The ACCC's ad tech inquiry is another move in the global push to reign in Google. Like a big virtual octopus, Google's tentacles wind through a sea of digital markets. Advertising is just one of them.
The broader consequence of Google's global dominance is a reduction in choice for endusers, which can easily transpose into higher prices and lower quality products and services. That's exactly what competition laws are designed to avoid. The ACCC's interim report on its ad tech inquiry looks at how that's playing out in the digital advertising world.
The digital advertising supply chain: In rough terms there are (at least) four stages of the display advertising supply chain between the advertiser and the publisher.
- First there's an advertiser ad server. That stores the advertiser's campaign content and collects data about how an ad performs.
- Then there's a demand-side-platform. A DSP helps the advertiser buy advertising spots on publisher's websites. This happens automatically, or `programmatically' in the biz.
- Next comes the supply-side-platform. A SSP auctions off the ad space available on publishers' websites. DSPs bid in the auctions on behalf of the advertisers.
- Last up is the publisher ad server. It manages the ad space and collects data for the publisher, and makes the right ad show up in the right spot.
Why is the ACCC interested in digital advertising: Mostly, because Google. It operates a service with a dominant position in each of those four stages of the display ad supply chain. The ACCC's interim report says that Google's services get between 60% and 100% of display ad impressions, depending on the service. This can impact competition in a few ways.
- Google can preference its own services. The ability to integrate services vertically means it can leverage its strength right across those four stages of the supply chain and make it difficult for others to compete on any single level. It can also preference its other business interests. For example, advertisers can only get ads to appear on YouTube via Google's DSP.
- Google acts on both sides of the bargain. By operating a DSP and a SSP, Google effectively bargains with itself on behalf of both advertisers and publishers over the purchase of display ad space. This arguably places it in a conflicted position where it can't look after both parties' best interests.
There's more: There are also problems with opacity and pricing in the display ad supply chain. With all these extra suppliers taking their piece of the pie, it's difficult for advertisers to get a true sense of where their money is going. That makes it difficult to compare services and change supplier if they're not happy. And that's tied directly to the reduction of choice that we mentioned at the outset.
There's also opacity in the performance of the various suppliers, which has the same effect. Related to that is the (claimed) tension between data and privacy. Advertisers want more access to data to measure the performance of their suppliers and ads. Suppliers (mostly Google) say that they can't share more data out of concern for privacy.
What about ad agencies? Despite the buzz of outrage around ad agency rebates and transparency a couple of years ago, the ACCC wasn't too interested in this. They basically said it's up to advertisers to look after their own interests and hold agencies to account.
What's on the solutions table: The ACCC is looking for feedback on a few different ideas.
- It's proposing measures to increase data portability and interoperability. This is meant to make it easier for advertisers in particular to move between suppliers, but the rules could extend to individuals too.
- To limit Google's strength from vertical integration, the ACCC is considering rules to silo data between services. That would limit Google's ability to leverage power across different stages of the supply chain. But it could also reduce quality and efficiency of the services, so it's a tricky balance.
- There's talk of rules to manage conflicts of interest and restrict self-preferencing. Interesting idea; often these kinds of rules would be made via court orders follow a finding of misuse of market power. If adopted, this approach would reflect the federal government side-stepping misuse of market power laws.
- Finally there are proposals aimed at addressing opacity in the supply chain, making it easier to measure and compare ad tech suppliers' performance.
Politics, or law? Google's position in the ad tech industry raises some obvious competition law issues. There's an antitrust case running in the US already against Google about its ad tech businesses. So the output of the ACCC's ad tech inquiry seems like less of an obvious political play than say, the news code (don't get us started). But it's also fair to say that globally, governments are pretty darned worried about Google taking over the world. The stream of legal actions against Google is like death by a thousand cuts. Our government doesn't want to miss its turn with the knife.