He told the Australian Association of National Advertisers and a ThinkTV audience of marketing and television advertising executives in Sydney on Wednesday night that a company was allowed to be be big and exert substantial market power.
It has been estimated that more than two-thirds of every digital advertising dollar spent in Australia goes to either Google or Facebook.
Pricing of intermediary services, such as the cut of the amount paid by the advertiser for the ad impression, is being examined by the Australian Competition and Consumer Commission as it can often be quite opaque.
“It is important that we better understand the issues with the ad tech supply chain because a lack of transparency means that advertisers do not know what they are paying for, where their advertisements are being displayed, and to whom,” Sims said.
“Higher advertising prices ultimately translate to higher prices for consumers for products and services.”
He said Australian competition law did not prohibit a business from having substantial market power or using efficiencies or skills to go one better than its rivals.
"But the dominance held by Google and Facebook in certain markets, plus the incentives they face, does mean their conduct should be subject to particular scrutiny to identify whether it is creating competitive or consumer harm," he added.
Also under examination is whether advertisers can verify if ads they buy are actually shown to their target audience.
Both the AANA and Free TV have pointed out that Facebook and Google monitor advertisement delivery on their own platforms and keep score, despite being players themselves. TV broadcasters, on the other hand, are subject to third-party verification of their audiences.
The ACCC said both Google and Facebook had rejected claims that advertisements on their platforms were not verifiable. Both claim they have internal processes for this function and also allow third parties to check metrics on behalf of advertisers.
“We have not yet reached a view as to whether the existing arrangements on the major digital platforms are sufficient to address the issue. This is an issue we hope to achieve clarity on before our final report in June,” Sims said.
Each month, about 19 million Australians use Google, 17 million access Facebook, 17 million watch YouTube and 11 million use Instagram.
Said Sims: “With an audience of this size, digital platforms are a primary channel for businesses looking to reach Australian eyeballs and, more importantly, their wallets. This is why this inquiry is important for Australian advertisers, and we welcome feedback from everyone with an interest.”
A preliminary report on digital platforms was issued in December.