Facebook: ACCC’s Recommendations Make Online Advertising “Unworkable”

Krasnoyarsk, Russia - June 13, 2011: Facebook main webpage on Google Chrome browser on LCD screen

The ACCC’s recommended media framework could see the social and economic benefits of targeted advertising made redundant.

That is the message from Facebook, which has today released its response to the ACCC’s Digital Platforms Inquiry.

“We are concerned that some recommendations, if enacted as presently framed, have the potential to adversely impact Australia’s economy,” said the social media giant.

“For example, the recommendations that make targeted advertising practically unworkable in Australia are out of step with other countries such as Singapore and the European Union.”

Facebook argues in the response that “technology is a great equaliser for a country such as Australia” and that targeted advertising – the practice which has allowed Facebook to flourish financially – has democratised advertising and given small businesses an opportunity.

“These benefits are at risk because the evidence does not support many of the conclusions reached
in the Final Report,” Facebook said.

As one of the 23 recommendations handed down in July, the ACCC called for an inquiry into the supply of ad tech services and advertising agencies.

Although Facebook stated it “broadly” supports this recommendation, it also suggested the ACCC has failed to acknowledge the “commercial realities” of the online advertising ecosystem.

“We support the ACCC’s recommendation for a further public inquiry in relation to ad tech services and advertising agencies—to assist the ACCC in further developing its knowledge and understanding of these and other key developments.”

The ACCC also accused Facebook (and Google) of “a lack of transparency” when it comes to online advertising services.

Facebook seemingly disagrees with this sentiment, using the response to highlight the tools it has in place to help advertisers understand how their ads perform.

“We are committed to providing transparency to our customers—if they can’t measure the success of the ads in real time, they will shift their ad spend elsewhere.”

Problems with definitions

Facebook also appeared to take issue with the way it was classed alongside Google throughout the ACCC’s findings.

“While the Final Report explicitly acknowledges that Facebook and Google are different companies, many of the recommendations of the Final Report are underpinned by a conflation of Facebook with Google, a competitor with a very different business structure and suite of products,” Facebook said.

By conflating the two companies, the recommendations in the report, therefore “will not address the challenges” in discussion.

Role of traditional media

Facebook also appeared to take issue with the suggestion it has contributed to a decline in journalism.

The social media company was particularly dismissive of the proposed “bargaining code” for commercial negotiations between Facebook and “powerful” media companies.

“It is hard to imagine that such influential companies require the assistance of the Australian Government to negotiate commercial terms with Facebook, especially in light of the lack of evidence or findings of unfair trading on our part,” quipped Facebook.

“The analysis does not reflect our experience and is not supported by evidence of our daily commercial interactions, feedback or engagement with Australian publishers.”

While acknowledging the news media industry is undergoing a period of “change and challenges”, Facebook refused to take the blame for the disruption, pointing out that many of these problems predate the invention of Facebook in 2004.

“The Final Report fails to acknowledge the significant power and influence held by Australian media companies. These companies do not require a regulator to protect them…” said Facebook

“Media organisations also have substantial audiences and reach: News Corp, for example, has publicly stated that they have a monthly audience that matches, if not exceeds, Facebook’s reach in Australia.”

Facebook’s response to the Digital Platforms Inquiry comes after the Digital Industry Group Inc (DIGI) – the not-for-profit that represents Facebook, Google and Twitter in Australia – voiced its “concern” over the recommendations.

The Federal Government is currently working with the industry and relevant stakeholders as part of a 12-week consultation process following the release of the ACCC’s report before it unveils a new framework by year’s end.

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