ACCC interim report: Google has the ‘ability and the incentive’ to control $9.1bn ad tech market

Google’s hold over the $9.1 billion ad tech supply chain means it has the “ability and the incentive” to negatively impact competition, the Australian Competition and Consumer Commission (ACCC) has concluded.

The opacity and lack of competition negatively affects publishers, advertisers, and consumers, according to the 222-page interim report released today as part of the ACCC’s digital advertising services inquiry.

The ACCC’s chair, Rod Sims, noted that ad tech has “significantly transformed the way that advertising is delivered to consumers online. As consumers live more of their lives online, ad tech plays an increasingly critical role in the advertising market and the wider digital economy.

“But there is a real lack of competition, choice and transparency in this industry. These issues add to the cost of advertising for businesses, which will ultimately impact the prices paid by consumers.”

Google is easily the biggest ad tech provider – cemented by a number of acquisitions – and the only provider to also sell ad inventory. According to the ACCC, Google’s share of the market ranges from 50-60% to an enormous 90-100%, depending on the service.

“Google’s significant presence across the whole ad tech supply chain, combined with its significant data advantage, means Google is likely to have the ability and the incentive to preference its own ad tech businesses in ways that affect competition,” Sims continued.

“During this inquiry we have heard concerns from parties about potential conflicts of interest from Google’s various roles in this industry. This includes Google very often acting on behalf of both publishers and advertisers for the same ad sale across the ad tech supply chain, while also selling its own ad inventory.”

ACCC chair, Rod Sims

For example, YouTube (owned by Google) ads are sold exclusively through Google platforms. And Google runs its own ‘Open Bidding’ auctions for ads, separately to auctions run by publishers.

The preliminary report makes a number of suggestions to combat such issues, including implementing conflict of interest rules to prevent self-preferencing. Since similar proposals have recently been made in the UK and Europe, the ACCC will examine whether elements of those proposals could be implemented locally.

Another suggestion is to break up the data sets held by companies like Google, so competitor ad tech providers can effectively compete.

The commission will also investigate whether demand-side platforms should allow independent verification, and the industry should implement common transaction and user IDs.

“The ACCC recognises that any proposals must be carefully designed with an eye to regulatory burden, efficiency and protecting consumers’ privacy while enhancing competition and transparency,” the watchdog said in a statement.

Google’s MD, Silva

The inquiry – which began almost a year ago and puts advertiser ad servers, demand-side platforms, supply-side platforms, and publisher ad servers under the microscope – is running alongside an additional five year inquiry into the digital platforms. The government asked the watchdog to complete both of the additional inquiries after the first digital platforms inquiry concluded, which led to the hotly-contested News Media Bargaining Code.

The code tug-of-war between news outlets and the digital platforms escalated in a senate hearing last week, in which Google’s local managing director, Melanie Silva, said Google would pull its search engine function from the local market should the code become legislated.

The ad tech inquiry will culminate in a final report, to be released in August. The ACCC is seeking submissions in response to the interim report, which are due by 26 February.

The ACCC said it is also keeping a close eye on a complaint filed by the Texas Attorney-General late last year, which alleges that Google has a monopoly in the ad tech market.


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