It's been a busy start to the year for Australia's regulators. As the government battles with big tech over a proposed media bargaining code that it hopes will address a power imbalance in the news industry, it has today (January 28) begun a new war with Google over its dominance in the adtech supply chain.
Google controls a majority of every part of the adtech supply chain in Australia, with a market share that ranges from the 50% to 60% range to the 90% to 100% range, depending on the service, according to the findings of a comprehensive inquiry into digital advertising services conducted by Australia's competition watchdog.
The tech giant is the only provider across the full adtech supply chain that also sells ad inventory, and has built its position through the acquisition of adtech firms such as DoubleClick, AdMob and AdMeld, as well as media inventory like YouTube.
According to the estimates of the Australian Competition and Consumer Commission (ACCC), Google is most dominant in the advertiser and publisher ad server space.
The ACCC estimates that Google’s advertiser ad server, Google Campaign Manager, held an 80% to 90% share of impressions in Australia in 2019, while its publisher ad server, Google Ad Manager, held a 90% to 100% share of impressions. The report paints a picture of a lack of competition in these services.
In between the supply and demand, Google also operates a DSP and an SSP. Google’s two DSPs (Google Ads and Display & Video 360) are estimated to have collectively held a 60% to 70% share of revenue for DSP services in 2019, while Google Ad Manager, which also operates as an SSP, is believed to have held a 50% to 60% share of revenue in 2019. This comes despite there being a plethora of alternative DSPs and SSPs for advertisers and publisher to choose from. The ACCC said it is examining the interconnection of Google's services, and whether its exclusive access to its own ad inventory is impeding the ability for others to compete.
The ACCC said it had received submissions from parties in the adtech supply chain alleging that Google has misused its position to engage in anti-competitive practices, such as selling YouTube ad inventory exclusively through its own DSP, channelling demand from its DSP to its SSP, and not participating in header bidding auctions run by publishers.
ACCC Chair Rod Sims said of the findings: "Google’s significant presence across the whole adtech supply chain, combined with its significant data advantage, means Google is likely to have the ability and the incentive to preference its own adtech businesses in ways that affect competition."
Concerns were also raised about potential conflicts of interest when Google acts on behalf of both publishers and advertisers for the same ad sale, Sims said.
Elsewhere, the interim report also found an overall lack of transparency in the adtech industry over pricing and performance reporting, which may be contributing to competition challenges.
Agencies get a portion of the blame, but escape regulation
Beyond Google, the regulator evaluated the pricing and disclosure practices of ad agencies and their role in contributing toward the opacity to the adtech supply chain. The report said there may be conflicts of interests when agencies use their own adtech services, and transparency concerns related to the way that agencies disclose rebates, discounts and incentives. But the ACCC ruled out regulatory intervention, stating that potential issues relating to ad agency conduct may be mitigated through advertisers better educating themselves on certain practices and seeking protections in contracts.
The ACCC proposed several solutions to address issues in the adtech industry, including establishing rules to manage conflicts of interest and prevent self-preferencing; mandating independent verification and the implementation of common transaction and user IDs; promoting competition in the industry through boosting data portability and interoperability; and mandating the breaking up of data sets held by large incumbents. The competition regulator is seeking feedback on the proposals.
The ACCC noted similar efforts to review issues in the adtech supply chain by the Competition and Markets Authority in the UK and the European Commission, and said the success of regulation will be enhanced "if policymakers collaborate and coordinate policy solutions across national borders".