Australians have been warned Google holds a “remarkably dominant” position over the web, just days after the tech giant threatened to walk away from the Australian market.
The Australian Competition and Consumer Commission has released an interim report from its digital advertising inquiry, warning of a lack of “competition, choice and transparency” in advertising technology.
ACCC chair Rod Sims said Google wielded huge influence over the $3.4b ad tech industry, which he said had become increasingly important.
“Google is in a remarkably dominant position,” he told Sky News.
“It’s by far the largest player in each part of the supply chain. We’ve (also) got issues in relation to a lack of competition, partly because of Google’s dominance but also because of some of the things they do.”
The report found Google’s grip on the market was strengthened by its “unrivalled” data collection, which it prevented its rivals from accessing.
Ads on Google-owned YouTube were sold exclusively through Google’s own platforms, meaning advertisers were forced to use Google’s ad tech service to buy ad space.
The set-up has raised claims of a conflict of interest, with Mr Sims saying Google had an incentive to preference its own ad tech businesses.
“This is a market that doesn’t have much transparency at all,” he said.
“It’s often hard to know what price you’re paying, what service you’re actually getting, and how effective the ad is.
“So (it’s) a really important market (with) a lot of problems.”
A spokesperson for Google said the company had “engaged constructively” with the ACCC and said it had made significant investments to promote a “healthy ad tech ecosystem”.
It insisted it was just “one of many players” operating in the space.
“Every day, Google’s ad technology helps businesses connect with customers and publishers reach new audiences, creating new growth and revenue opportunities for them,” they said.
“Ad tech is a competitive market with low barriers to entry.
“There are many companies, large and small, working together and in competition with each other to power digital advertising across the web, each with different specialties and technologies.
“We’ve made it easier for others to choose who they want to work with.”
Google’s power was laid bare last week, when it threatened to remove its search function from Australian users over the federal government’s plan to force it to pay media outlets for news content.
Google Search accounted for 95 per cent of searches in Australia.
But Google told a senate inquiry the regulation would make the function unviable, despite paying just $59m in corporate tax while reporting over $4b in revenue.
Mr Sims said the threat was not unexpected but claimed it may prove to be nothing more than “brinkmanship”.
“It’s a code they don’t want, so they have to play all the cards they can,” he said.
“I’m not surprised they’ve threatened it, (but) whether they’ll do it or not I honestly don’t know.
“The issue is how much you can let your public policy be determined by companies or governments.”
He warned of “big implications” for Australia if Google carried out its threat, but said it could also be a “leg up” for its competitors.
“If it does happen, then I guess people have to look for other search engines. They do exist, so it’s a big call,” he said.
Facebook has also threatened to prevent Australians from accessing news content on the platform if the laws were passed.
But Prime Minister Scott Morrison said on Friday the government would not be intimidated by threats from tech giants.
The ACCC provided its preliminary report to the Treasurer in December and will deliver its final report by the end of August.
The senate inquiry resumes on Monday.