What you need to know:

• The ACCC's digital platforms report has been published, with the regulator seeking sweeping new powers to curb Google's virtual monopoly of Australia's digital ad market.
• Google has used its position to preference its own services and shield them from competition, per the ACCC. 
• It is investigating further Google's alleged use of vast first party data within ad tech services for potential breach of the Competition and Consumer Act 2010.
• But it said even powers under the CCA will not be sufficient. "Significant regulatory reform" is required.

Australia’s consumer and competition regulator says Google’s monopoly of the digital ad supply chain is causing significant harms – and it is seeking new powers from government to bring the tech giant to heel.

The ACCC said Google’s dominance of both demand and supply side of digital ad infrastructure effectively kills competition while its vertical integration means Google can self-preference its other services while hoovering far more personal data than any other player, fuelling further advantages over all other ad tech firms.

Google insists it does not use that data in ad tech services, but the industry disagrees. The ACCC is taking no chances and said Google must come clean on how it uses that data with “clear public statements” made available for the ad industry and consumers alike. The regulator also flagged concerns that Google's move to kill third party cookies – which underpin the business models of most ad tech service providers – will further entrench its first party data advantage with Google's alternative 'privacy sandbox' proposal opening the door to further competitive distortion.

It is still investigating the self-preferencing allegations, which if proven would breach the Competition and Consumer Act 2010. But it said even punitive measures under CCA powers are insufficient, with "substantial regulatory reform" required.

"The ACCC should have powers to develop rules to manage conflicts of interest, prevent anti-competitive self-preferencing, ensure rivals can compete on their merits by having nondiscriminatory access to certain services, and address transparency concerns," per the report.

It also seeks powers to stop Google – and any other firms – from using data collected from other services, such as Android phones, smart speakers, payment services, Gmail or maps – to advantage its advertising business. Or to to force Google to open up those data sources to other parties.

Meanwhile the ACCC said lack of transparency over ad tech fees – the amount ad tech services take from every ad dollar en route to the publisher – is an industry-wide problem, with potential for Google and others to retain "hidden" fees. It effectively wants industry to publish rate cards, or face enforcement action.

The regulator also seems keen to pursue a common transaction ID – which would allow advertisers to follow an ad impression through the supply chain – as a measure to improve transparency. It thinks it could be done in a way that protects privacy. It has gone cold on the idea of a common user ID for privacy reasons.

Ad agencies in the clear

Media agencies appear to be given the green light. While the regulator flagged concerns over the transparency of media buying services, and said advertisers were better off taking an itemised model  (where fees are listed) rather than opting in to non-disclosed models (where advertisers pay a set fee and do not necessarily see where their ads run or the rates paid for those ads) it has decided not to take any further action, given the market is competitive.

"Overall, we consider that an itemised commission model is likely to better guarantee that fees will be transparent. A fixed price model can also be transparent if there is sufficient disclosure, but this may not be the case across agencies and for all advertisers. Therefore, we consider that, for at least some agencies, pricing transparency could be improved," stated the report.

"Given advertisers are able to take a range of actions to reduce the risks from potential conflicts of interest in agency relationships, the development of these industry led frameworks and checklists, and the competitiveness of the ad agency industry in Australia, we do not consider government intervention is currently required to respond to transparency and conflict of interest issues relating to ad agency conduct."

Regulators prepare to bite

The competition watchdog's long-awaited digital advertising services report and subsequent actions could ultimately provide a template for other governments. Rod Sims was last week appointed to a senior global network of networks aiming to rein-in big tech's dominance of digital supply chains. Likewise, the ACCC said it would align with other global regulators, such as the UK's Competition & Markets Authority.

“Google has used its vertically integrated position to operate its ad tech services in a way that has, over time, led to a less competitive ad tech industry. This conduct has helped Google to establish and entrench its dominant position in the ad tech supply chain,” Rod Sims, ACCC Chair, said.

“Google’s activities across the supply chain also mean that, in a single transaction, Google can act on behalf of both the advertiser (the buyer) and the publisher (the seller) and operate the ad exchange connecting these two parties. As the interests of these parties do not align, this creates conflicts of interest for Google which can harm both advertisers and publishers.”

The 200-page report estimates more than 90 per cent of ad impressions traded in 2020 passed through at least one Google service.

Sims said the ACCC had identified “systemic competition concerns” relating to multiple ad tech services but current laws are not equipped to deal with them.

“Investigation and enforcement proceedings under general competition laws are not well suited to deal with these sorts of broad concerns, and can take too long if anti-competitive harm is to be prevented,” Sims said.

Even after a multi-year process, the ACCC says it is unclear how much Google uses its first-party data to advantage its ad tech businesses. Meanwhile, he put the tech giant and the broader ad tech industry on notice over ticket clipping.

“If Google fails to provide sufficient information, or the industry’s voluntary standards do not achieve transparency, then new requirements should be able to be put in place to address this,” said Sims.

Google's response

The ACCC's report takes aim squarely at Google, which responded: 

“Google’s digital advertising technology services are delivering benefits for businesses and consumers – helping publishers fund their content, enabling small businesses to reach customers and grow, and protecting people online from bad ad practices," a spokesman said. 

"Analysis by PwC Australia for Google Australia found that three quarters of Google’s ad tech customers are Australian small and medium businesses – and three in four businesses surveyed observed important benefits from using Google’s services including cost savings, time savings and business growth, compared to other services. PwC also estimated that the existence and use of Google’s advertising technology directly supports more than 15,000 full-time equivalent jobs and contributes $2.45 billion to the Australian economy annually.

"As one of the many advertising technology providers in Australia, we will continue to work collaboratively with industry and regulators to support a healthy ads ecosystem.” 

While that response appears not to acknowledge the fundamental competitive issue at the heart of the report, the company says it will carefully review the ACCC's findings.