The Federal Government has directed the ACCC to examine Facebook and Google’s effect on media and advertising.

Between them Google and Facebook accounted for 76 per cent of internet ad spend outside China in 2016, according to the December 2017 edition Zenith’s Advertising Expenditure Forecasts, released today.

The ACCC’s inquiry will look at the effect that digital search engines, social media platforms and other digital content aggregation platforms are having on competition in media and advertising services markets.

“The ACCC goes into this inquiry with an open mind to and will study how digital platforms such as Facebook and Google operate to fully understand their influence in Australia,” ACCC Chairman Rod Sims said.

“We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers.”

The ACCC will also look at the long term effect of technological change on competition in media and advertising.

The inquiry will have compulsory information gathering powers and hold hearings to assess the level of competition in a market.

The consumer watchdog said it will be calling for public submissions soon. The ACCC is expected to produce a preliminary report early December 2018, with a final report due early June 2019.

In the meantime most of the growth in ad spend between 2017 and 2020 will be captured by just five big platforms – Google and Facebook, plus the Chinese platforms Baidu, Alibaba and Tencent.

According to Zenith’s Advertising Expenditure Forecasts the value of digital advertising will rise from US$203bn in 2017 to US$225bn in 2020.

In Australia, internet ad spend will capture 52.1 per cent of the market in 2017, ahead of the global average. By 2020, online ads will account for 60.3 per cent of total ad spend in Australia.

“Google and Facebook are the main benefactors of this growth and this is likely to continue to 2020,” said Zenith Australia CEO, Nickie Scriven.“Out-of-home continues to buck the trend and post year on year growth, buoyed by the digitisation of panels, inventory growth and investment in tech.”

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