Google faces possible regulatory action in Australia over online advertising costs

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SYDNEY – Australia’s competition watchdog has expressed concern over Alphabet Inc.’s Google dominance in much of the online advertising industry and has said it is considering regulatory action against the giant of technology.

Google holds a dominant position in key parts of the advertising technology supply chain, the Australian Competition and Consumer Commission said in a roughly 200-page report released on Tuesday. He said he was looking into specific allegations against Google under Australian law, but Australia’s current competition rules are not sufficient to fully address the issue and new regulations should be developed to level the playing field. rules of the game.

“We are concerned that the lack of competition has likely led to higher ad technology fees,” said ACCC President Rod Sims. This is “likely to reduce the quality or quantity of online content and ultimately consumers pay more for the products advertised.”

Ad technology services are used in the buying and selling of digital signage ads, according to the regulator, and they involve the automated use of complex algorithms to exchange digital ads across websites and apps almost instantly. . Digital signage ads include images or videos that appear before or next to content viewed online, the regulator said.

The regulator’s report focused on open display channels, which are used by different website publishers to sell their ad inventory to many advertisers. These ads represented around 43% of the total amount spent on display advertising in Australia last year.

According to the ACCC report, another way of exchanging ads, called closed channels, involves publishers selling their ad inventory directly to advertisers using their own systems. Social media platforms, like Facebook Inc., use closed channels. Research and classifieds were also not the focus of the regulator’s report.

A Google spokesperson pointed to a new study from consulting firm PwC Australia which found that around three in four companies surveyed said they benefit from Google’s advertising services, especially in terms of cost savings, time saving and business growth. The study, commissioned by Google Australia, estimated that Google’s advertising technology directly supports more than 15,000 full-time equivalent jobs.

Google’s digital advertising technology services deliver benefits for businesses and consumers: they help publishers fund their content, enable small businesses to reach and grow their customers, and protect internet users from bad practices. advertising, “said Google spokesperson. “As one of the many ad technology providers in Australia, we will continue to work collaboratively with industry and regulators to support a healthy advertising ecosystem. “

Australia has taken an aggressive stance on regulating America’s tech giants, an approach that has been seen widely around the world as other countries consider similar measures. Earlier this year, Australian lawmakers passed a law requiring big tech companies, including Google and Facebook, to pay news publishers for content. At one point, Facebook removed news from its platform for Australian users.

And last year, the Australian government asked the competition regulator to conduct a five-year investigation into digital platforms at large, including search engines, social media services and digital advertising.

On Tuesday, the ACCC said it estimated that more than 90% of ad impressions exchanged through the ad technology supply chain passed through at least one Google service in 2020. It said Google can act on behalf of of both the advertiser and the publisher and operate. the exchange of announcements linking the two parties, creating a conflict of interest.

Several Google acquisitions, including DoubleClick in 2007, AdMob in 2009 and YouTube in 2006, have helped solidify its dominant position in advertising technology, ACCC said.

The ACCC has also stated that Google has access to a great deal of data collected through its Search, Maps and YouTube products, and that the extent to which Google uses its first-party data to leverage its ad technology business is not. Claire. The ACCC also found that the pricing and operation of ad technology services lacked transparency.

Google has previously said that its ad technology products currently use extremely limited data from individual consumers of its user-facing services, when bidding on or targeting ads on third-party websites.

Write to Mike Cherney at [email protected]

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