Google could face even more regulations in Australia after a damning interim report by the country’s competition watchdog.
The report by the Australian Competition and Consumer Commission (ACCC) found the trillion-dollar company dominated digital advertising in Australia, and would be investigated over allegations it had abused its market power.
The findings come less than a week after Google threatened to withdraw its search engine from Australian users in protest against proposed laws that would force it to pay for the news it uses.
But the report was welcomed by the Federal Government, with Treasurer Josh Frydenberg saying some Australian laws may need to be updated to “keep pace with the changes being driven by digital platforms”.
The ACCC launched an inquiry into digital advertising services in February last year following an 18-month investigation into the impact of the tech giants.
Its interim report revealed Google dominates multiple arms of the multibillion-dollar digital advertising industry in Australia, controlling more than 90 per cent of ad server services for publishers and more than 80 per cent for advertisers.
This market control had the potential to drive up the price of goods for local buyers, the ACCC warned.
“Effective competition in the ad tech industry is important for Australian consumers,” the report found.
“If advertisers pay too much for digital advertising, the costs will be passed on to consumers in the form of higher prices for goods and services.”
The report also noted that Google had “the ability and incentive to favour its own related businesses” in the digital advertising market, and the ACCC would investigate allegations it had done so.
“Many of the concerns raised by stakeholders such as alleged self-preferencing by Google have the potential to infringe the misuse of market power provision in the Competition and Consumer Act,” the watchdog noted.
“The ACCC has not yet reached a view on whether any of the conduct discussed in this report breaches the CCA but will continue to examine these issues during the Inquiry.”
Its proposals to address Google’s market dominance included new regulation for conflicts of interest in the market, an industry standard for verifying ad transactions, and changes to encourage competition.
Treasurer Josh Frydenberg said the report again proved that digital platforms had “fundamentally changed the way that media content is produced, distributed and consumed” in Australia.
“To that end, we need to ensure our regulatory frameworks keep pace with the changes being driven by digital platforms,” he said.
“While this is an interim report, the Government notes the ACCC’s concerns over competitiveness and the continued dominance of tech giants.”
Australia Institute’s Centre for Responsible Technology director Peter Lewis said the digital advertising market operated in a complex manner hidden from consumers.
“The scary thing is we have no idea on how any of this works because Google controls the entire process in secret,” Mr Lewis said.
“It is essential there are guardrails placed around how this technology operates and real transparency so the public can have trust in how their data is being used.”
Google faces further regulation in the News Media and Digital Platforms Mandatory Bargaining Code that is currently being scrutinised in the Senate. It is designed to force Google and Facebook to negotiate with Australian media outlets to pay for the news the companies use on their platforms.
But Google Australia managing director Mel Silva last week told Senators the company objected to it so much that “if this version of the code were to become law it would give us no real choice but to stop making Google search available in Australia”.
The ACCC is due to hand down a final report into digital ad services by August 31.