Advertising giants face ACCC inquiry into market power


The Morrison government has kicked off a new inquiry into the conduct of digital giants such as Google and Facebook, as well as global advertising agencies, by directing the competition watchdog to probe ad technology services.

The inquiry will assess if the advertising supply chain is operating competitively and will aim to bring more transparency to the murky market.

As well as the big tech companies such as Google, Facebook and Twitter, the world's largest advertising agencies are expected to be probed by the Australian Competition and Consumer Commission's latest inquiry.

These include WPP Group, Omnicom Group, Publicis Groupe, Interpublic Group and Dentsu. They own several smaller advertising and media agencies in Australia, as well as creative and data agencies.

'Black box'

Businesses paying for advertising have raised concerns about rebates received by agencies in both the outdoor and television advertising sector.

The ACCC's digital platforms inquiry last year found problems for businesses using advertising via digital platforms are magnified by the "black box" nature of online advertising products and services.

"The automated or ‘programmatic’ advertising supply chain is particularly opaque," the ACCC's final report said.

"It can be difficult for advertisers to know where their advertising dollar goes and for websites and apps offering advertising opportunities to know the true value of their advertising inventory.

"Where problems do occur, they may be impossible for participants to detect."$zoom_0.184%2C$multiply_0.7214%2C$ratio_1.776846%2C$width_1059%2C$x_0%2C$y_0/t_crop_custom/e_sharpen:25%2Cq_42%2Cf_auto/0f22895fcd08f25f5f388b61518b6e7d99a6152a
Digital advertising technology faces a new probe. AP

The ACCC's original inquiry found that more than 98 per cent of online searches on mobile devices are with Google,  and that Facebook has about 17 million Australian users who spend on average half an hour each day on the social media platform.

Treasurer Josh Frydenberg said digital platforms had fundamentally changed the way that media content is produced, distributed and consumed.

"Given this incredible level of market concentration, it is critical that these companies continue to be closely monitored,” Mr Frydenberg said.

“The government recognises that there is a need for reform to better protect consumers, improve transparency, address power imbalances and ensure that substantial market power is not used to lessen competition in media and advertising services markets.”

Google vows to work with media

Google chief executive Sundar Pichai in September pledged to work with media companies to drive "sustainable growth" for journalism, arguing that government intervention and regulation were not required.

Google has opposed to the Australian competition regulator's proposal for a code of conduct to govern the tech giant's commercial dealings with media companies.

Mr Frydenberg has also given the ACCC an extra $26.9 million in funding to permanently and proactively investigate the conduct of digital platforms in Australia.

The new unit's first interim report is due by September 30 and it will thereafter report to the Treasurer every six months.

The ACCC will have compulsory information gathering powers to periodically and systematically collect data from the digital platforms.

In the United States in 2018, the Federal Bureau of Investigation, Google and other technology partners exposed a multi-million dollar digital ad fraud operation by other ad tech firms.