accc ad tech advertising supply googles competition

ACCC Ad Tech Report> Stopping short of saying it will file suit against Google, Australia’s> competition authority finds plenty of issues in the “ad tech” market caused> by Google.Australia’s competition regulator has issued its interim report on the stateof a section of the online advertising world, and like other regulators aroundthe world, have found that Google plays on outsized role in many sectors ofthis part of the internet.The Australia Consumer & Competition Commission (ACCC) was tasked by theTreasurer of Australia Josh Frydenberg “to hold an inquiry into markets forthe supply of digital advertising technology services (ad tech services) anddigital advertising agency services (ad agency services) (the Inquiry)” asexplained in the ACCC’s March 2020 Issues Paper. This interim report was dueby the end of December 2020, and the ACCC is looking for feedback, especiallyits proposed remedies, by 26 February 2021 and aims to provide its finalreport by 31 August 2021.In the agency’s press release, ACCC Chair Rod Sims asserted: * [T]here is a real lack of competition, choice and transparency in this industry. These issues add to the cost of advertising for businesses, which will ultimately impact the prices paid by consumers. * Google’s significant presence across the whole ad tech supply chain, combined with its significant data advantage, means Google is likely to have the ability and the incentive to preference its own ad tech businesses in ways that affect competition.At this point, the ACCC is not calling for changes to Australian law and isholding off on formally launching an investigation into Google’s dominance ofwhat the ACCC is calling the ad tech market. But, the ACCC signalled its keeninterest in one of the antitrust suits in the United States (U.S.) againstGoogle, suggesting it may follow suit.The ACCC noted other jurisdictions have investigated the ad tech market andfound problems. The ACCC further suggested cooperation and seemed to hint thatsuccessful government regulation in other markets may help solve those inAustralia:A number of governments and regulatory agencies have previously releasedreports that include consideration of the ad tech industry. This Inquirybuilds on that body of previous work and describes the issues as they relateto Australia. The ACCC is seeking stakeholder views on the proposals outlinedin this report, which reflect the ACCC’s initial views of measures that may beeffective in addressing competition and transparency issues in the supply ofad tech services. There is close alignment between these proposals and thosediscussed in overseas reports into the industry. The ACCC considers that thesuccess of any proposed interventions in this industry is likely to beenhanced, and the regulatory costs minimised, if policymakers collaborate andcoordinate policy solutions across national borders.The ACCC’s report follows other investigations into concentration in digitalmarkets, including:It bears note that this ACCC inquiry is aside and apart from the recentlyunveiled measure that could require Google, Facebook, and others payAustralian media for use of content. The “Treasury Laws Amendment (News Mediaand Digital Platforms Mandatory Bargaining Code) Bill 2020” that “establishesa mandatory code of conduct to help support the sustainability of theAustralian news media sector by addressing bargaining power imbalances betweendigital platforms and Australian news businesses” according to the ExplanatoryMemorandum. The legislation comes after the center-right government, theLiberal–National Coalition, tried to negotiate a voluntary agreement withGoogle and Facebook, but talks fell apart. In late July 2020, the ACCCreleased for public consultation a draft of “a mandatory code of conduct toaddress bargaining power imbalances between Australian news media businessesand digital platforms, specifically Google and Facebook.” In publishing thedraft, the ACCC explainedThe code would commence following the introduction and passage of relevantlegislation in the Australian Parliament. The ACCC released an exposure draftof this legislation on 31 July 2020, with consultation on the draft due toconclude on 28 August 2020. Final legislation is expected to be introduced toParliament shortly after conclusion of this consultation process.However, the interim report on ad tech does bear on the financial health ofthe Australian media, one of the major reasons why the Liberal-NationalCoalition moved forward with its program of making platforms pay for media.The extent to which there are anti-competitive forces in the onlineadvertising market, it stands to reason the revenues of media companies wouldbe depressed, thus further jeopardizing their viability.The ACCC explained the scope of its ad tech inquiry and why a major onlineadvertising player like Facebook was not implicated:Digital display advertisements are the images or videos that appear before oralongside content viewed online. This Inquiry considers the advertisingtechnology (or ‘ad tech’) services that deliver personalised digital displayadvertising on websites and apps, and associated advertising agency services.The Inquiry does not consider online search advertising and does not focus onadvertising sold by businesses such as Facebook that is not sold through thead tech supply chain.With respect to the scope of the inquiry, the ACCC added thatThis report focuses on concerns identified by online publishers, advertisers,industry groups, academics and ad tech providers with the supply of ad techservices in Australia.The ACCC summarized “[t]he main themes explored in the report: * Google’s industry-leading position. While there are a large number of ad tech providers across the supply chain as a whole, Google is by far the largest provider of each of the four key ad tech services considered. The report considers the reasons for, and implications of, Google’s position * concerns about opacity in the operation and pricing of ad tech and ad agency services. This has been a key issue for both online publishers and advertisers, and raises multiple questions. First, with so many different ad tech services used to deliver an ad to a consumer, how much advertising spend on digital display is being retained by ad tech providers, and how much is flowing through to publishers? Secondly, are advertisers and publishers getting enough information about how the whole supply chain operates to make informed choices about which suppliers to use? Thirdly, how should transparency and competition in the supply of ad tech services be promoted while ensuring consumer privacy is protected?As noted, the ACCC namechecked one of the three anti-trust suits currentlypending in the U.S.: * The ACCC is closely following recent overseas enforcement actions in relation to digital platforms and the supply of ad tech services. On 16 December 2020, the Texas Attorney-General on behalf of nine US states filed a complaint against Google, alleging Google has monopoly power and forecloses competition in US markets for the supply of ad tech services. * The alleged anti-competitive conduct includes unlawful tying arrangements, exclusionary conduct, market allocation and price fixing arrangements. The complaint alleges Google’s exclusionary conduct has foreclosed competition and harmed consumers, evidenced by the exit of rival firms and limited and declining entry rates. The filed complaint also alleges the existence of an unlawful agreement between Google and Facebook and deceptive trade practices in breach of some states’ consumer protection laws. * Most of the allegations and concerns raised with the ACCC and discussed in this Interim Report are set out in the complaint filed by the US states. The ACCC will continue to consider these issues during this Inquiry, including whether enforcement proceedings under the Competition and Consumer Act 2010 (Cth) (CCA) are required.In December, Texas Attorney General Ken Paxton and nine other attorneysgeneral[1] filed their antitrust action in the Eastern District of Texas anddropped a bomb: they allege Google and Facebook conspired to monopolize theonline advertising market after publishers have devised a system to bluntGoogle’s dominance. However, Paxton and his colleagues argue that Google’sillegal actions have essentially taxed Americans through higher prices andlower quality products and services because companies are forced to pay apremium to Google to advertise online.Paxton and the attorneys general summarized their suit and the relief theythink appropriate in light of Google’s conduct:As a result of Google’s anticompetitive conduct, including its unlawfulagreement with Facebook, Google has violated and continues to violate Sections1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. Plaintiff States bring thisaction to remove the veil of Google’s secret practices and end Google’s abuseof its monopoly power in online advertising markets. Plaintiff States seek torestore free and fair competition to these markets and to secure structural,behavioral, and monetary relief to prevent Google from ever again engaging indeceptive trade practices and abusing its monopoly power to foreclosecompetition and harm consumers.The ACCC delved into these topics, among others: * Vertical integration and conflicts of interest * Pricing of ad tech services * Opacity in the supply of digital advertising technology servicesThe ACCC laid out what it wanted input on and how it may ultimately proceed toaddress Google’s seemingly deleterious conduct: * The ACCC invites stakeholder views on a range of possible proposals that it is considering to address the issues identified in this report. These proposals are based on suggestions received during this inquiry, and the ACCC’s assessment of industry developments. * If ultimately recommended by the ACCC, many of these proposals could be implemented through industry arrangements. Should industry participants be unable to reach agreed industry solutions, the ACCC may consider it appropriate to make further recommendations. * The ACCC also considers it critical that prior to the adoption of any measures of the type outlined below for consultation careful scrutiny is undertaken to ensure those measures could be implemented in a way that sufficiently safeguards the privacy of consumers.Nonetheless, before having received formal consultation, the ACCC made sixpolicy proposals, summarized thusly: * Proposal 1: Measures to improve data portability and interoperability. The ACCC is considering measures aimed at increasing data portability and interoperability, to reduce barriers to entry and expansion and promote competition in the supply of ad tech services. Any such measures would require safeguards to ensure that consumers have sufficient control over the sharing and processing of their data. * Proposal 2: Data separation mechanisms. The ACCC is considering the extent to which data separation mechanisms, such as data silos or purpose limitation requirements, may be effective in levelling the playing field between large platforms with a significant data advantage and rival ad tech providers. * Proposal 3 – Rules to manage conflicts of interest and self-preferencing in the supply of ad tech services. The ACCC is considering whether rules should be introduced that would aim to prevent and manage the competition and other issues that can arise from vertical integration. In particular such rules could prevent self-preferencing, and manage conflicts of interest. The high-level obligations which could be covered by these rules include: * requirements to put measures in place to manage conflicts of interest, such as preventing the sharing of information between ad tech services, or obligations to act in the best interest of publisher or advertiser customers * requirements to provide equal access to ad tech services (i.e. level playing field obligations to prevent self-preferencing), and * requirements to increase the transparency of the operation of the supply chain. * Proposal 4 – Implementation of a voluntary industry standard to enable full, independent verification of DSP services. To enable advertisers to assess DSP services fully and independently and encourage competition, industry should develop a standard that allows full and independent verification of DSP services. This standard should set out minimum requirements for this, along with the categories of data necessary to enable third-parties to provide full and independent viewability, fraud and brand safety verification services. The ACCC considers that this should initially be left to industry to develop and implement, but that other options could be considered if this was not successful. * Proposal 5 – Implementation of a common transaction ID. Industry should implement a common system whereby each transaction in the ad tech supply chain is identified with a single identifier which allows a single transaction to be traced through the entire supply chain. This should be done in a way that protects the privacy of consumers. * Proposal 6 – Implementation of a common user ID to allow tracking of attribution activity in a way which protects consumers’ privacy. Introduction of a secure common user ID, which ad tech providers would be required to assign to any data used for attribution purposes. This should be done in a way that protects the privacy of consumers.At this point, the ACCC seems to be favoring surgical changes that wouldtheoretically result in a lessening of Google’s dominance through increasedcompetition. These measures include promulgating rules to address conflicts ofinterest Google has throughout the advertising chain the ACCC compares tothese possible rules to the European Commission’s proposed Digital Markets Act(see here for more analysis) and the UK’s proposal (see here for moreanalysis.)* * *[1] These states sued Google: Texas, Arkansas Idaho, Indiana, Mississippi,Missouri, North Dakota, South Dakota, Utah, and the Commonwealth of Kentucky.© Michael Kans, Michael Kans Blog and michaelkans.blog, 2019-2021.Unauthorized use and/or duplication of this material without express andwritten permission from this site’s author and/or owner is strictlyprohibited. 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