Online advertising spend as has exploded since the very first banner ad appeared almost 25 years ago. But in recent years much of that growth has flowed into the pockets of two players: Google and Facebook.

The ACCC’s 600-page Digital Platform Inquiry report paints a picture of a market dominated by two players, while new and legacy media organisations fight over the leftovers.

The watchdog has pulled together new estimates of the size and dominance of the duopoly, as well as scale of disruption experienced by local print media over the last two decades.

It has also examined the consequences of the current online news dynamics, including the intensification of the filter bubble effect and the evaporation of regional news organisations around the country.

The report highlighted there is a substantial disconnect between how consumers think their data should be treated and how it is actually treated.

Where Australians are spending time online (Page 6) 

The amount of time Australians spend on Google or Facebook platforms dwarfs the amount of time spent on other web sites or apps.

In terms of audience size:

  • 19.2 million Australians use Google Search;
  • 17.3 million Australians access Facebook;
  • 17.6 million Australians watch YouTube (owned by Google);
  • 11.2 million Australians access Instagram (owned by Facebook).
Source: ACCC Digital Platform Inquiry

Australian advertising expenditure by media format and digital platform (Page 18) 

Dollars follow attention. And Google and Facebook have effectively monetised their massive audiences.

Over the past decade, a strong fall in the print advertising revenue of commercial Australian media publishers has been accompanied by a rise in spending on online advertising. Within the digital advertising segment, Google and Facebook have collected a significant portion of the ad dollars from 2014-2018.

Source: ACCC Digital Platform Inquiry

Breakdown of $A100 spent by an advertiser in online advertising (excluding classifieds) (page 122)

The ACCC looked at how much money the rest of the advertising ecosystem is fighting over once Google and Facebook take their share.

Based on information provided to the inquiry, the ACCC estimates that for a typical $A100 spent by advertisers on online advertising (excluding classifieds):

  • ƒ $47 goes to Google (some of which is for the provision of adtech services);ƒ
  •  $24 goes to Facebook;
  • ƒ $29 goes to all other web sites and adtech.

The ACCC estimates that over the past three years, Google and Facebook have captured more than 80 per cent of all growth in online advertising.

Source: ACCC Digital Platform Inquiry

Annual ad revenue per user for Google Search and Facebook (Page 50)

Google makes about $116 from showing you ads while searching, and you’re worth about $73 to Facebook.

Figure 1.4 below plots the average Australian advertising revenue per monthly active user (ARPU) for Facebook and Google, using the advertising revenue figures and monthly active users for each digital platform.

Source: ACCC Digital Platform Inquiry

Google dominates search (page 65)

The search market is mature in Australia, and Google has been the dominant provider for the past decade, enjoying a market share of between 93 and 95 per cent since 2009. Microsoft-owned Bing is the only other supplier with a market share of more than one per cent. Other players include Yahoo and DuckDuckGo.

Source: ACCC Digital Platform Inquiry

Facebook’s role in display advertising (page 98)

In 2018, Facebook and Instagram accounted for 51 per cent of the display advertising market in Australia, according to the ACCC. The rest of the market is highly fragmented, with the ACCC estimating no other publisher has a market share of more than five per cent (including, for example, YouTube and Snapchat).

Source: ACCC Digital Platform Inquiry

Online tracking by Google and Facebook (page 86)

Google and Facebook have enriched their audience segmenting and advertising capabilities by collecting vast amounts of consumer data both on and off their platforms.

A paper published by Princeton University that analysed online tracking on the top one million web sites shows the breadth of Google and Facebook’s data collection network.

Figure 2.6 shows more than 70 per cent of those web sites had a Google tracker, and over 20 per cent of web sites had a Facebook tracker.

The report states, “Even though a large number of trackers are present across the top one million web sites, it is clear that Google, in particular, and also Facebook have trackers on significantly more web sites than other firms using third-party trackers to collect data. That is, Google and Facebook are collecting considerably more data from third-party web sites than other businesses.”

Source: ACCC Digital Platform Inquiry

Consumer attitudes to tracking (page 390)

In general people don’t want to be tracked online, especially if they aren’t signed in.

According to an ACCC consumer survey, 82 per cent of digital platforms’ users considered that tracking of online behaviour such as browsing history, viewing habits, or search history when they are not logged into an account to be a misuse of personal information. Figure 7.6 shows the ACCC consumer survey results on what consumers perceive to be a misuse of personal information when they are not signed in to a digital platform.

Research conducted by Which-50 and Pure Profile earlier this year reinforces this finding. When consumers were asked about the very common practice of tracking their browsing activity on other sites and then using the data to target them, 70 per cent said this was unacceptable.

Source: ACCC Digital Platform Inquiry

Geographic coverage and closure of regional and community publications 2008–2018 (page 322)

The destruction of the print industry’s business model has been felt in regional Australia. Figure 6.26 shows 106 local and regional newspapers closed across Australia between 2008 and 2018. This leaves 21 local government areas without coverage from a single local newspaper, in either print or online formats.

The industry is yet to find a way to reverse this decline. According to the report, “the trend of local and regional publication closures is expected to continue, and it has been indicated to the ACCC that more local and regional publications are earmarked to either reduce frequency of circulation or close entirely in 2019.”

Source: ACCC Digital Platform Inquiry

The filter bubble effect (page 348)

The report also examined how the ‘filter bubble effect’ impacts news consumption. The graph below illustrates a 2017 study tweets expressing moral outrage tend to be widely shared within their political spheres. Figure 6.27 visualises the study’s findings and shows the ideology underlying each tweet and the network of its retweets.

“While issues around plurality of news are not new or confined to journalism accessed through digital platforms, the ACCC’s view is that these risks are potentially magnified online. The ACCC considers that consumers accessing news via digital platforms may be at risk of greater exposure to  filter bubbles. However, the nature and extent of any harm in Australia is not yet clear,” the report states.

The ACCC recommended a wait and see approach, arguing the issues do not yet warrant any government action. However recommendations 14 and 15 of the report, which cover monitoring of credibility signalling and responses to complaints about disinformation, will provide mechanisms for the government to gather evidence on the nature and extent of harm caused by filter bubbles in Australia.

The full ACCC report is available to download here.

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