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ACCC Invites Comment on Lack of Ad Tech Competition

A lack of competition and transparency in the digital advertising technology supply chain is impacting publishers, advertisers and consumers and needs to be addressed, according to the interim report for the Australian Competition and Consumer Commission’s Digital advertising services inquiry.

The report examines the digital display advertising supply chain in Australia, which enables the near instantaneous delivery of AUD$3.4 billion of digital display advertising opportunities on news, entertainment and other websites and apps each year. Digital advertising is, in essence, how consumers’ attention and data are monetised.

“Advertising technology, or 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,” ACCC Chair Rod Sims said.

“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.”

While there are many ad tech providers in Australia, Google is by far the largest provider of all of the key ad tech services examined by the report, and is the only provider across the full ad tech supply chain that also sells ad inventory. The ACCC estimates that Google’s share of the revenue or ads traded in each of the required services in Australia ranges from 50-60 per cent to between 90-100 per cent, depending on the service.

Over time, Google has made a series of acquisitions that have cemented its strong position in the ad tech supply chain, which is further reinforced by its unrivalled access to data from its wide range of consumer-facing services, including Google Search, Chrome and Android, and from its wide network of trackers on third-party websites and apps.

“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,” Mr Sims said.

“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.”

Google-owned YouTube’s ad inventory is sold exclusively through Google’s own platforms. Advertisers who consider YouTube ads essential to their advertising strategy must use Google’s ad tech services to buy these ads.

Google also does not participate in header bidding auctions run by publishers, in which they offer ad inventory for sale to advertisers in a real-time bidding process. Instead, Google’s publisher ad server developed its own proprietary Open Bidding auctions, which means publishers who wish to receive real-time bids from advertisers using Google’s ad tech services must use Google’s publisher ad server.

The ACCC has also heard concerns about the competitive effect of Google’s restrictions on rivals’ access to different types of data, for example its move to block access to the DoubleClick ID and its proposal to block third-party cookies on Chrome.

The ACCC’s preliminary report sets out a series of possible options for addressing the issues in the ad tech industry, based on suggestions received during this inquiry and other industry developments.

Feedback is sought on these options, which include:

  • Rules to manage conflicts of interest and prevent self-preferencing in the supply of ad tech services. The ACCC notes that the Competition and Markets Authority in the UK and the European Commission have both recently released proposals that relate to these issues, and seeks feedback on which aspects of those proposals could be appropriate in Australia.
  • Proposals to enhance the ability of ad tech providers to assess the price and quality of services, including requiring demand-side platforms to allow independent verification and that the industry implement common transaction and user IDs.
  • Promoting competition in the industry through boosting data portability (allowing a consumer’s data to be moved or shared at their request) and interoperability (allowing data to be shared between firms without a request from a consumer). One option is to require firms with a significant data advantage to provide consumers with an easy way to port their data between rival.
  • Mandating the breaking up of datasets held by large incumbents, to make it easier for rival ad tech providers to enter and compete in the supply of ad tech services.

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 report also supports the ACCC’s previous recommendations from the Digital platforms inquiry to introduce an unfair practices provision and the establishment of an ombudsman scheme to resolve complaints and disputes with digital platform.

The report is available at Digital advertising services inquiry. Submissions to the preliminary report are due by 26 February 2021.


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