Google’s dominance in ad tech supply chain harms businesses and consumers, finds ACCC inquiry

An Australian Competition and Consumer Commission (ACCC) inquiry into the advertising technology (ad tech) sector has identified significant competition concerns and likely harms to publishers, advertisers and, ultimately, consumers.

The report, published today, concludes that enforcement action under Australia’s existing competition laws alone is not sufficient to address the competition issues in the sector, and that the ACCC should be given powers to develop specific rules in response.

Ad tech services facilitate complex transactions for the selling and buying of advertising space on websites or apps, resulting in the ads that are displayed to consumers.

Earlier this month, Google denied that use of its ad tech platforms provides brands with an unfair advantage over the competition thanks to the large amount of data it has from its users.

The report finds that Google has a dominant position in key parts of the ad tech supply chain and estimates that more than 90% of ad impressions traded via the ad tech supply chain passed through at least one Google service in 2020.

Google’s dominance in the ad tech supply chain is underpinned by multiple factors including its access to consumer and other data, access to exclusive inventory and integration across its ad tech services. Key acquisitions by Google, including of DoubleClick in 2007, AdMob in 2009, as well as YouTube in 2006 have helped Google entrench its position in ad tech.

The report states Google has used its position to preference its own services and shield them from competition. For example, Google prevents rival ad tech services from accessing ads on YouTube, providing its own ad tech services with an important advantage.

Google has also refused to participate in publisher-led header bidding, an industry innovation aimed at increasing competition for publishers’ inventory, and previously allowed its services to have a ‘last look’ opportunity to outbid rivals.


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“Google has used its vertically integrated position to operate its ad tech services in a way that has, over time, led to a less competitive ad tech industry. This conduct has helped Google to establish and entrench its dominant position in the ad tech supply chain,” ACCC Chair Rod Sims said.

“Google’s activities across 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 operate the ad exchange connecting these two parties. As the interests of these parties do not align, this creates conflicts of interest for Google which can harm both advertisers and publishers.”

Ad tech services perform an important role in the digital economy, helping Australian businesses reach consumers and publishers fund online content.

The report estimates that, in Australia, at least 27% of advertiser spend on ads sold via the ad tech supply chain was retained by ad tech providers in 2020.

“We are concerned that the lack of competition has likely led to higher ad tech fees. An inefficient ad tech industry means higher costs for both publishers and advertisers, which is likely to reduce the quality or quantity of online content and ultimately results in consumers paying more for advertised goods”, Sims said.

“The ACCC is considering specific allegations against Google under existing competition laws. However new regulatory solutions are needed to address Google’s dominance and to restore competition to the ad tech sector for the benefit of businesses and consumers. We recommend rules be considered to manage conflicts of interest, prevent anti-competitive self-preferencing, and ensure rival ad tech providers can compete on their merits.”

“We have identified systemic competition concerns relating to conduct over many years and multiple ad tech services, including conduct that harms rivals. Investigation and enforcement proceedings under general competition laws are not well suited to deal with these sorts of broad concerns, and can take too long if anti-competitive harm is to be prevented,” Sims said.

“Many of the concerns we identified in the ad tech supply chain are similar to concerns in other digital platform markets, such as online search, social media and app marketplaces. These markets are also dominated by one or two key providers, which benefit from vertical integration, leading to significant competition concerns. In many cases these are compounded by a lack of transparency.”

Sector-specific regulation, such as that proposed in this report, is not new. Other industries, such as telecommunications, have specific rules which can address particular competition and transparency concerns identified in those sectors.

“How the recommendations in this report should be given effect, including the legal framework for the proposed rules and powers will be considered as part of a broader ACCC report due in September 2022,” Sims said.

That report will also look at whether the proposed rules for ad tech need to form part of a broader regulatory scheme to address common competition and consumer concerns we have identified in digital platform markets. Consultation on that report will commence in the first quarter of 2022 and will take into account overseas legislative proposals to deal with these issues.

For more on this story, the team spoke about it on the Mumbrellacast


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