ACCC finds that Google’s dominance in ad tech supply chain harms businesses and consumers

An ACCC inquiry into the ad tech sector has identified significant competition concerns and likely harms to publishers, advertisers and, ultimately, consumers.

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

Ad tech services facilitate complex transactions for the selling and buying of advertising space on websites or apps, resulting in the ads that are displayed to consumers.

The report finds 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 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.

ACCC Chair Rod Sims, says, “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.”

“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”

The ACCC also found that the pricing and the operation of ad tech services lack transparency. The complexity of the supply chain contributes to this lack of transparency and can make it difficult for advertisers and publishers to understand how the supply chain is operating and detect misconduct.

It recommends the industry establish standards, requiring ad tech providers to publish average fees and take rates to enable ad tech customer to easily compare fees and take rates across different ad tech providers and services. It also recommends an industry standard to enable full and independent verification of the services advertisers use in the supply chain.

The report also identified specific transparency issues with Google’s publisher services, and recommends that Google should be required to provide publishers with information about the operation and outcomes of its publisher ad server auctions.

Commenting on the release of the ACCC’s final report, CEO of Commercial Radio Australia, Joan Warner, says, “We welcome the ACCC’s report and its recommendations.  We support increased transparency over the operation of Google’s ad tech services, including the way it collects and uses data, the fees it charges to users and publishers, and Google’s claims regarding the benefits of its ad tech services.” 

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