Australia to Curb Google Adtech Dominance - Latest News

Australia's Watchdog Seeks Powers to Address Google's Adtech Dominance

The Australian competition watchdog is advocating for new legal authorities to limit Google’s substantial influence within the adtech industry.

Report Highlights Competition Concerns

This call to action accompanies the publication of the final report from an inquiry focused on competition within the digital advertising landscape. The Australian Competition and Consumer Commission (ACCC) determined that novel regulatory measures are necessary to counteract Google’s prevailing dominance and foster competition in the adtech sector – ultimately benefiting both businesses and consumers.

Focus on First-Party Data

The report particularly emphasizes Google’s control over first-party data. The regulator suggests that specialized interventions may be required to address this dominance, potentially including data separation or mandated data access provisions.

Systemic Competition Issues Identified

ACCC Chair Rod Sims stated that systemic competition concerns have been identified, stemming from conduct spanning numerous years and encompassing multiple adtech services, including actions detrimental to competitors. He explained that standard enforcement procedures are inadequate for addressing these widespread issues and can be excessively time-consuming in preventing anti-competitive harm.

Impact on Costs and Content Quality

Sims further noted concerns that the lack of competition likely contributes to elevated adtech fees. An inefficient adtech industry translates to increased costs for publishers and advertisers, potentially diminishing the quality or availability of online content, and ultimately leading to higher prices for consumers.

Self-Preferencing Practices

The ACCC’s investigation revealed that Google has leveraged its position to prioritize its own services – a practice known as self-preferencing – and shield them from competitive pressures. Specifically, the watchdog cited Google’s restriction of rival adtech services’ access to advertisements on YouTube, granting its own adtech offerings a significant advantage.

Dominant Market Position

Generally, the ACCC found that Google holds a dominant position across key segments of the adtech supply chain. Estimates suggest that over 90% of ad impressions processed through the adtech supply chain passed through at least one Google service last year.

Factors Underpinning Dominance

Google’s dominance is attributed to several factors, including access to consumer data, exclusive inventory, and the integration of its various adtech services.

Key Acquisitions

The report also points to strategic acquisitions made by Google – such as DoubleClick (2007), AdMob (2009), and YouTube (2006) – as contributing to its entrenched position in the adtech market.

Lack of Transparency

The report also criticizes the sector’s lack of transparency, highlighting opaque pricing and operations. This complexity makes it challenging for advertisers and publishers to fully understand the supply chain and identify potential misconduct.

Global Regulatory Scrutiny

Similar concerns were raised by the U.K.’s competition watchdog in its own adtech sector report last year. U.K. lawmakers are currently working on reforms to domestic competition law with a digital focus.

Recommendations for Industry Standards

In addition to advocating for new legal powers, the ACCC recommends that the industry adopt standards, such as requiring providers to publicly disclose average fees and rates to facilitate easier comparison for customers.

Independent Verification

The ACCC also suggests an industry standard to enable comprehensive and independent verification of the services utilized by advertisers within the supply chain.

Header Bidding and "Last Look"

The report highlights Google’s past resistance to the publisher-led “header bidding” initiative, which aimed to enhance competition for publishers’ inventory. It notes that Google previously allowed its services a “last look” opportunity to outbid competitors, a practice deemed critical.

Vertical Integration Concerns

Sims emphasized that Google’s vertically integrated structure has enabled it to operate its adtech services in a manner that has diminished competition over time, solidifying its dominant position.

Conflicts of Interest

Google’s involvement on both the advertiser and publisher sides of transactions, as well as operating the connecting ad exchange, creates inherent conflicts of interest that can harm both parties.

Widespread Recognition of Issues

A key observation is that the ACCC’s findings are not novel. These are issues regulators and lawmakers globally are addressing and seeking solutions for.

International Precedents

The Australian report follows a substantial penalty imposed on Google in France earlier this year, related to self-preferencing within the adtech sector. France also secured commitments from Google regarding interoperability in the adtech market.

Alignment with EU and U.K. Initiatives

The ACCC’s recommendations – including rules to manage conflicts of interest, prevent self-preferencing, and ensure fair competition – align with concerns raised by European Union legislators in proposed regulations targeting tech giants.

U.K. and German Regulatory Updates

The U.K. is also planning updates to competition rules to grant regulators specific powers to address platform giants. Germany has already updated its competition laws to target digital giants, enabling intervention against anti-competitive practices.

Ongoing Investigations and Future Regulations

The ACCC is currently considering specific allegations against Google under existing competition laws, while emphasizing the need for new regulatory mechanisms to address its overall dominance.

Broader Digital Sector Regulations

Australia is also contemplating broader regulations for the digital sector, with a report expected within a year, potentially including sector-specific rules for adtech.

Similar Concerns Across Digital Markets

Sims noted that the concerns identified in the adtech supply chain are similar to those in other digital platform markets, such as online search, social media, and app marketplaces, all dominated by a few key providers.

Global Trend Towards Regulation

Consultation on the broader digital sector report will begin in early 2022, with the ACCC considering legislative proposals from other countries. The EU’s Digital Markets Act and Digital Services Act, Germany’s updated competition rules, South Korea’s fine against Google, and even China’s actions against its own tech giants demonstrate a global trend towards regulating Big Tech.

A Global Consensus

The overarching conclusion is that there is a growing global consensus that Big Tech requires oversight. The remaining questions concern the methods and speed of implementing these changes.

Google's Response

In response to the ACCC’s report, a Google spokesperson stated: “The ad-supported web is at risk if digital advertising practices don’t evolve to reflect people’s changing expectations around how data is collected and used.”

Google added that its Privacy Sandbox initiative, developed in collaboration with the industry, aims to provide strong privacy for users while supporting publishers.