Google slammed for ‘harming consumers’ with market dominance in advertising technology

Google has been accused of harming consumers by pushing up the prices of goods due to its dominance in online advertising.

Australia’s competition regulator – the ACCC – on Tuesday released a report finding the tech giant was involved in ‘more than 90 per cent of ad impressions’ sold through advertising technology software known as ad tech.

Google’s dominance allows it to charge higher prices for the adverts and this in turn pushes up the cost of the products, the ACCC said.

‘We are concerned that the lack of competition has likely led to higher ad tech fees,’ said chairman Rod Sims.

‘An inefficient ad tech industry means higher costs for both publishers and advertisers, which is likely to reduce the quality or quantity of online content and ultimately results in consumers paying more for advertised goods.’

Ad tech analyses, manages, and delivers advertisements. Google, Facebook and Amazon are the best-known players in the $170billion industry. 

The report said Google has achieved dominance in ad tech partly due to its vast access to consumer data and its take-over of other companies including DoubleClick in 2007, AdMob in 2009, and YouTube in 2006. 

‘The report finds that Google has used its position to preference its own services and shield them from competition,’ the ACCC said. 

‘For example, Google prevents rival ad tech services from accessing ads on YouTube, providing its own ad tech services with an important advantage’.

The ACCC also raised concerns that Google’s dominance means it often provides services for advertisers and publishers at the same time, potentially causing a conflict of interest.

‘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,’ the report said.

‘As the interests of these parties do not align, this creates conflicts of interest for Google which can harm both advertisers and publishers.’

The ACCC also accused Google of being secretive with how it operates its technology.

‘Many of the concerns we identified in the ad tech supply chain are similar to concerns in other digital platform markets, such as online search, social media and app marketplaces. 

‘These markets are also dominated by one or two key providers, which benefit from vertical integration, leading to significant competition concerns. In many cases these are compounded by a lack of transparency,’ the report said. 

Mr Sims said he wants new rules to tackle Google’s market power and level the playing field for other companies.

‘New regulatory solutions are needed to address Google’s dominance and to restore competition to the ad tech sector for the benefit of businesses and consumers,’ he said. 

Google released a statement which did not directly address the concerns raised in the ACCC report.

‘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,’ it said. 

A Google source said its advertising fees are similar to industry averages and that if they were too high advertisers and publishers would go elsewhere. 

The source also said Google faces competition from ‘closed channels’ such as Facebook, Tik Tok and Twitter which sell their space directly to advertisers.

Closed channels make up 57 per cent of total display advertising spend, the ACCC said. 

The Australian Government said it would now consider the report’s findings. 

In April, Daily Mail sued Google in the US District Court in New York for allegedly building a dominant position in the ad tech industry illegally and forcing companies to use its services. 

Ad tech includes the software that publishers use to sell ad space and the marketplace, referred to as an exchange, where millions of ad slots are sold in auctions each day.

Google exploits its control of those ad tech tools by forcing publishers to use its own ad server, which it has tied to its own exchange, in a bid to stamp out competition from rival exchanges, the lawsuit alleges. 

According to the complaint, Google makes it difficult for publishers to compare prices among different exchanges, reduces the number of exchanges that can submit bids for ad space and even uses bids offered by rival exchanges to set its own bids. 

‘This lawsuit is to hold Google to account for their continued anti-competitive behavior including manipulation of ad auctions and news search results, bid rigging, algorithm bias and exploiting its market power to harm their advertising rivals,’ a Daily Mail spokesman said.

‘Despite increased criticism by regulators and governments around the world, Google’s ongoing behavior clearly shows they are not prepared to change their conduct.

‘DailyMail.com brings this antitrust action for compensation and for injunctive relief to restore competition in the monopolized markets and safeguard news content for readers. This includes, but isn’t limited to the elimination of forced tying of products, bid rigging and bias in news search results, while also providing transparency when they make changes to their algorithm.

‘DailyMail.com is a world leader in digital news and is taking this necessary action to address Google’s harm to publishers and to protect freedom of speech.’

According to the complaint, Google punishes publishers by allegedly manipulating search rankings if they do not sell enough advertising space through the tech company’s own exchange.

For example, keywords related to Daily Mail’s recent coverage of the UK royals and Piers Morgan, who is DailyMail.com’s editor at large, has not prominently shown up in Google search results.

Data shows that the Daily Mail’s visibility share on Google’s search results pages was just 1.65 percent for search terms ‘Harry and Meghan’ between March 1 to March 11 compared to the BBC’s 16.62 percent.

Daily Mail’s share for the keywords ‘Piers Morgan’ accounted for 1.57 percent of visibility share on Google. Meanwhile, the Independent and the Guardian had 13.7 percent and 11.8 percent visibility in search.

The keyword ‘Prince Phillip’ had 1.34 percent visibility share on Google, compared to the BBC’s 17 percent.

Back in June 2019, Google allegedly punished Daily Mail over a three month period by causing it to disappear from its search results because the news publisher wasn’t selling as much ad inventory through the search giant’s exchange.

Despite Google’s assurances to Daily Mail there were no issues with the search algorithm, the lawsuit alleges the tech company regularly modifies the search results page and algorithm to favor certain publishers.

The lawsuit alleges that Daily Mail’s search traffic was ‘restored’ by Google ‘as quickly as it disappeared’ in September 2019 after being forced to sell twice as much inventory through Google’s exchange.

The federal lawsuit, which is seeking unspecified damages, is demanding Google discontinue its alleged misconduct and offer transparency into its search algorithm.

A Google spokesperson said the Mail’s claims in the lawsuit ‘are completely inaccurate’.

‘The use of our ad tech tools has no bearing on how a publisher’s website ranks in Google Search. More generally, we compete in a crowded and competitive ad tech space where publishers have and exercise multiple options,’ the spokesperson said.

‘The Daily Mail itself authorizes dozens of ad tech companies to sell and manage their ad space, including Amazon, Verizon and more. We will defend ourselves against these meritless claims.’

Google is facing similar allegations in a lawsuit filed by Texas and other US states in December. 

The nine states that joined Texas are Arkansas, Indiana, Kentucky, Missouri, Mississippi, South Dakota, North Dakota, Utah and Idaho. 

The suit was prompted by complaints by publishers and other businesses whose publications rely on advertising revenue to survive. 

‘Google repeatedly used its monopolistic power to control pricing (and) engage in market collusions to rig auctions in a tremendous violation of justice,’ Texas Attorney General Ken Paxton said at the time.  

He added that Google ‘eliminated its competition and crowned itself the king of online advertising’.

‘If the free market was a baseball game, Google positioned itself as the pitcher, the batter and the umpire,’ Paxton said.           

Australia showed a willingness to take Google head on when it passed world-first laws to make tech firms pay for news in February. 

The bargaining code forces Google and Facebook – which dominate online advertising – to pay media companies for the news content they host or face ‘final offer arbitration’ if a deal cannot be reached.

Initially, Google threatened to pull its search engine from Australia altogether – but backed down and began doing deals with media outlets.