Competition watchdog ACCC says dominance of Google ad technology “hurts” businesses and users
The regulator’s report argues that it currently lacks the power to resolve the issue under existing competition laws and needs stronger and faster legislation to act to prevent abuse of market power.
The ACCC report accuses Google of using its dominant position to privilege its own services and protect them from competition. For example, Google blocks competing ad technology services from accessing ads on YouTube, giving its own ad technology services a significant advantage.
For example, the report cites Google’s refusal to participate in publisher-led header auctions, an industry innovation aimed at increasing competition for publisher inventory, and previously allowing its services to have a “last glance” opportunity to outbid its competitors.
ACCC President Rod Sims said Google has operated in a way that has led to a less competitive ad technology industry.
âThis behavior has helped Google establish and consolidate its dominant position in the ad technology supply chain,â he said.
âGoogle’s activities throughout the supply chain also mean that, in a single transaction, Google can act on behalf of both the advertiser (the buyer) and the publisher (the seller) and manage the advertising exchange linking these two parties. As the interests of these parties do not align, it creates conflicts of interest for Google that can harm both advertisers and publishers. “
ACCC’s concern and attention to the issue is sparked by the growing importance of ad technology services in the digital economy. The report estimates that at least 27% of Australian advertisers’ spend is sold this way.
Sims expresses concern over potential increase in costs due to lack of competition, and ACCC investigates specific allegations against Google, including conduct detrimental to its competitors, under existing competition laws , but says any report will take too long to avoid further damage to competition. .
“An inefficient advertising technology industry means higher costs for publishers and advertisers, which is likely to reduce the quality or quantity of online content and, ultimately, consumers pay more for the products advertised. “, did he declare.
âNew regulatory solutions are needed to remedy Google’s dominance and restore competition in the ad technology industry to the benefit of businesses and consumers. We recommend that rules be considered to manage conflicts of interest, prevent anti-competitive self-preference, and ensure that rival ad technology providers can compete on their merits.
âMany of the issues we’ve identified in the ad technology supply chain are similar to issues in other digital platform markets, such as online search, social media, and app markets. These markets are also dominated by one or two key suppliers, which benefit from vertical integration, resulting in significant competition concerns. In many cases, these are compounded by a lack of transparency.
Sims said the legal framework for the proposed rules and powers recommended in the new report will be considered as part of a larger ACCC report due in September 2022.
Consultation on this report will begin in the first quarter of 2022 and will take into account foreign legislative proposals to address these issues.
Data creates dominance
The ACCC argues that Google’s access to a large volume and range of first-party data from its customer-facing services, such as Search, Maps and YouTube, has helped strengthen its market dominance. But the regulator says the extent to which Google uses this data for the benefit of its ad technology companies is unclear and is confusing among industry stakeholders.
Rod Sims has said he wants Google to be clear about how it uses its data through clear public statements in its terms and conditions and other materials it uses to sell its services.
The report also recommends that under the proposed new industry rules, the ACCC be empowered to develop and implement special measures to address competition concerns caused by the data advantage of an advertising technology provider, such as data separation or data access requirements to address competitive risks.
More transparency needed
The ACCC also found that the pricing and operation of ad technology services lacked transparency. Part of the problem is the complexity of the supply chain, making it difficult for advertisers and publishers to understand how it works and spot faults.
Regulator recommends industry set standards, requiring ad technology providers to publish average fees and take tariffs to allow ad technology customers to easily compare fees and take tariffs between different providers and advertising technology services. It also recommends an industry standard to allow full and independent verification of the services used by advertisers in the supply chain.
The report also identified specific transparency issues with Google’s publisher services, and recommends that Google be required to provide publishers with information on the operation and results of its publisher ad server auctions.
“If Google does not provide enough information or if voluntary industry standards do not provide transparency, new requirements should be able to be put in place to address this issue,” Sims said.
You can download and read the ACCC Digital Advertising Services Investigation Report here.