14 April 2021
4 min read
#Technology, Media & Communications, #Data & Privacy
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The ACCC’s Ad Tech Inquiry
The Australian Competition and Consumer Commission (ACCC) has been tasked by the Government with conducting an 18 month inquiry into the ad tech services market to investigate the competitiveness and efficiency of the markets for the supply of digital advertising technology services and digital advertising agency services (Ad Tech Inquiry).
The final report from the Ad Tech Inquiry, due in August 2021, will make findings and recommendations in relation to the following key aspects of the competitiveness and efficiency of those markets, amongst others:
International guidance
The Ad Tech Inquiry interim report was issued in January 2021 and highlights the importance of transparency within the ad tech markets. The ACCC’s interim report draws heavily on the experience of the UK Competition and Markets Authority (CMA) in its Online Platforms and Digital Advertising Market Study which was published on 1 July 2020.
The CMA found that the lack of transparency within the ad tech market has the potential to create or exacerbate various competition problems. Dominant platforms, such as Google, can utilise the opacity of the market to reduce other publishers’ ability to demonstrate the effectiveness of their advertising and force advertisers to rely on information and metrics provided by those dominant platforms. Advertisers and publishers, who cannot independently verify the effectiveness of Google’s ad tech services, are ultimately unable to make informed choices about the services they use, perpetuating the market dominance of these platforms.[1] Following the release of that Market Study, the UK Government has established a Digital Markets Unit within the CMA and early indications are that the Unit has begun to develop codes of conduct for digital platforms.
The interim report also makes clear that the ACCC has been following the various litigation proceedings commenced in the United States, including two separate actions from 10 US States – led by the Texas Attorney-General – and 38 US States – led by Colorado – in relation to anti-competitive conduct alleged against Google.
The complaint filed by the Texas Attorney-General refers to marketing statements made by Google which liken its ad exchange to the New York Stock Exchange. However, while ad exchanges may, like stock exchanges, facilitate high volumes of transactions occurring rapidly in real-time, that is where the similarities end. Ad exchanges currently lack the transparency and well-defined rules that are fundamental to the effective and fair operation of a stock exchange.
Following release of the ACCC’s interim report, revelations arising from the Texas-led litigation have provided further indications that Google’s activities might not be fully transparent. Information about Google’s “Project Bernanke” – exposed publicly via unredacted documents filed recently with the Texas Court – shows that the digital platform has been using historical data about ad tech auctions to drive up advertisers’ bids.
What action might the ACCC take?
The interim report indicates that the ACCC is well aware of the various anti-competitive practices engaged in by dominant platforms within the ad tech industry which are likely, in part at least, to have been enabled by a lack of transparency. The question is whether the ACCC will ultimately decide it has sufficient information to challenge the likes of Google in relation to a breach of the existing Competition and Consumer Act 2010 (Cth), or whether the ACCC will recommend the introduction of new regulatory rules to improve transparency and otherwise facilitate competition within this market.
Proposals put forward in the ACCC’s interim report include the introduction of rules to manage dominant platforms’ conflicts of interest and self-preferencing behaviours as well as to enable the independent verification of advertising services.
Google’s analogy between the ad tech market and the stock exchange may offer an appropriate and reasonable model for the development of these rules. Regulation of stock market trading offers an appropriate structural model for the proposed regulation. The ACCC could be appointed as the “supervisor” of the ad tech market – in a similar way that ASIC is designated as the supervisor of financial markets. The ACCC would be well-placed to develop and enforce any rules introduced to promote transparency, competition and efficiency within the ad tech market.
For example, share trading is subject to a “best execution” obligation, requiring market participants to achieve the best outcome for their client and ensure their own interests do not interfere with those of their client. The implementation of an equivalent obligation for ad tech service providers could protect both advertisers and publishers.
Whatever the ACCC determines to recommend in its final report from the Ad Tech Inquiry, it is likely that it will be guided by international regulatory developments and litigation.
Authors: Angela Flannery & Clare Giugni
[1] As discussed on page 17 of the Market Study report available here.
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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