Australia wants to regulate the ad tech space and slams Google

The Australian Competition and Consumer Commission (ACCC) has found Google has a dominant position in the ad tech space. Thus, the commission considers that the position created “systemic competition concerns.”

Google controls the ad tech space

The ACCC’s report on the state of ad tech states that Google’s dominant market position has made it difficult for advertisers to compete for ad technology. As a result, in 2020, the ACCC estimates, over 90% of all ad impressions will be traded via at least one Google service, making it difficult for advertisers to affordably compete.

Google is the dominant player in the ad tech world. Over more than a decade, it has made its dominance even stronger. And this happened by incorporating vertical integration into their business and getting really good at ad technology. As a result, it’s made competition lower, and has entrenched its position as the top dog.

From analysing open display ads, the regulator found Google’s share of impressions for online ads was between 70-100% of all ads. So, for those ad tech services where revenue information is available, Google’s share of revenue was between 40-70% of total ad revenue.

The remaining amount of revenue was split among 8 other demand-side platform competitors, and Google was responsible for the biggest part. But Google is claiming that the ACCC’s investigation is only focused on a narrow aspect of the ad tech industry. They say this is because the ACCC has only examined the open display ad practices.

Google’s conduct that “harms rivals”

The ACCC says that AU$2.8 billion was spent on open display advertising last year. That’s 33% of all digital advertising spend. Also, the ACCC’s probe showed that this is 43% of all open display advertising. According to the authorities, there are “systemic competition concerns” regarding to the conduct that “harms rivals”.

As a result, the authorities appreciate that the fees went higher for both publishers and advertisers. Thus, it affected the quality of online content and also made users pay more for advertised goods.

The ACCC claims that Google achieved this dominant market position by using its first-party data. They gathered data through Search, Maps, and YouTube, to provide targeted advertising. Thus, they managed to gain a competitive advantage. Still, Google mentioned that it does not use its first-party data to gather information for targeted ads.

The Australian Competition and Consumer Commission (ACCC) said Google is fueling a transparency problem in the ad tech sector. Therefore, the giant does not provide visibility over the total fees or take rates. Now, Google does not show the fees it is charging advertisers or publishers, as it hides often in the system. So this system drives up prices for advertisers and lowers revenue for publishers.

The lack of transparency undermines the industry

As a result, ACCC is concerned that the lack of transparency undermines the trust in the industry. So, the ACCC is looking for government to give it the power it needs. Therefore it would target certain ad tech players with specific rules based on their level of market power. This way, it will address competition concerns and certain players will not be able to use their advantage over others.

The Australian Competition and Consumer Commission (ACCC) has also announced it is looking into specific allegations against Google under existing laws.

The ACCC wants to introduce new obligations for managing conflicts of interest, for example Google’s. Currently, Google acts on behalf of both the buyer and seller of ads while also operating the ad exchange connecting these two parties.

The Australian Competition and Consumer Commission (ACCC) is considering a number of new rules for advertising technology providers, including transparency requirements and a ban on using information from one product to supply another.

Google should change its public material

As a new regulatory power, the ACCC recommended that Google should change its public material, so that it better explains how it uses customer data for advertising. Thus, it should include descriptions of how they use first-party data to provide ads displayed on third-party websites.

The competition watchdog is demanding that ad tech providers publish average rates to increase transparency. So, Google became the main target because it controls the majority of the ad market. It should provide more information about its operations to publishers, which should also include details on its publisher server auctions.

The Australian Competition & Consumer Commission (ACCC) wrapped up their inquiry into digital ad tech. So, now they will turn their attention to broader regulatory changes to digital platforms, which are part of the Digital Platforms Inquiry. The authority would come with a legal framework for the proposed rules in September next year.

Still, Google has repeatedly claimed in the past, it does not stifle competition in the world of advertising. But the company emphasised that its services bring benefits to advertisers.

Anyway, if you want to keep ads away from your computer, download Ad Guardian Plus.