Indian ad industry may be tardy in complaining against Google

Alphabet Inc’s gigantic digital platform Google is under attack in several countries for misusing its dominant position in the online advertising market with the latest salvo being fired by the European Union. The company’s ad tech practices are already under investigation in the UK and it’s been dragged to the courts in the US. Last week, Bloomberg reported that the European Commission has charged Google with abuse of its dominance over advertising technology to throttle competition and “only the mandatory divestment by Google of part of its services would address its competition concerns,” the report said quoting Margrethe Vestager, the EU's competition commissioner.

Cut to India where Google is the largest digital advertising platform, too, and made nearly Rs 25,000 crore in ad revenue in the financial year 2022. However, interestingly, so far, neither the advertisers nor the ad agencies have lodged a formal complaint against the platform which controls different aspects of the programmatic advertising business required to serve digital ads to a target audience. EU’s competition commissioner said that Google favoured its own ad exchange, controlled the ad tech supply chain and charged a higher fee for its service.

Sandeep Goyal, managing director, Rediffusion, said Google is a monopoly business in Search which is the starting point of most digital consumer journeys. “For the last 10 years it has coaxed clients to place bids with its own ad exchange over rivals during the automated ad bidding process which has allowed the exchange to charge higher fees from buyers and sellers. It has the advantage of being at the top of the funnel with Search, and the monopoly helps,” he said.

Shanu Jain, vice president, media and e-commerce at Dentsu Creative India, said Google’s practices are under close scrutiny in many countries because of the network it uses to advertise on different websites. “It doesn’t cater only to its own platform. So, your ads run not just on YouTube or Google Search but other network sites which also makes it most preferred option,” Jain said.

The company is currently actively promoting its platform DV 360 which allows an advertiser to reach his target customer on different digital platforms, say, a YouTube, SonyLIV or a Times of India, without having to deal with them and advertising on them individually, Jain explained. “Google is pushing advertisers to use this platform for better efficiencies. It charges a 7-8% fee if I buy media via their programmatic tool,” he said.

Vivek Das CEO, FoxyMoron sees Google as one of the top ad platforms in the world and said there is a significant ‘dependence’ on them across publishers, advertisers and consumers.

“Dominant players command a steep margin -- that’s a universal fact across categories. I am not sure we can generalize it all as abuse of power. Given Google’s dominant position as a supplier (mediator) of ad inventory, scale is the biggest factor at play here. In all media, large operations offer economies of scale. They may appear to control inventory and pricing to a great degree even if without that intention. It remains a grey area,” he said. Storyboard18 reached out to Google and is awaiting response from the company on its ad tech practices.

Despite Google’s control over the digital ad business, executives do not see the industry filing a complaint against the tech company in a hurry. They have a significant dependence on Google, Das said. The Advertising Agencies Association of India (AAAI), the not-for-profit trade body of the ad industry, doesn’t get involved in such issues, said Goyal. AAAI president Prasanth Kumar was unavailable for comment.

Incidentally, in October 2022, the Competition Commission of India (CCI) had fined Google upwards of Rs 1,300 crore for abusing its dominant position in relation to android mobile devices. It said its practices were harming businesses of smartphone makers, competing app creators and users. Meanwhile, even the newspaper owners and digital news publishers had approached CCI with the complaint against Google’s unfair revenue sharing terms with respect to news content. The matter is still pending with CCI though several large newspapers have struck individual revenue share deals with the platform.

Clearly, ad spends on Google are unlikely to dwindle in the country. “It will continue to corner a big chunk of ad spends,” Dentsu’s Jain said, especially since it appears to be building new products. “They have been building tools to achieve all objectives of visibility, building viewability…everything. Earlier it was Facebook which built reach. Now it is YouTube and Google Network,” said Jain. Today, YouTube takes away 70-80% of a brand’s digital advertising budgets, he said adding that there is no alternative to Google Search and even the smallest of brands advertises on that.

However, Foxymoron’s Das said there is hope if rival platforms also start scaling. “There have been other dominant players, especially in social media, who have been tackled much better and that was thanks to the rise of competition which started to level the playing field.” Das said. Jain said Amazon was building its own platform which could work well for advertisers as Amazon really knows what are the customers looking to purchase.

Rediffusion’s Goyal believes that building an alternative to Google is possible --- “quite like what the Government of India has done with ONDC in e-commerce but it requires their commitment and it may also have a downside in terms of controls and interference,” he said.

Das said policy makers must weigh public sentiment in the context of economics and the future of commerce. “Technology is fast becoming the new oil, and the new ‘nuclear power.’ I believe that the entire tech industry around the Internet and AI is in serious need of a balanced regulation,” he said.