Australian report lays bare need to rein in Google
System behind digital ads is filled with layers of complexity that obscures its domination
The first thing you notice is just how incredibly complicated it all is. That slightly strange takeaway is what I was left thinking after reading a preliminary report by the Australian Competition and Consumer Commission about online advertising.
As obtuse and overwhelming as the ad tech industry is, it also important. It is the economic backbone of the modern web — how Google, Facebook and others make most of their billions, but also how online publishers, such as the Star, also generate revenue.
It’s also important because contained in that complexity is the truth that Google in particular has an enormously outsized presence in the online-ad business. That’s part of why the news industry has been decimated over the past couple of decades, as Google and others swallow up the lion’s share of advertising dollars — and potentially threatening journalism’s importance to democracy, too.
Ad tech is the name given to the set of technologies that enable the ads we all see online. You might think that if you see an ad for a truck on your favourite news site, it’s just the truck company paying the publication for the privilege of getting their message out. In truth, online ads are a mess of networks and technologies that include not just the tech that displays the ad, but the data collection that lets it be targeted to your tastes (or what you looked at last week), as well as sophisticated algorithms that decide when and where to show ads, and how much to charge for them.
For you to see an ad, what happens roughly goes like this. First there is the ad server, which manages the ad campaign itself — tracking where ads end up and how they are doing. Then there is the demand-side platform, which uses algorithms to decide where the ad goes — for example, that an ad for men’s shampoo would show up on a men’s health site. This is partly where all that data that tech companies collect on you comes in; if you’ve been searching for shampoo, then it knows to show that ad to you here. But then on top of this, there is also the supply-side platform, which actually run auctions for the sale of the space on a news website, so that they can bid for the best price on the behalf of the publisher. Finally, publisher ad servers manage the ads on a news site itself.
Phew! Is that all clear? Because that is the greatly simplified version. In reality, it has more layers and more intermediaries, and also often happens at the speed of light and in relative obscurity.
As the Australian report notes, that complexity is itself at least convenient for Google because it obscures that in each of those stages, the company often dominates. In demand- and supply-side platforms, Google owns anywhere between 60 and 80 per cent of the market in Australia; on publisher ad servers, between 90 and 100 per cent. The numbers for Canada are unlikely to be significantly different.
For people looking to advertise, it often makes more sense to stick with Google for the various layers because Google not only has more data on users, but keeping things all with one company is simpler and more efficient.
The problems this all creates are many. For one, Google’s trove of data comes from its many properties — the famous Google search, but also YouTube, Gmail and others that encompass billions of people around the world. That gives it an enormous leg up in information about what ads to serve, where to squeeze higher or lower prices, or how to streamline or adapt its business. The sheer scope of Google’s presence makes it both brilliantly efficient, but also ruthlessly dominant.
That position emerged in part from Google’s acquisition of DoubleClick advertising many years ago. But even now, it’s worth asking whether or not that kind of vertical integration isn’t just unfair, but damaging, and even a contravention of anti-monopoly laws.
How we respond to this situation is a question of what we think a fair society is — and also whether or not we want the news industry to survive. Google may be indispensable, but it is also a multiheaded hydra, with its fingers in altogether too many pots.
Put more simply: Google is too powerful. And its domination of the ad industry has had, as just one significant effect, a further strangling of a news industry already damaged by a whole range of factors from the overtaking of the classifieds business, the expansion of poor quality sources and misinformation, its own tardy response to the web, and the simple fact that there is far more competing for attention these days.
What we cannot let happen, however, is just how complicated the technology is obscure a simple fact: Google and other big tech firms control too much of the economic destiny of publishers. It’s time to rein them in.