Watchdog flags court action against Google

The ACCC interim report released on Thursday ­accuses Google of abusing its dominance of the $3.4bn sector.

The ACCC will deliver its final ­report by August 31. Picture: AFP

Competition watchdog chief Rod Sims has flagged potential court action against Google, as the country’s major media organisations backed the Australian Competition & Consumer Commission’s push to check the technology giant’s market power.

The ACCC released an interim report from its digital advertising services inquiry on Thursday, ­accusing Google of abusing its dominance of the $3.4bn sector, leading to a lack of competition and transparency.

Mr Sims ­later accused Google of “marking its own homework” because it controlled the entire ad supply chain, and said its dominance was harming Australian publishers and small businesses.

“When you talk to a wide range of publishers, it’s important as to how much money they get, and what content they can put online. So this is a key part of the health of the internet, that we have a well-functioning advertising technology market,” the ACCC chairman said.

“Media want to get a fair compensation for the ads they host as well, so it’s an important element of the health of the media.’’

Mr Sims said there was ­“potential for court action’’, and revealed he was also talking to US regulators, who late last year sued Google, alleging it had a dominant position in both search and advertising. He said Google’s dominant positions across search and advertising, as well as its growing number of acquisitions, amounted to a potential misuse of market power.

“Google dominates search, so they get an amazing amount of data,” he said. “And because people link to search, that enables Google to put more cookies on other people’s websites, and gives Google an amazing data advantage.’’

The ACCC intends not only to continue its focus on Google, with the prospect of further litigation, but will also seek additional regulatory tools to use in digital markets. Its interim report found Google enjoyed about 70 per cent of the total revenue from ad tech services in Australia, and recommended potential new laws to force more transparency and competition.

News executives praised the watchdog’s actions. “The ACCC’s interim report shines a light on Google’s pervasive commercial power that impacts the entire Australian economy not just the publishing industry,” said Michael Miller, executive chairman of News Corp Australasia, publisher of The Australian.

Free TV Australia chief executive Bridget Fair said Google’s power had led to a lack of choice in the ad market. “We strongly support the ACCC’s proposed measures to allow advertisers and publishers to choose their own ad tech suppliers and to improve transparency measures,” she said.

Display ads are banners and videos that are personalised to each individual user, and then follow the user around the internet. Google’s technology powers the real-time auctions in which the ads are sold, and the company controls virtually the entire ad supply chain.

The tech giant has been accused of preferencing its own products, without giving marketers transparency over where their budgets are spent.

Angela Flannery, data and privacy partner at national law firm Holding Redlich, said Google used its dominant market position to stifle innovation and the growth of Australia’s digital economy.

“It is unsurprising that the ACCC found that Google is the dominant provider of all key types of ad-tech services and that this in large part is attributable to the vast quantities of data that Google collects, even from Australians that don’t have Google accounts,“ Ms Flannery said.

“ … we should not lose sight of the fact that the ACCC ­already has significant powers to take ­action under the Competition and Consumer Act.’’

Ms Flannery added that the watchdog should also work closely with its international counterparts to find global solutions to the issues, including a break-up of Google if necessary.

A Google spokesman said the company acknowledged the ­report, and had engaged constructively with the ACCC to date.

“Google has made significant efforts and investments in innovation and promotion of a healthy ad tech ecosystem, and we always aim to do so in a way that balances the interests of users, advertisers, and publishers,’’ the spokesman said.

The ACCC will deliver its final ­report by August 31.