ACCC chair calls on advertising industry to consult on digital platforms inquiry report

Australian consumer watchdog raises concerns about the lack of transparency around advertising on Google and Facebook and their dominance in the media supply chain

ACCC chairperson Rod Sims
ACCC chairperson Rod Sims

The Australian Competition and Consumer Commission (ACCC) has called on Australia’s advertising industry to further collaborate on its inquiry into the impact digital goliaths such as Facebook and Google are having on the nation’s media ecosystem.

In a speech delivered earlier this week to attendees of an Australian Association of National Advertisers (AANA) and ThinkTV event, ACCC chair, Rod Sims, pointed out more than $0.68 in every advertising dollar in Australia is now going to Google and Facebook, transforming the very nature of the nation’s media landscape.

“The reality is quite simple: In digital advertising in Australia, Google and Facebook dwarf others,” he told attendees.

“Being big is not a sin. Australian competition law does not prohibit a business from possessing substantial market power or using its efficiencies or skills to outperform its rivals. But the dominance held by Google and Facebook in certain markets, plus the incentives they face, does mean their conduct should be subject to particular scrutiny to identify whether it is creating competitive or consumer harm.”

The comments follow the release of the ACCC’s preliminary Digital Platforms Inquiry report in December, which is open for feedback until June. Among the recommendations are calls for more regulatory authority to investigate, monitor and report on how both players are dominating news content and advertising services, along with how consumer data is being captured and used by these companies.

The report itself paints a concerning picture of how Google and Facebook are transformation Australia’s news and advertising. For example, the watchdog warned consumers are in danger of winding up in a news filter bubble riven the range and reliability of news made available to them by these platforms.

The ACCC has also expressed concern with the amount and variety of data being collected on Australian consumers, plus complexity and ambiguity of online terms of service and privacy policies.

On the advertising and supply front, the ACCC is also concerned about the extent to which Google and Facebook favour their own interests and can reward businesses maintaining existing commercial relationships with their platforms.

In his speech, Sims noted the inquiry is examining issues concerning the pricing of intermediary services, such as the cut of the amount paid by the advertiser for the ad impression – a practice seen as opaque. The ACCC estimates this is between 30 and 75 per cent of the final price paid for ads and is now exploring whether transparency is adequate.

“It is important we better understand the issues with the adtech supply chain because a lack of transparency means that advertisers do not know what they are paying for, where their advertisements are being displayed, and to whom,” Sims said.

“Higher advertising prices ultimately translate to higher prices for consumers for products and services.”

Sims also said the lack of clarity around adtech was disadvantaging online media businesses and their ability to monetise their premium content via advertising opportunities.

“We have not yet reached a view on these issues and we are continuing to examine the adtech supply chain to understand better how it works and how this impacts advertisers,” Sims continued. “It is important for the ACCC to better understand the issues with the adtech supply chain because a lack of transparency means advertisers do not know what they are paying for, where their advertisements are being displayed, and to whom.”

What’s more, there’s clear disconnect around advertisers verifying whether the ads they purchase are show to their target audience when purchased from Google and Facebook, with both platforms lacking third-party verification. This also leads to ad fraud, which is estimated by some to cost global advertisers US$7.2 billion.

The warning is a highly apt one, coming as both Australian and international advertisers suspended advertising on Google’s YouTube platform after paedophilia content was found on the video streaming platform. The content has led to allegations YouTube has facilitated paedophiles’ ability to connect with each other, trade contact info, link to child porn in comments and monetise their efforts.

Yet in its submission back to the ACCC, both Google and Facebook have rejected a number of the findings. Both for example, don’t believe an algorithm regulator would lead to higher quality search results or promote journalism. Facebook has also disputed that any regulatory change would help to sustain journalism in Australia.

As Sims noted, in any given month, 17 million Australians are watching content on YouTube, 17 million are accessing Facebook and 19 million are using Google search.

“With an audience of this size, digital platforms are a primary channel for businesses looking to reach Australian eyeballs and more importantly, their wallets,” Sims said. “This is why this inquiry is important for Australian advertisers, and we welcome feedback from everyone with an interest.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu 

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