What you need to know:

• The news media bargaining code is just the first round of 15 ACCC market interventions.
• Even if platforms end up paying $200m a year to news providers, that cost could be dwarfed by what comes next as the ACCC aims to regulate the digital ad market, where Facebook and Google take 81% of revenue, some $8bn+.
• The next round – the digital advertising services inquiry – has Google in its sights, because the platform dominates the ad ecosystem.
• It contains six key proposals designed to open up walled gardens and their data, and increase transparency from end to end.
• Industry execs think they could have huge implications.
• Regulators around the world are mulling similar interventions.

Attitude adjuster

The news bargaining code has, unsurprisingly, grabbed headlines. But it’s just the first of 15 rounds between big tech and the Australian government – and may end up being the least significant.

Round two is the digital advertising services inquiry, where the ACCC has dived deep into the digital supply chain, found it non-transparent and largely sewn-up by Google, and come up with six core proposals.

How these proposals are developed and implemented will have a fundamental impact on the way marketers, publishers, agencies and adtech companies go about their business.

All six proposals are interrelated. If successfully executed, they could potentially open-up walled gardens, shine a light on the digital supply chain’s darker recesses, create data marketplaces – and just maybe crack the attribution riddle.

They could ultimately help lay the foundations of a world where people are paid for their data and better understand its value, though that nirvana may prove a stretch.

There will also be a cost to unwinding data and tech monopolies. As ever, industry will likely foot the bill. The prize is an open, competitive digital market rather than one dominated by a single player. The ACCC has laid out the start of its roadmap, but getting there will be bumpy. 

The six proposals

Data and access to data lies at the heart of all the ACCC's intended remedies, which are as follows:

1. Measures to improve data portability.
2. Data separation mechanisms.
3. Rules to manage conflicts of interest and self-preferencing in the supply of adtech services.
4. The implementation of a voluntary industry standard to enable full independent verification of demand-side platforms.
5. The implementation of a common transaction ID.
6. The implementation of a common user ID to allow tracking of attribution activity.

Proposal one: Data portability and interoperability 

The ACCC wants both consumers and advertisers to be able to move their data around between platforms.

Such portability could knock down some of the biggest barriers in advertising, says UM’s Joshua Lowcock, enabling advertisers to use their datasets to buy within and across walled gardens.

Whereas currently, a total lack of portability entrenches the data advantage built by the big platforms, per Guardian Australia’s Dan Stinton.  Data portability could unlock “really substantial competition benefits”, he says. However, “you have to do this in concert with [the Attorney-General’s review of] privacy regulations, because it does raise significant risks of intrusion on consumer privacy rights.”

“Privacy by design” is increasingly critical for the ad industry’s future, says IAB’s Gai Le Roy. She says global work on ID systems is accelerating, driven by the looming third party cookie crunch.

If those IDs can be made to work across the piste while respecting privacy laws, suggests Le Roy, “then that’s great for the whole ecosystem”.

But that is why so much hinges on the Attorney-General’s review, and why Lowcock, Stinton and Le Roy urge lawmakers to ensure the ACCC’s digital platforms review does not conclude before the overhaul of Australia’s privacy laws.

“You don't want to put things in place that then will have to be untangled down the track,” warns Le Roy.

Data as a commodity?

If the ACCC can corral industry to unlock data portability in Australia and beyond, UM’s Lowcock sees “everyone benefitting”, with one key upside: Transparency on the value of data – and its price.

“A lot of people that consolidate data also operate media,” says Lowcock. Introducing pricing transparency about the value of media and data, he thinks, will create “a world where you are paying for data” with a price set by marketplaces.

Lowcock thinks the price of data is more likely to increase than decrease.

Proposal two: data separation mechanisms

The ACCC is looking at whether to ban companies from using data collected in one area to fuel other services. The regulator needs to be sure any data separation mechanism delivers more competition benefits than burdens for businesses – but it’s an approach that has government support in countries such as the UK.

Guardian Australia’s Dan Stinton told last week’s Mi3 podcast that Google should be banned from using data harvested from Gmail to power its ad business. But he says that other data aggregators should also be brought to heel, which would have implications for some significant players in Australia’s ad market, potentially those using some forms of shopper data.

“I don’t think consumers should have a reasonable expectation that their credit card data can be packaged off and sold for targeted advertising somewhere else,” says Stinton. “Most consumers would think that is an unreasonable use of their data. So I think there needs to be limitations around that.”

Pain for brands, platforms and other data aggregators?

OMG’s Kristiaan Kroon thinks the ACCC’s intention to stop data bundling could cause short-term pain for agencies and brands.

“From an advertiser’s perspective, if you're looking to limit the ability of a market leader to interconnect data, there's no benefit to that in the short-term because all you're doing is restricting what they're able to do in the marketplace

“It might create competition in the medium to long-term, but in the short-term… I’m not sure what an advertiser gains from this approach.” In effecting those rules, Kroon also questions to whom they may ultimately apply: “Where do you stop?” he asks.

Unwinding data stacks is no mean feat, says IAB CEO, Gai Le Roy. “Both the data separation and portability side of things are huge undertakings,” she says.

Le Roy agrees with Kroon that deciding where and how to apply those limitations could be key. 

“We need to make sure that any changes look at the broader landscape, because it is not just the platforms … there are commerce players going heavily into this space. We want to make sure that whatever we build suits those purposes, as well as today’s”.

Proposal three: rules to manage conflicts of interest and self-preferencing

Probably the most technical part of the interim report, the ACCC is attempting to get under the hood of the programmatic supply chain.

The regulator is taking a keen interest in vertical integration; how to curb conflicts of interest; and how to prevent the likes of Google favouring its own services within an ecosystem it largely controls.

The ACCC also looks set to introduce requirements to increase transparency across the entire programmatic supply chain.

Such a mandate “would probably be a big win for advertisers and a big challenge for a lot of the programmatic operators and key platforms that have, if you look at other regulatory markets, been called out for preferencing their own adtech stack,” says UM’s Joshua Lowcock.

While the ACCC has not found that Google is definitely self-preferencing, “what they found is that there is an incentive to do so,” says Guardian Australia’s Dan Stinton.

Stinton thinks Google’s dominance of the supply chain is a fundamental problem: “If there was a meaningful alternative to Google’s ad server, then I think we would see fairer value for publisher inventory, more dollars flowing through to the campaigns themselves and more effective ad campaigns as a result.”

Big tech break-up?

The ACCC has explicitly stated its concerns about Google’s vertical integration. Many within industry believe Google cannot help but self-preference when it is playing both sides of the market.

Either way, MFA’s Megan Brownlow thinks big tech monopolies may be looking down the barrel of a break-up – regardless of anything Australia’s lawmakers may attempt.

“There's already rumblings in the U.S. about anti-trust activities by businesses [that have become] too big. There is definitely precedent here; look at the primacy of sectors historically. You had big oil [in the early 20^th century] when Business Standard Oil got broken up into 34 businesses. Then in the eighties AT&T had primacy within telcos and they were broken up into half a dozen businesses. Then there were the attempts on IBM and then Microsoft,” says Brownlow.

“This is a very significant threat and so I think the natural inclination for self-preferencing, whether it's adtech stacks or any other part of your behemoth businesses, is under that threat. And now we've got a different administration in the US, I think we might see some more self-imposed controls in that area.”

Proposal four: A voluntary industry standard to enable full independent verification of DSP services

The ACCC is telling industry to come up with a way to enable an audit across the demand-side supply chain – and industry shouldn’t wait to be told twice, suggests UM’s Joshua Lowcock.

“I think this is the biggest carrot the ACCC has dropped,” he says. “Because they are saying, if you sort this out yourself, you might avoid some of the other headaches.”

Omnicom Media Group’s Kristiaan Kroon says industry “is already on that journey” in Australia, but must quickly arrive at its destination if sharper regulation is to be avoided.

“It’s not too big a jump to think that there might be a mandatory clause in there somewhere like there has been on other things the ACCC has done,” he suggests.

Proposal five: implementation of a common transaction ID

The regulator wants industry to create a privacy-compliant identifier that can be attached to each transaction and traced along the digital ad supply chain from end to end.

UM’s Joshua Lowcock believes a common transaction ID could be fundamental to much of what the ACCC wants to achieve more broadly.

“I think this is an enabler of transparency. It also feeds into concepts like the unified ID. So you can actually use data more portably, between different platforms and services,” he says. “It breaks down some of the siloed walls between buying in one environment and another.”

Lowcock sees a looming “arms race to build a solution in that area” and as such, says the ACCC needs to ensure one critical component.

“Right now, the word that is missing from the ACCC piece is ‘interoperable,” says Lowcock. “If those [disparate ID systems] are interoperable and can be used in an open marketplace, that would be the win.”

Guardian Australia’s Dan Stinton agrees. “If this is going to be successful, interoperability is key. We wouldn’t want this to become something which just ends up creating an oligopoly.”

Proposal six: a common user ID to allow tracking of attribution activity (but that is privacy compliant)

If industry can deliver a common user ID, they could solve a big part of the attribution puzzle – at least in theory.

“Attribution is very complex, even if you're looking at a single client,” says OMG’s Kristiaan Kroon.

“Who gets to be the arbiter of how attribution works? That could predetermine who becomes the biggest ad firm in the world, because it's all about attribution.”

Megan Brownlow agrees, “it sounds hard.” She thinks perhaps only the IAB could drive a solution, provided industry pays. “That’s the only way I could see it being enacted.”

Even if industry agrees to fund that solution, IAB CEO Gai Le Roy cautions attribution will likely always involve some guesswork.

“No matter what we try and do, we're not going to get to a point where attribution is perfect or probably even as good as we think it is today,” she says. “There is going to be modeling involved. We're going to have to be ready for that.”

UM’s Joshua Lowcock thinks industry can deliver a workable common user ID solution. “But it also requires solving for privacy,” he reiterates. “So we need to look at the [Attorney-General’s] Privacy Act review in tandem with the ACCC’s review.”

With the ACCC due to report in August, that may yet require a timetable adjustment.