Google’s ad tech dominance could harm consumers – ACCC (update – Google’s response)

Google ads

The Australian Competition and Consumer Commission has released its final report into the Digital Advertising Service inquiry initiated in February 2020. It found that Google’s ad tech dominance could harm consumers but the ACCC competition laws alone are not sufficient to address the issues.

The 202-page report (PDF so check downloads) raises so many issues – marketplace dominance; conflict of interest acting on behalf of the buyer (advertises) and publisher (seller); access to privileged data (that never leaves Google); and that its ad tech competitors can be disadvantaged are but a few of the significant issues.

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. One or two key providers also dominate these markets, which benefit from vertical integration, leading to significant competition concerns. In many cases, a lack of transparency compounds the issues.

ACCC Chair Rod Sims

But this is all new ground. Ad tech is a child of the internet – there are few laws pertaining to it. The ACCC must focus on gaining the right tools and legislation to move forward. It is not alone, as several international governments are facing the same issues.

What is ad tech?

Ad tech services buy and sell digital display advertising. They use automated, millisecond swift, complex algorithms (programmatic) to trade digital ads on websites. Simply put, an advertiser specifies the target market, what they are willing to pay (Cost per Thousand Impressions CPM), and the computer serves relevant ads over millions of channels.

Digital display advertisements include images or videos that appear before or alongside online content.

Display ads can appear as banners, pop-ups and videos. They can be traded through open display channels or via closed when publishers sell ads directly to advertisers. Open display channels are the focus of this report.

Why Google has an advantage

Google Android is free or low cost to Android phone makers and is on about 80% of global handsets. Google Apps like Search, Maps, and YouTube add to its understanding of your needs. An ancillary competition issue is the Google Play store.

Google is not breaking any laws. You must accept its privacy policy before using Android and its apps (you did read that, didn’t you?). You can opt-out of targeted advertising and only receive passive advertisement.

Why the ACCC has the role?

The ACCC is the consumer watchdog. We should thank it every day for protecting our rights through Australian Consumer Law (ACL) and warranties. It also looks at competition and monopolistic behaviour.

ACCC is not singling out Google (although it’s the most prominent target). Facebook (nearly 99% of its revenue), Amazon, Apple, and Microsoft all have ad tech businesses.

It wants to ensure that consumers have rights as far as the use of their data and absolute transparency about what a company does with it.

Google’s response

Google’s digital advertising technology services are delivering benefits for businesses and consumers – helping publishers fund their content, enabling small businesses to reach customers and grow, and protecting people online from bad ad practices.  

As one of the many advertising technology providers in Australia, Google will continue to work collaboratively with industry and regulators to support a healthy ads ecosystem.

Google spokesperson

Google background points:

  • Google will carefully review the report recommendations and consider impacts for its customers and users.
  • Google’s ad tech helps Australian businesses. PwC Australia estimates that three quarters of Google’s ad tech customers are small and medium businesses. Three in four businesses surveyed by PwC observed key differences in Google ad tech services including cost savings, time savings and business growth, compared to other services.
  • Google’s publicly disclosed fees for selling ads using its ad tech products are similar to the ACCC’s findings on industry averages. The fees reflect the cost of providing the service and the significant value they create for advertisers. Publishers keep about 70% of the revenue when using its products, and for some types of advertising, publishers keep even more. For example, publishers retain nearly 100% of the revenue when using its systems to deliver traditional ad campaigns, which are sold by publishers directly to its advertisers. Every year, Google pay out billions of dollars to the publishing partners in our ad network. For more on Google’s fees and what they pay for, see here
  • Google’s products are built to work well together and with competing products across the ad tech stack. For example, Google shares access to advertising data to support publisher monetisation to more hundreds of competing advertiser platforms and 80 publisher platforms across its products. Publishers and advertisers often use multiple ad tech products simultaneously, taking advantage of the different innovative features offered by various service providers in the industry.
  • Google’s ad tech products serve its customers’ interests and are incentivised to do so. If it does not provide competitive returns for advertisers and publishers they will simply choose other options.
  • Google acknowledges there can be challenges to transparency in this space due to how fragmented and dynamic the broader sector is, and the need to balance this with user privacy expectations and regulations. It is working to support improved advertiser and publisher metrics through its ad tools, and participation in industry collaborative efforts. 
  • Google has previously shared with the ACCC, and in other forums, that its ad tech products currently make extremely limited use of individual data from our user-facing services when bidding for or targeting ads on third-party websites and apps. Google currently does not use the user data or information collected from Gmail, Translate, Drive or Photos for the purposes of personalising ads.
  • The ACCC report only considers a narrow part of the digital advertising industry and largely excludes the role of significant players that Google competes with for ad spend (eg. Facebook, Tik Tok and Twitter), or online publishers that sell their inventory directly to advertisers. This is despite the ACCC’s final report concluding that ‘closed channels’ such as Facebook, Tik Tok and Twitter comprise 57% of total display advertising spend. 

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