30 Sep 2021

  • Data Compliance and Privacy
  • Privacy and Compliance

6 new ways the ACCC wants to tackle Google power

The release of the Final Report in the Digital Advertising Services Inquiry has stated that 27% of digital ad revenues are kept by ad tech providers, prompting the ACCC to bare its teeth locally and internationally to agitate for greater regulation.

Australia’s chief digital regulator, the ACCC, is recommending sweeping new powers to rein in Google’s dominance over Australia’s digital advertising services market, releasing a new report threatening increased power and tougher laws.

The local digital advertising industry has an estimated annual value between $3.4b and $9.5b, with ad tech providers keeping 27% of the revenue for themselves, according to the ACCC Digital Advertising Services final report.

“An inefficient ad tech industry means higher costs for both publishers and advertisers, which is likely to reduce the quality or quantity of online goods and ultimately results in consumers paying more for advertised goods,” ACCC chief Rod Sims says.

Of these ad tech providers - which include Google, AppNexus, Xandra, Verizon Media, Amazon, Adform, Facebook Audience Network, The Trade Desk, MoPub (Twitter) and Taboola - Google dominates across all parts of the complex digital advertising supply chain, including ad serving, DSPs, SSPs, ad networks and publisher ad servers.

A British report into digital advertising found 15% of advertiser spend was lost in what’s called the ‘unknown delta’ of digital advertising in the UK, but the ACCC report shows that amount is higher in Australia, with the top four providers - Google, AppNexus, Verizon Media and Amazon - collecting the bulk of the fees.

The Australian investigations found only 72.9% of advertiser spend is reaching the publishers or online media that displays advertisements sold during 2020.

The ACCC says ad tech fee levels are higher than they should be in Australia due to Google’s market power over dealings with both advertisers and publishers.

The ACCC’s Digital Platforms Inquiry set off a series of follow ups including the controversial news media bargaining code controversy and now this final report into digital advertising services.

The ACCC says it is in talks with the federal government “to be given new powers” and create new legislation to make the digital advertising industry more competitive.

“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 report says.

Google is so dominant - and has unprecedented data-gathering capabilities through technologies like search, maps, email and YouTube - that the ACCC estimates that 90% of advertising impressions in Australia during 2020 passed through the tech titan’s complex array of services, networks and platforms.

ADMA says all providers should be fair and transparent

ADMA is going through the details of the report and will provide advice to members in the future.

For now, ADMA agrees with the essence of the ACCC Digital Advertising Services Inquiry Final Report as a step in the right direction to protect the competitiveness of the local ad tech industry, but wants any regulatory changes to be systematic and impactful so that all players across the data-driven marketing industry can engage and deliver fair, transparent and responsible marketing.

“The next steps from the ACCC’s recommendations must be grounded in the understanding that regulatory reform has to address the issues (not just the current problem) in a way that will continue to apply in a dynamic, constantly developing environment. Rules must apply for all in a way that no one player can manoeuvre their way out of, " says ADMA Head of Regulatory and Advocacy Advisory, Sarla Fernando. “The regulatory framework must instill confidence and protection for the digital advertising services industry to compete in a way that is transparent, efficient, healthy and sustainable. This will ultimately benefit the consumer, advertiser and publisher.”

ADMA CEO Andrea Martens says, “The digital advertising services industry continues to be a driving stimulus to the Australian digital economy.”

“It offers innovative solutions, provides access to services and content, opens up advertising opportunities and creates paths to new consumers,” she says.

ADMA looks forward to supporting the data-driven marketing industry as it works in conjunction with the government and regulators to overcome issues identified and facilitate growth, trust and opportunities for all.

Uncompetitive digital advertising is harmful and increases prices

Ad tech services involve both programmatic and the buying and selling of digital display ads through open display channels. It involves the automated use of complex algorithms and systems to buy, sell and auction to bid on digital ad space on websites and apps.

This ACCC report has not gone into ‘closed channels’ that don’t use programmatic tech - like Facebook or Instagram - instead arguing a competitive ad tech supply chain is vital for Australian advertisers, publishers and ultimately consumers.

With around $1billion a year retained by ad tech providers in Australia by ACCC estimates, there are a range of harmful impacts outlined by a non-competitive industry, including:

  1. Advertisers at risk from low quality services 
    Automated processes to buy programmatic and display media - which include things like auctions, winning creative and audience targeting - rely on a complex array of networks, technology and anonymised data that is opaque and often unreportable to the advertiser or publisher.

    “Without strong competition in the ad tech supply chain, advertisers will likely pay more to ad tech suppliers for poorer quality services,” the report says.

    This is also likely to mean increased costs are passed on to consumers in the form of higher prices supplied by those advertisers.
  2. Consumers at risk from poorer quality media
    The Australian public faces reduced access to diverse and high quality information and services online without a robust, fair and competitive digital advertising supply chain, according to the report.

    “If publishers earn less revenue for their advertising space, they are likely to produce less, and/or lower quality online content … and explore alternative monetisation strategies, for example by charging consumers to access their websites or apps,” the report says.
  3. Google's access to data entrenches its dominance
    The ACCC says Google’s terms of service and privacy policies do not prevent Google using first-party data - which may be personal data from citizens - to offer targeted advertising through its ad tech services on third-party inventory (IE, the webs and apps that Google doesn’t own).

    This means advertisers, agencies, networks and publishers - who often have transparent privacy and cookie policies that prevent such behaviour - do not have access to the same advantages as Google.

    “Even if Google is not currently relying on first-party data in the supply of ad tech, there is nothing stopping it from doing so in the future,” the report says.

    “Google would be able to do so without seeking additional consent from its customers or otherwise notifying industry or its customers of a change of practice.”

    What’s more, the ACCC says these “widespread perceptions” about Google further distorts competition in favour of Google.

Sweeping new powers to regulate Australian digital advertising and marketing

The ACCC has made six key recommendations to the federal government about digital advertising services, including:

ACCC RECOMMENDATION 1: Google should clearly describe how it uses first-party data to provide ad tech services

The ACCC is imploring Google to publicly explain how it uses its consumer-facing services - such as YouTube, ad networks and search - in the data it relies on to provide advertising services.

“This should include a description of how both non-aggregated first-party data (data about a single consumer) and aggregated first-party data (such as combined data from multiple consumers) is used to provide ad tech services which enable the display of advertisements on third party websites and apps,” the report says.

It specifies that Google should amend:

  • Its Terms of Service, its Privacy Policy and “any other documents which set out or explain to consumers how Google uses their data”.
  • Material aimed at business users, or potential business users, of Google’s ad tech services, including any terms and conditions of service.

“Google should make these amendments now and ensure the information remains up to date.”

ACCC RECOMMENDATION 2: ACCC wants more power to legislate rules for ad tech providers with market power

“The ACCC should be given powers to develop detector specific rules to address current competition issues arising in the supply of ad tech services,” says the report.
These rules should be:

  • Developed in consultation with industry
  • Be proportionate to competition issues and conflicts of interest issues
  • Enforceable by the ACCC with penalties for non-compliance

ACCC RECOMMENDATION 3: More power for the ACCC to address market data advantages

The ACCC wants the power to create ‘data separation measures’ to prevent ad tech providers using data collected from consumer-facing services - or first-party data - to provide ad tech services on third-party sites and apps.

The regulator wants ‘data access requirements’ to force ad tech providers to give other ad tech providers access to first-party data.

“It may be difficult for data access requirements to be implemented in a way that adequately protects consumers’ privacy and complies with the Privacy Act 1988 (including any future amendments). However, technological developments may make this possible in the future,” the report says.

ACCC RECOMMENDATION 4: Average fees and ‘take rates’ need to be published 

Because the supply chain is so opaque, the ACCC is urging the industry to develop standards that make average fees and rates transparent.

“If such voluntary industry standards are not effective in achieving transparency to meet the needs of advertisers or publishers - or if the standard is not made within a reasonable period of time - the ACCC could introduce measures to address transparency issues under the rules proposed in recommendation 2,” the report warns.

ACCC RECOMMENDATION 5: Google must give publishers more information about publisher ad server auctions

The ACCC says publishers should be able to compare bids received from different sell side platforms. “Specifically, publishers should be able to compare bids received through Google’s SSP and Open Bidding, to bids received through header bidding,” the ACCC recommends, specifically asking the tech titan to engage in the process of header bidding.

Header bidding - as opposed to Google’s usual ‘waterfall technique’ - would give publishers more control over their sites and allow them to prioritise advertisers, giving marketers the ability to work more with their preferred publisher.

Header bidding would also likely allow publishers to charge more for premium inventory, improving their yield and reducing reporting discrepancies.

ACCC RECOMMENDATION 6: Powers to develop and enforce transparency across the Australian ad tech supply chain

The ACCC wants the price and performance of digital advertising to be more transparent. “Measures could include common transaction IDs, or requirements to publish prices and take rates in a standard form,” the report says.

ACCC chairman Rod Sims now has a new role on the International Competition Network (ISN), where he will co-ordinate his regulatory agenda globally.

“Competition regulators are increasingly dealing with global issues that require global responses, underscoring the importance of the ICN’s work,” Sims says.


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