Facebook is seeking to distance itself from Google in the ACCC’s current adtech probe, saying it has incorrectly been lumped in with its fellow online advertising giant by the regulator.

The tech giants do, however, share the same defence to the competition regulator’s ongoing inquiry: both argue the troves of user data they collect and use in advertising aren’t an anticompetitive advantage.

In its submission to the ACCC’s digital advertising services inquiry, Facebook argues its advertising services play only a “limited role” beyond its own walled gardens in the advertising technology market. 

Facebook does operate as an ad network outside its platforms for third-party publishers with its Facebook Audience Network. The service allows advertisers to extend campaigns beyond Facebook platforms and creates more demand for publishers, according to Facebook. 

But the company claims this service represents only a small number of the total ads it serves including its own platforms, and pales in comparison to the breadth of adtech services Google provides.

“… the vast majority of ads delivered using our advertising solutions are surfaced on our owned and operated platforms,” Facebook’s submission states, without a breakdown of the split. 

Facebook says the ACCC has mischaracterised its role in the inquiry’s initial  issues paper, stating, “To the extent that we have any role in the adtech stack, that role is limited to supplying third-party publishers with a source of demand for advertising inventory on their platforms.”

A substantial part of the submission is also allocated to highlighting Google’s dominance and vertical integration in the adtech marketplace, including colour-coded charts for Google adtech technology and a breakdown of its rival’s growing advertising revenues.

Data defence

The regulator’s inquiry includes an examination of “competition throughout the adtech supply chain and in the supply of ad agency services” as well as “the role and use of data in supplying these services”. 

Both Facebook and Google argue the huge amounts of data they collect on user behaviour does not necessarily give them an anticompetitive advantage and barriers to market entry are low.

While the regulator established in its Digital Platforms Inquiry that the two companies take more than half of every dollar spent on online advertising in Australia and have become “unavoidable trading partners”, Facebook insists it competes in a “highly competitive and dynamic environment”.

The social media giant argues user data is “non-rivalrous and readily available from a range of third-party providers as well as from users directly”. In its submission, Facebook cites research from Dr Catherine Tucker, an MIT economist retained by Facebook to address the ACCC’s previous Digital Platforms Inquiry.

According to Facebook, Tucker’s work shows “Data is neither rare nor the preserve of just a few digital platforms — it is non-rivalrous and readily available from a range of sources.”

Facebook argues data is readily available and access to it does not necessarily create market entry, growth or success. Rather, the social media giant says, it is its ability to analyse data to determine customer preferences that give it a competitive advantage.

Google employs a similar data defence in its submission to the ACCC, arguing that user information is useful but does not necessarily provide a competitive advantage, “much less an insurmountable advantage”.

Google also argues data is readily available from consumers themselves and third parties.

The Google submission states, “For example, they can turn to companies called data brokers, which aggregate and sell large volumes of consumer data, such as lists of names, online browsing history, purchase histories, or loyalty card data … the key to success in the online advertising world continues to be the development of the most innovative and insightful technologies, including technologies that attract users and technologies that help to unlock the value of user data.”

Written submissions for the inquiry have now closed, but the ACCC’s investigation will run until 31 August 2021, with an interim report expected by the end of this year.

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