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30 September 2021

ACCC: Google’s Dominance In Ad Tech Supply Chain Harms Public Access To Journalism

A new report from the Australian competition authority has found that Google’s dominance in the ad tech sector places public access to “important and valuable content” such as journalism at risk.   

The Australian Competition and Consumer Commission’s final report on its digital advertising services inquiry found that weak competition in ad tech was likely to damage journalism.

The regulator said that enforcement action under Australia’s existing competition laws alone was “not sufficient” to address the competition issues in the sector, and that the ACCC should be given powers to develop specific rules in response.

The News Media Association welcomed the report. “This report lays bare the damaging economic impact for publishers, and corresponding societal damage from restricted access to public interest news, resulting from Google’s dominance in the ad tech space,” NMA chief executive Owen Meredith said.

“We also note the ACCC’s call for new powers to deal with these problems, which restrict public access to journalism. This underlines the need for the UK Government to act as swiftly as possible to give the Digital Markets Unit the legislative teeth it needs to do that important job on behalf of UK consumers.”  

The ACCC report found that Google has a dominant position in key parts of the ad tech supply chain and estimates that more than 90 per cent of ad impressions traded via the ad tech supply chain passed through at least one Google service in 2020.

Google’s dominance in the ad tech supply chain is underpinned by multiple factors including its access to consumer and other data, access to exclusive inventory and integration across its ad tech services.

Key acquisitions by Google, including of DoubleClick in 2007, AdMob in 2009, as well as YouTube in 2006 have helped Google entrench its position in ad tech, the ACCC said.

“Weak competition in the supply of ad tech services can harm Australian advertisers, publishers and consumers. In particular, without a competitive and innovative ad tech supply chain, the ability of Australian websites and app owners, such as news publishers and providers of other online content, to make important and valuable content available to many Australians is placed at risk,” the ACCC said.

“If publishers earn less revenue for their advertising space, they are likely to produce less, and/or lower quality, online content. Alternatively, publishers may explore alternative monetisation strategies, for example by charging consumers to access their websites or apps.

“Australian consumers are therefore at risk of facing reduced access to diverse and high quality information and services online. This is particularly problematic where digital advertising is used to fund content that is important to the public or has broader public benefits, such as journalism.”

ACCC Chair Rod Sims said: “Google has used its vertically integrated position to operate its ad tech services in a way that has, over time, led to a less competitive ad tech industry. This conduct has helped Google to establish and entrench its dominant position in the ad tech supply chain.

“Google’s activities across the supply chain also mean that, in a single transaction, Google can act on behalf of both the advertiser (the buyer) and the publisher (the seller) and operate the ad exchange connecting these two parties. As the interests of these parties do not align, this creates conflicts of interest for Google which can harm both advertisers and publishers.”

The report finds that Google has used its position to preference its own services and shield them from competition. For example, Google prevents rival ad tech services from accessing ads on YouTube, providing its own ad tech services with an important advantage.

Google has also refused to participate in publisher-led header bidding, an industry innovation aimed at increasing competition for publishers’ inventory, and previously allowed its services to have a ‘last look’ opportunity to outbid rivals.

“We are concerned that the lack of competition has likely led to higher ad tech fees. An inefficient ad tech industry means higher costs for both publishers and advertisers, which is likely to reduce the quality or quantity of online content and ultimately results in consumers paying more for advertised goods,” Mr Sims said.

“The ACCC is considering specific allegations against Google under existing competition laws. However new regulatory solutions are needed to address Google’s dominance and to restore competition to the ad tech sector for the benefit of businesses and consumers. We recommend rules be considered to manage conflicts of interest, prevent anti-competitive self-preferencing, and ensure rival ad tech providers can compete on their merits.”