Google, media buyers and publishers react to interim ACCC report: Not a ‘nefarious anti-competitive conspiracy’

Google has maintained that “ad tech is a competitive market with low barriers to entry” in response to yesterday’s report out of the Australian Competition and Consumer Commission (ACCC), which set out the extent of the search engine’s dominance at every stage of the digital display ad process.

A Google spokesperson countered the ACCC’s concern that the digital platform has too much power by claiming: “There are many companies, large and small, working together and in competition with each other to power digital advertising across the web, each with different specialties and technologies. Google is just one of these many players, and we’ve made it easier for others to choose who they want to work with.”

“Google has made significant efforts and investments in innovation and promotion of a healthy ad tech ecosystem, and we always aim to do so in a way that balances the interests of users, advertisers, and publishers,” the spokesperson continued.

“This includes creating privacy-enhanced measurement solutions, developing major innovations in auction technology, and participating in industry initiatives designed to foster the long-term viability of an ad-supported digital advertising ecosystem.”

Two top media buyers intimately familiar with the ad tech supply chain drew different conclusions from yesterday’s report, which was delivered almost a year into the 18-month long inquiry (the final report will be published in August).

While both Nunn Media’s managing director, Chris Walton, and Thinkerbell’s general manager of media, Ben Shepherd, weren’t surprised by the report’s findings, they did have different views on whether Google has an unfair, and uncompetitive, level of power.

Walton told Mumbrella that, “based on the concentration of dollars into Google, and their dominance over both the buy and sell sides of media, I think the ACCC’s concerns are well placed”.

Chris-Walton CEO Nunn Media

Chris Walton, Nunn Media

But, according to Shepherd – who has also been a vocal critic of the News Media Bargaining Code, the result of the ACCC’s first inquiry into the platforms – Google is being punished for simply being better.

“Google has built a successful business and I believe it’s being punished for that, many years after their acquisitions and movements had been green-lit by government authorities,” Shepherd said.

“At some point, we need to look at whether they’re simply better at building a modern commercial and technology business than our local incumbents, rather than it being some sort of nefarious anti-competitive conspiracy.

“It has been better than the local competitors at understanding what both users and its SME and enterprise customers want, and has built products that adapt to that. Most of the competitors are still following the same business model that has been the norm for 30-50 years ago – selling ads or ad related services to a handful of large businesses.

“Google executes better than the competition and are being punished, those who haven’t adapted as quickly are seemingly being rewarded.”

Ben Shepherd

In 2018, Google paid out more than $14 billion to publishers within its ad network. And according to the 2020 Google Economic Impact Report, advertisers receive $63 million in net advertising benefits through ads on websites using AdSense. The report also revealed that Google Search and Ads deliver approximately $31.7 billion in net advertising benefits to local businesses each year.

But the ACCC is concerned that Google has so much power as to potentially be anti-competitive. YouTube ads can only be bought through Google’s demand side platform, Google Ads, which is then channelled into Google’s supply side platform.

Its level of dominance means Google has a big piece of the ad spend pie. Last financial year, digital ad spend was worth $9.1 billion. Each year, digital display ads contribute $3.4 billion to that total.

Additionally, the watchdog’s estimations show that Google’s share of impressions is 90-100% among publisher ad servers, 60-70% among supply side platforms, 70-80% among demand side platforms, and 80-90% among advertiser ad servers.

And this matters, according to the commission, because if advertisers are paying too much for their digital ads, they will pass that cost on to consumers. Similarly, if publishers do not receive enough revenue as part of the process, this could impact the quality and variety of content they provide to consumers.

News Corp’s boss, Michael Miller, said the interim report “shines a light on Google’s pervasive commercial power that impacts the entire Australian economy not just the publishing industry”.

Guardian Australia managing director, Dan Stinton, who appeared in front of senators at the committee hearing into the News Media Bargaining Code, added that the two main concerns are “the opacity of the digital supply chain and complete dominance of Google throughout”.

“Clearly Google needs to be restricted from exploiting its market power to preference its own business and the market needs to operate with more transparency to give consumers, advertisers and publishers more confidence in the way it operates,” Stinton said.

Dan Stinton, Guardian Australia

“It is essential, however, that this is done in concert with a substantial overhaul of our woefully inadequate privacy regulations to put appropriate guardrails on the ubiquitous collection and use of consumer data.”

Nine and Seven did not respond to a request for comment, but industry body Free TV said ensuring broadcasters get their fair share of revenue will mean more money invested into local content and news.

“We strongly support the ACCC’s proposed measures to allow advertisers and publishers to choose their own ad tech suppliers and to improve transparency measures,” CEO Bridget Fair said.

“With less money wasted in the system, more money will be available for Free TV broadcasters and other content creators to continue to invest in great local programming and trusted news.

“In submissions to the ACCC since 2017, Free TV has been calling for new rules to govern the ad tech market, specifically to ensure that Google does not preference its own products and that auctions processes are fair and transparent. We very much welcome the fact that the ACCC has included this proposal in its interim report.”

The interim report was handed down in the midst of the heated and ongoing News Media Bargaining Code debate, in which Google, Facebook, and publishers are embroiled. Today, Google has inserted a message at the top of its search results, stating: “We are willing to pay to support journalism.”

But it is also experimenting with blocking links to Australia’s biggest and most reputable news outlets for a small percentage of users. And a week ago, while presenting to the senate hearing, Google said it would have no choice but to pull its search function from the local market should the code, which was introduced to parliament late last year, become law.

Walton, MD of Nunn Media, is not “overly concerned” about the threat.

“Brands and their products are not going anywhere and of course customers and their demand are not going anywhere,” he said. “The two will still need to be connected, albeit in a slightly different way if common sense doesn’t prevail.”

Thinkerbell’s Shepherd, meanwhile, stated that while the possibility of a Google-less Australia is worrying, “they’re entitled to do it if they want”.

“[The] challenge is, if Google leave[s] the market, it won’t solve the problem. Whoever replaces them (be it a Bing or a new entrant) will ultimately have the local media companies make the same request,” he said.

“The issue is not a company issue – it’s an issue of adapting to how citizens use media in 2021.”

The Thinkerbell executive added that given the level of scrutiny applied to Google, he was “surprised” by the ACCC’s “almost casual response” to the issue of agency rebates, discounts, and incentives. The watchdog has preliminarily ruled that such conflicts of interest shouldn’t face regulation at this stage.

“I worry that the government and ACCC are trying to make important decisions in an area of technology that perhaps no one understands the full ramifications of,” Shepherd said.

“If anything, it has demonstrated that the legislation governing media and technology in this country is in need of a big overhaul.”


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