Key Takeaways From Congress’ Digital Competition Report

Key Takeaways From Congress' Digital Competition Report

After months of speculation and several dramatic public hearings, a damn report by the Cartel Subcommittee of the House Judiciary Committee on Thursday is making many ponder the future of the online advertising industry.

The report gathered evidence from Amazon, Apple, Facebook, and Google, and each of the platforms was in turn viewed as a “gatekeeper over a major sales channel” by which they maintain their dominance.

“Not only do they have tremendous power, they abuse it by collecting exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and companies who rely on them,” the report said.

On 449 pages, “Investigation of Competition in Digital Markets” is of great scope and forensic research depth. Several sources contacted by Adweek said they consulted the report.

Among the recommendations of the report, the legislature proposed investigating the platforms’ companies in order to further combat anti-competitive behavior, renew efforts to duplicate mergers and monopolies and restore oversight of antitrust laws.

Below is a breakdown of the recommendations in the report and the industry sources from which the likely outcome is expected.

Structural separations

David C. Dinielli, an antitrust expert with the Omidyar Network, told Adweek that it is still unclear how the antitrust authorities will proceed and that it is likely that the relevant authorities will “marinate” on the disclosures for some time.

“With regard to Google, there is almost a consensus that it is for a single digital advertising company – worth billions of dollars – that controls how local news agencies get their funding and how advertisers do it contact with consumers can be controlled by a single unit. “

Implement a rule to avoid self-preference

Several sources approached by Adweek felt a forced divestment by either of the platforms was unlikely, although some believe that Google may want to ditch several of its ad tech resources like the ad server.

Others believe that it is more likely that players like Google will voluntarily offer to lift the lid of their ad stack (slightly) and assure (better) that some aspect of their ad stack, such as their DSP, is not preferring to deliver their own ad.

Wayne Blodwell, CEO of The Programmatic Advisory, said, “Not that much is going to change in the short term, but if you look at the scope of the report, this could well be the report that is changing ad tech technology and opening the market up a lot more companies. “

Promote interoperability

The report recommended that any of the platforms or walled gardens be opened to competition for their online advertising by promoting interoperability.

For example, Google, owned by third-party Google DSPs, does not allow buying ad inventory on the video sharing network, among other restrictions on its platform. Several Adweek sources indicated that the move caused several video ad tech companies to exit the business, essentially through “surrender sales” to larger parties.

Strengthening state control

“It is unclear whether the antitrust authorities are currently in a position to block anti-competitive mergers in digital markets,” said the report, in which Congress was also recommended to change the assumptions for future acquisitions by the dominant platforms. This would mean that any proposed merger of large players in the market would be considered “anti-competitive” unless the parties can demonstrate otherwise.

Whether the recommendations will be taken up or not remains unclear, but a source speaking with Adweek in the background because of their employer’s PR policies said that a forced separation of such actors was necessary.

Continue reading