Facebook says ACCC's ad tech probe makes a number of incorrect assumptions

Social media giant said the watchdog has misconstrued Facebook's position and that its overall inquiry requires much more consideration, analysis, and stakeholder engagement.

Facebook has asked Australia's competition watchdog to go back to the drawing board with its probe into the local advertising tech (ad tech) space, saying some of its proposals would have a significant impact far beyond the intended focus of its inquiry.

"Digital services, including those that generate revenue through personalised advertising (such as Facebook's), create substantial benefits for Australian businesses and consumers," it said in a submission [PDF] to the Australian Competition & Consumer Commission (ACCC).

"Consequently, Facebook considers the ACCC should undertake detailed further consideration, analysis and stakeholder engagement is required to assist the ACCC in assessing the potential broad impact of its proposals and to ensure that those proposals do not stifle innovation, hinder competition, harm businesses and consumers, or otherwise have unintended consequences across the advertising ecosystem."

The ACCC is currently focusing its efforts, again, on Google, saying it's concerned with "Google's industry-leading position".

Facebook is off the hook for now as the ACCC said, despite submissions to the contrary, unlike Google, Facebook does not sell its own ad inventory in the "open display market" or through the ad tech supply chain. Instead, Facebook uses its own closed systems to sell inventory directly to advertisers.

"[The interim report] makes conclusions about Facebook's use of data and transparency for advertising which are incorrectly conflated with the analysis by the interim report of Google's leading position in the supply of ad tech services," Facebook said.

"The interim report misconstrues Facebook's position in relation to access to data without undertaking proper inquiry or consultation."

The ACCC formed the preliminary view that "the inability of smaller rivals to access the necessary types and volumes of data to compete effectively with Google and Facebook is likely to raise barriers to entry or expansion".

"In light of Facebook's very limited role in ad tech services (as recognised by the ACCC), it is not appropriate for the ACCC to draw conclusions on the role of data in Facebook's wider business (in ad tech or more generally) by reference to an assessment of how players in the ad tech supply chain access and use data," Facebook said.

"In fact, the ACCC's wide-ranging conclusions are simply not supported by the more narrowly focussed evidence and analysis in the interim report and have been reached without proper inquiry or consultation on that wider scope."

In line with data protection regulations such as Europe's GDPR, Facebook considers that data portability should be user-initiated and the ACCC should accordingly focus on user-initiated data portability proposals.

"Further, the interim report does not provide evidence to support the notion that advertiser-initiated or publisher-initiated data portability is in fact necessary or desirable," it added.

Facebook said its access to data has not prevented or inhibited new entry and growth by rivals in the advertising sector.

Facebook argues that it operates in a "highly competitive and dynamic advertising landscape".

"A number of companies are well-established in the online advertising space, including Google, Amazon, and Twitter. There are also many new entrants that have expanded rapidly, including Snap whose revenue from digital advertising has been increasing significantly, and TikTok … the barriers for further new entrants are not high," it claims.

"Facebook competes vigorously with offline advertising channels and a range of online services that offer search and/or display advertising services, all of which seek to capture user engagement and corresponding advertiser spend. While the Inquiry focuses on online display advertising, it is also necessary to consider the impact of any proposals on other online and offline advertising channels."

It considers the ACCC's work to date as a "starting point". It's asked the watchdog pay proper recognition to the highly competitive and dynamic nature of the advertising sector.

"The digital ecosystem is rapidly evolving and the debate on regulating digital services is a global one that stretches beyond competition and consumer law considerations," it said. In particular, the impact of the ACCC's proposals on users' privacy rights and expectations requires careful thought and consideration. Facebook urges the ACCC not to act unilaterally in developing regulatory proposals that cut across privacy and data protection expectations and regulations."

The social media giant also believes the ACCC should continue to monitor the impact of evolving web browser and mobile operating system changes; exercise caution to avoid undermining personalised advertising services; and not draw conclusions on the role of data or impose data-related proposals that have implications far beyond the ad tech stack.

Twitter, meanwhile, believes the ACCC's interim report raises a number of important issues affecting innovation, competition, and dynamism of markets for digital advertising services in Australia.

It therefore "encourages" the ACCC to resist over intervention that risks stifling innovation and competition to the detriment of advertisers, publishers, and consumers when it comes to contemplating new rules or enforcement activities in the ad tech supply chain.

Rather, it considers the ACCC's proposed interventions should be targeted only to those market participants whose dominant position in the supply chain "undermines competitive tension, creates or entrenches barriers to entry or expansion, or gives rise to consumer harm".

"Regulation should not be a one-size-fits-all approach," it wrote in its submission [PDF].

Pointing to proposed data portability requirements, Twitter said applying the rule to all firms regardless of their market position and power may inhibit new entrants and smaller market participants.

"Rules or requirements introduced to manage self-preferencing, conflicts of interest and/or interoperability should be directed and only applicable to firms which the ACCC considers to have a market dominance or power and that engage in problematic or anticompetitive conduct," it said.

"We caution that industry-wide interoperability requirements may harm competition by imposing significant design, implementation and compliance costs on smaller competitors, disincentivising new entrants or stifling the innovation that drives competing business models and services in digital markets."

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