advertising revenues with those who operate the networks. But Google apparently remains defiant, and maintains that it contributes to mobile infrastructure costs already:

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. Google and other web companies invest heavily in developing these services — and in the behind-the-scenes infrastructure to deliver them.

But whatever Google or other online advertising firms say, the carriers' plan to block ads will likely face scrutiny from EU regulators, particularly given the potential impact that such a move would have on other companies, and the seemingly inevitable conflict with existing net neutrality rules.

Source: The Financial Times via TNW
Original smartphone with stack of coins image via Shutterstock

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