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Google defends competition in adtech ecosystem as industry responds to ACCC interim adtech report

Google references low barriers to entry in the advertising supply chain in initial response to the ACCC's interim adtech services inquiry report

Google has defended its position as a connector and supporter of digital advertising services and stressed continuing levels of competition across the ecosystem in its preliminary response to the ACCC’s interim adtech services inquiry report released yesterday.

The comments come as the search giant continues its offensive against Federal Government plans to introduce a payment scheme and mandatory negotiation as part of the proposed News Media Bargaining Code by using a pop-up across its search engine to warn consumers of the potentially detrimental consequences of the legislation.

The Australian Competition and Consumer Commission (ACCC)’s Digital Advertising services inquiry report into Australia’s $3.4 billion digital display advertising supply chain was released this week. It comes nearly 12 months after the ACCC’s Digital Platforms Branch was appointed by the Treasurer to hold a public inquiry into Australia’s adtech services and agency markets. Four main areas of focus have driven the adtech inquiry: Advertiser ad servers, demand-side platforms, supply-side platforms and publisher ad servers.

Two main themes are in the spotlight in the interim ACCC report, driven by industry feedback to date: Google’s dominant position and role in the supply chain, and concerns about the opacity of the supply chain itself.

The initial Digital Advertising services inquiry report highlights Google as the largest provider of all key adtech services investigated and noted it’s the only player to operate across the full supply chain as well as sell ad inventory, raising significant conflicts of interest. The ACCC estimated Google’s share of revenue of ads traded in Australia ranges from 50-60 per cent to between 90-100 per cent, depending on which of the four service areas is referenced.

In addition, the report notes a lack of transparency across the adtech supply chain and puts forward a number of recommendations in response.

In an initial response to the report’s release, a Google spokesperson said the digital advertising ecosystem remains a competitive market and the search engine giant was one of many operators in this space.  

“Adtech is a competitive market with low barriers to entry. There are many companies, large and small, working together and in competition with each other to power digital advertising across the Web, each with different specialties and technologies,” the statement read. “Google is just one of these many players, and we’ve made it easier for others to choose who they want to work with.

“Google has made significant efforts and investments in innovation and promotion of a healthy adtech ecosystem, and we always aim to do so in a way that balances the interests of users, advertisers and publishers.”   

On this list are creating privacy-enhanced measurement solutions, innovations in auction technology, and participating in industry initiatives, Google continued.

“Every day, Google’s ad technology helps businesses connect with customers and publishers reach new audiences, creating new growth and revenue opportunities for them,” the spokesperson continued. In 2018, Google paid out more than $14 billion dollars to the publishing partners in its ad network.

“We’ll continue to participate constructively in this process as the ACCC’s Ad Tech Inquiry continues.”    

Several immediate responses from the wider industry and news media to the ACCC’s adtech report reiterated Google’s dominant position in Australia’s digital ecosystem as a concern. In its preliminary statement for example, News Corp Australasia executive chairman, Michael Miller, highlighted Google’s significant commercial power.

“The ACCC's interim report shines a light on Google's pervasive commercial power that impacts the entire Australian economy not just the publishing industry,” Miller stated.

Free TV CEO, Bridget Fair, was pleased to see the ACCC recognising concerns the body has raised about inefficiencies and lack of choice in the adtech market. In particular, she highlighted the call since 2017 to ensure Google does not preference its own products and to improve transparency and fairness of auctions processes.

“We strongly support the ACCC’s proposed measures to allow advertisers and publishers to choose their own ad tech suppliers and to improve transparency measures.  This will deliver more competition into the market and importantly ensure that advertisers know where their money is going,” she said.

“With less money wasted in the system, more money will be available for Free TV broadcasters and other content creators to continue to invest in great local programming and trusted news.”  

Then there’s the questions of improving transparency of the supply chain. While the Interactive Advertising Bureau Australia (IAB) is still reviewing points raised in the report, its chief executive, Gai Le Roy, was pleased to see many of its industry driven education initiatives, tech standards and guidelines have been referenced as providing knowledge and transparency on how digital advertising trading operates.

“As pointed out in the ACCC Interim Report, there are challenges in being able to provide information on measurement, verification and attribution while the industry increasingly focuses on consumer privacy,” she told CMO. “The IAB locally and globally will continue to introduce new technical standards and processes to ensure that the digital advertising ecosystem works as efficiently and transparently as possible.”

Meanwhile, following last week’s senate inquiry into the ACCC’s proposed News Media Bargaining Code saw Google threaten to remove its search products from Australia if such an “unworkable” code was introduced, the company has created a pop-up at the top of its search engine to promote its views. The video link features a short video statement from Google A/NZ MD, Mel Silva, explaining the reasons for why the company sees the code as detrimental to Australia’s digital landscape and consumers.

The industry has until 26 February 2021 to provide responses to the ACCC on the interim Ad Tech Services inquiry report.

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