A lack of competition, choice and transparency pervades Australia’s digital advertising supply chain and it’s hurting publishers, advertisers and consumers alike, says the Australian Competition and Consumer Commission (ACCC).
The regulatory watchdog has just released its interim Digital Advertising services inquiry report into Australia’s $3.4 billion digital display advertising supply chain. Two main themes are in the spotlight, driven by industry feedback to date: Google’s dominant position and role in the supply chain, and concerns about the opacity of the supply chain itself.
The interim report’s release comes nearly 12 months after the ACCC’s Digital Platforms Branch was appointed by the Treasurer to hold a public inquiry into Australia’s adtech services and agency markets. The four main areas of focus for the adtech inquiry are: Advertiser ad servers, demand-side platforms, supply-side platforms and publisher ad servers.
It’s a complement to the wider Digital Platforms Inquiry, which delivered its final report in July 2019. The resulting legislation from the inquiry was tabled late last year in the House of Representatives and was the subject of a senate inquiry last week.
In reportage that echoes the Digital Platforms Inquiry report, the interim Digital Advertising services inquiry report found Google to be by far the largest provider of all key adtech services investigated and noted it’s the only player to operate across the full supply chain as well as sell ad inventory, raising significant conflicts of interest. The ACCC estimated Google’s share of revenue of ads traded in Australia ranges from 50-60 per cent to between 90-100 per cent, depending on which of the four service areas is referenced.
The report also highlighted Google’s series of acquisitions to cement its strong position in the adtech supply chain, including its acquisitions of DoubleClick, AdMob and AdMeld, and pointed to its “unrivalled access to data” from consumer-facing services such as Google Search, Chrome and Android, as well as via trackers on third-party websites and apps.
In this vein, the ACCC said it’s closely watching overseas actions being launched against Google around its supply of adtech services. The big one is arguably the Texas Attorney General’s decisions on behalf of nine US states to file a complaint against Google on 16 December 2020 alleging Google has monopoly power and forecloses competition in US markets for the supply of adtech services.
The ACCC is now seeking feedback on a range of recommendations made in its report, including rules to manage conflicts of interest and to prevent “self-preferencing” of digital players in supplying adtech services. As a way of achieving this, the ACCC referenced the Competition and Markets Authority in the UK and the European Commission, which both recently released proposals relating to these issues.
To address transparency, the ACCC is looking to help adtech providers more effectively assess the price and quality of services, including requiring demand-side platforms to allow independent verification. It’s also recommending the industry implement common transaction and user IDs.
Another potential solution on the table for promote competition is to boost data portability and interoperability in order to allow data to be shared between firms without a request from a consumer. The ACCC said another option could be to require firms with a significant data advantage to provide consumers with an easy way to port their data between rivals.
This kind of data exchange is potentially already on its way via the Consumer Data Right, first announced in November 2016 and aimed at improving consumer data portability and transparency, to give consumers greater control of their data. Banking is the first industry the CDR is being applied to under the Open Banking regime.
The question of whether to mandate breaking up datasets held by large incumbents, to make it easier for rival adtech providers to enter and compete in the supply of adtech services, has also been raised in the report.
In addition, the adtech interim findings support the ACCC’s recommendation to introduce an unfair practices provision and the establishment of an ombudsman scheme to resolve complaints and disputes with digital platforms.
ACCC chair, Rod Sims, said it’s clear advertising technology, or adtech, has transformed the way advertising is delivered to consumers online and plays an increasingly critical role in the wider advertising market as well as digital economy.
“But there is a real lack of competition, choice and transparency in this industry,” Sims said. “These issues add to the cost of advertising for businesses, which will ultimately impact the prices paid by consumers.”
Specifically, Sims called out Google’s dominance of both the supply and buy sides of the digital advertising ecosystem as of concern.
“Google’s significant presence across the whole adtech supply chain, combined with its significant data advantage, means Google is likely to have the ability and the incentive to preference its own adtech businesses in ways that affect competition,” 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.”
For example, the ACCC pointed to Google-owned YouTube’s ad inventory, which is sold exclusively through Google’s owned platforms. It also noted Google does not participate in header bidding auctions run by publishers, instead developing proprietary Open Bidding auctions requiring publishers who wish to receive real-time bids from advertisers using Google’s adtech services to use the company’s publisher ad server.
The ACCC said its initial inquiry also heard concerns about the competitive effect of Google’s restrictions on rivals’ access to different types of data, such as its move to block access to the DoubleClick ID and its proposal to block third-party cookies on Chrome.
At the same time, the ACCC said it recognised any proposals must try to minimise regulatory burden, efficiency and protecting consumers’ privacy while enhancing competition and transparency.
The ACCC is now calling on industry to comment on the interim report by 26 February 2021. A final report is due to be tabled to the Federal Government by 31 August 2021.
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