In an interim report on Digital Advertising Services in 2019-20 released on Thursday, the Australian Competition and Consumer Commission said it had looked at Google's industry-leading position and concerns about opacity in the pricing of ad tech and ad agency services among others.
The watchdog said it had been following overseas developments in this area, with a number of anti-trust suits having been filed against Google in the US.
It said most of the allegations and concerns raised with the ACCC and discussed in the 222-page interim report had been also present in the complaints made in the US.
The ACCC interim report focuses on competition in supplying four services: advertiser ad servers, demand-side platforms, supply-side platforms and publisher ad servers.
The ACCC report said dominated all four services, having up to 90% of impressions in the advertiser ad server space, up to 70% of revenue and up to 80% of impressions in the demand-side platforms, up to 60% of revenue and up to 70% of impressions in the supply-side platforms, and almost all of the impressions in the publisher ad server space.
The ACCC said the following four factors gave Google the edge in ad tech services:
- "enabling access to a larger group of advertisers and publishers, as well as better access to greater volume and particular types of ad inventory (which comes from Google’s presence across the supply chain as well as its ownership of key ad inventory such as Google Search and YouTube);
- "ad targeting capability, which is linked to the breadth and depth of the data available to Google as a result of its activities across consumer-facing and advertising markets;
- "ease of use and integration with Google's other services; and
- "the performance, quality and price of its services."
When it came to advertiser ad servers, Google held between 80% and 90 % share, the report said.
"Google’s high share of impressions suggests that the competitive constraints on Google are not substantial," the ACCC said. "There are number of potential barriers to entry and expansion in the supply of advertiser ad server services including the degree of single-homing, the magnitude of switching costs, and the degree of vertical integration.
"The ACCC is seeking further information on the extent to which these barriers may prevent competitive entry and expansion by smaller rivals."
Google's two demand-side platforms — Google Ads and Display & Video 360 — took between 60% and 70% of the revenue.
"Google’s large share of revenue (and impressions) appears to be underpinned by its access to significant ad targeting data, exclusive ad inventory and vertical integration in the ad tech stack," the report said.
"Information suggests that the incentive to single-home with a DSP provider is significant and may be a key barrier to entry and expansion. The ACCC is continuing to examine the role of data and vertical integration as a barrier to entry and expansion."
Google was also the biggest supplier of supply-side platforms, with the ACCC estimating that it took up to 60% of revenue in 2019. And in the case of publisher ad servers, Google Ad Manager held a share of impressions of between 90% and 100% in 2019.
The report said submissions made to the market regulator had alleged that Google had been allegedly engaging in conduct that had limited competition in ad tech services.
Three specific allegations were that Google restricted access to YouTube, channelled its own ad demand to its supply-side platform, and preferenced its own supply-side services.
The ACCC has called for submissions to the interim report to be made by 26 February. A final report will be issued on 31 August.