Use Competition Bureau to end Google’s digital ad dominance, news publishers tell federal government

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News publishers in Canada are calling for the government to equip the Competition Bureau to take on Google’s dominance in the online advertising market, as across the border the United States Justice Department is looking to break up Google’s digital ad business.

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The Liberal government is consulting on updating Canada’s competition laws. In a submission, publishers’ group News Media Canada said the government should ensure the Competition Bureau has the necessary “resources, tools, and teeth.”

It recommended the government act “to prevent and prohibit companies from acting anti-competitively as both buyers and sellers in digital advertising markets.”

The Liberal government is in the process of passing legislation that would force Google and Facebook to share revenues with news publishers by requiring them to reach commercial deals. Postmedia, publisher of the National Post, is in favour of the legislation.

Bill C-18 takes aim at Big Tech companies who “make news content available to persons in Canada” — applying in cases where there is a significant bargaining power imbalance. That can be by reproducing news content or by facilitating access “by any means, including an index, aggregation or ranking of news content.” News stories show up in Google platforms like search and Google News, while Facebook users or outlets themselves post and share links to news stories, which can include headlines and snippets or summaries.

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The two companies have indicated they could respond to Bill C-18 by opting to no longer make news content available. Google has tested pulling news from its search results, and Meta has said it will remove news from Facebook and Instagram if the bill passes unchanged.

But the driving force behind the legislation is that news publishers and broadcasters can no longer rely on advertising revenue like they could in previous decades — in Canada, 80 per cent of digital advertising revenue now goes to Google and Facebook.

Both the U.S. Department of Justice case, and the news publishers’ consultation submission, argue for ending Google’s dominance in the ad-tech space.

“Advertising used to be negotiated by people. Today, it is auctioned through sophisticated fully automated digital trading exchanges in fractions of seconds,” News Media Canada told the government.

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The issue with that system is that one party — Google — has “come to dominate the technology that represents both the buyers and sellers, owns the dominant digital ad exchange, and has created unrivalled scale and impenetrable network effects,” it said.

News Media Canada said it hopes the Competition Bureau will soon issue an update on an ongoing investigation into Google’s conduct in relation to its online advertising business. The bureau is looking into whether Google has engaged in practices that harm competition in Canada’s online display advertising industry. On Wednesday, the union Unifor also called for an update on the investigation.

In the United States, the Department of Justice filed a civil antitrust suit against Google in January. This week, Google asked a judge to dismiss the case. The suit argues Google monopolizes advertising technologies that are used to buy and sell digital ads.

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“Google now controls the digital tool that nearly every major website publisher uses to sell ads on their websites (publisher ad server); it controls the dominant advertiser tool that helps millions of large and small advertisers buy ad inventory (advertiser ad network); and it controls the largest advertising exchange (ad exchange), a technology that runs real-time auctions to match buyers and sellers of online advertising,” the DOJ said in a release.

It argued Google has also engaged in anti-competitive conduct by acquiring competitors, forcing the adoption of its own tools, distorting auction competition and manipulating auctions.

“As a result of its illegal monopoly, and by its own estimates, Google pockets on average more than 30% of the advertising dollars that flow through its digital advertising technology products; for some transactions and for certain publishers and advertisers, it takes far more,” the DOJ said.

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In a blog post responding to the suit, Google accused the DOJ of trying to rewrite history by “demanding that we unwind two acquisitions that were reviewed by U.S. regulators 12 years ago (AdMeld) and 15 years ago (DoubleClick).”

The company argued competition in the digital ad sector is “increasing as more and more companies enter and invest in building their advertising businesses,” with companies like Amazon, Apple and TikTok growing their advertising businesses rapidly. “The average large publisher will use six different platforms to sell ads on its website this year, while advertisers and media agencies will use over three platforms to buy ads, on average,” it said.

McGill University media professor Taylor Owen said in an earlier interview it’s “absolutely” time to have a conversation about reviewing the Competition Act. “Is that going to be done in time for to use that lever, for this particular problem? Probably not.”

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He said while the U.S. is “clearly going to be the driver on major competition policy, if it ever happens” that doesn’t mean other countries can’t take similar actions in the competition space. For instance, in the last couple of years the U.K. has stopped a number of significant acquisitions, he noted.

Owen predicted there will be more alignment among various competition authorities. “They are also coordinating now, in a way they haven’t before, around investigations, around market research.”

Carleton University professor media Dwayne Winseck said Google and Facebook earn half of all advertising revenue in Canada.

“Online advertising revenue has increasingly taken up, more and more, all advertising. These companies’ position has kind of ballooned and it’s turned them into kind of bottlenecks in the advertising market.”

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Other big tech companies also have a share — Amazon, for instance, has a 10 per cent share of online advertising, he noted in an earlier interview.

He pointed out section 51 of Bill C-18 states “you cannot confer an unreasonable advantage or disadvantage on yourself or any other provider of a news content service.”

“I think we need to now push on that further,” Winseck said. “Section 51 is this real gem. Let’s take it out and polish it and start to talk about that more.”

Danielle Coffey, executive vice-president of U.S. publishers’ group News/Media Alliance, said the issue of compensation is about “so much more than just the ad tech space.” U.S. publishers are hoping to see a proposed bill similar to C-18 become law.

“Our content is being used to attract them in the first place on the distribution side. And then when we get fewer and fewer clicks on the traffic side, because 65 per cent of people now stay within Google, the few clicks that we get, we get an anti-competitive share of revenue for that traffic,” Coffey said earlier this month.

The internet landscape is also seeing a potentially huge change with the launch of services like ChatGPT, which can answer user questions. Coffer said the problem will get worse with emerging AI technologies “where there’s nothing to click through to, there’s no attribution.”