Google & Facebook Facing Regulatory Control, World First Following ACCC Probe
In a world first both Google and Facebook are facing heavy regulatory control in a move that could restrict their domination of the advertising and marketing industries in Australia the move comes following a 12 month investigation by the Australian Competition & Consumer Commission.
The secretive Google also faces having to part with information, with the new regulator armed with power to extract information and documents. It would investigate complaints, initiate investigations, and make referrals to other bodies to investigate.
The ACCC in a report to be published today has also warned that the digital platforms — which are reaping 80 per cent of the growth in the $8 billion digital advertising market and that could already be engaging in “discriminatory conduct”.
The new regulator will have control over advertising “and related business oversight” — which some say is broad enough to cover Google Search, Google News and their links back to advertising they have sold to Australian Companies.
Observers claim that the high-powered watchdog with investigative authority could quickly rein in the immense influence of both Google and Facebook with the two US organisations set to protest any form of regulatory control.
The report identifies serious concerns about social media giants’ willingness to crack down on ad fraud and their use of algorithms to determine what content and advertising users see.
While the regulator will have little control over the algorithms, they will have control on how they are used in the future. There is also the possibility of a separate regulator to monitor the pricing of intermediary services for online advertisers, as well as an ombudsman to deal with complaints.
Several organisations who submitted presentations to the ACCC claim that both Google and Facebook favoured their own business interests above those of advertisers and other websites,”.
The ACCC also found that advertisers were “unable to verify for themselves whether advertisements on Google and Facebook were actually delivered to their targeted audience and had a limited ability to negotiate on price with the tech giants.
The report reveals that the ACCC is looking at whether an ombudsman could have a role in addressing concerns about advertisements containing false representations, such as fake claims involving celebrities.
“Google and Facebook could do more to address this issue,” the ACCC says in its report.
For every $100 spent by advertisers in Australia, $47 goes to Google, while $21 goes to Facebook. The $US700bn company Alphabet owns Google, along with YouTube, Gmail and Google Play, while Facebook, a $US395bn company, also owns WhatsApp and Instagram.
The government, in a joint release from Treasurer Josh Frydenberg, Attorney-General Christian Porter and Communications Minister Mitch Fifield, said the preliminary report highlighted several important issues related to news media and advertisers, including market power and potential regulatory adjustments.
The Australian newspaper claims the report highlighted the significant change digital platforms had on advertising spending. It outlined that the spending on digital advertising had increased from less than $1bn in 2005 to almost $8bn in 2017. Over that same period, spending on print advertising had fallen from $5.7bn to $1.9bn. Digital advertising, as a share of all advertising, rose from 1 per cent in 2003 to 50 per cent in 2017, while print fell from more than 50 per cent to 12 per cent.
“The rise in digital advertising has been accompanied by the rise of Google and Facebook as the two largest suppliers of online advertising opportunities,” the ACCC says.
Both Google and Facebook have rejected claims their advertisements are not verifiable.