The Australian government looks set to open another front in its fight against Google, with the Australian competition watchdog warning the company could potentially be misusing its market power in the $9.1bn online display advertising market.
As part of its long-running digital platforms inquiry, the Australian Competition and Consumer Commission launched an inquiry in March into the complex world of online ads, and issues with the markets where those ads are bought and sold.
Ads displayed on websites are most commonly determined through an automated auction system that figures out which advertisement to present based on the information held about who is visiting that site, as well as the price sold to present the ad.
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The interim report from the ACCC, to be released by the treasurer, Josh Frydenberg, on Thursday, has found Google is the dominant provider across all aspects of the online ad market examined by the inquiry.
“While there are a large number of ad tech providers across the supply chain, Google is by far the largest provider of each of the four key services considered,” the report states, according to a selection briefed by the treasurer’s office to media outlets prior to its release.
The report found in the display advertising market, which made up 37% of the $9.1bn online ad spend in 2019-2020, Google accounted for between 50% and 100% of the four markets examined, where advertisers buy ads, run ad campaigns, and publishers sell ad space.
The ACCC warned Google’s position within various parts of the supply chain, and a lack of transparency over the supply chain, meant Google is “likely to have the ability and incentive to favour its own related business interests (self-preferencing).”
The report found that fees for ad services were quite high, making up 28% of advertiser expenditure on display ad impressions in Australia in 2019.
If Google was found to be self-preferencing, it could be a misuse of market power under Australian competition law, the ACCC said in the report, but it had not yet reached a view on that.
The regulator said it would continue to examine this issue before delivering the final report to the government in August. It has sought feedback on proposals to strengthen rules around conflicts of interest and self-preferencing. The ACCC has also proposed more transparency around the supply chain from advertiser to seller, as well as a proposal to make it easier for users of the ad tech systems to move data between operators.
Frydenberg said in a statement the government noted the competition concerns and the “continued dominance of tech giants”.
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“Digital platforms have fundamentally changed the way that media content is produced, distributed and consumed,” he said.
“To that end, we need to ensure our regulatory frameworks keep pace with the changes being driven by digital platforms.”
It is the latest front in the government’s battle with tech companies Google and Facebook, as the two companies last week threatened to withdraw search and news services in Australia if a code is brought in to force the digital platforms to negotiate with news media companies over payment for content.
Facebook was not included in any of the ad tech report briefed to media before its release. In the company’s submission to the inquiry last year, it sought to downplay its position in the ad tech sector as “limited”.
“We are not vertically integrated: we do not provide publisher ad servers, we do not run publisher-side auctions and we do not independently offer market-wide analytics,” Facebook said.
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