Meta’s Online Ad Dominance Draws ACCC Ire As TikTok Competition “Weak”

Meta’s Online Ad Dominance Draws ACCC Ire As TikTok Competition “Weak”

The Australian Competition and Consumer Commission (ACCC) has said that Meta’s dominance of the Australian online advertising market is a concern for competition within the industry.

 Currently, Meta’s Facebook and Instagram generate at least 10 times the ad revenue of YouTube — its nearest competitor.

This level of dominance, according to the ACCC, along with Meta’s increased number of ad impressions (up 18 per cent year-on-year), “suggests that consumers are getting less content in exchange for their data and attention” on Meta’s platforms than they were receiving two years ago.

However, the ACCC confirmed that TikTok had overtaken Instagram in terms of time spent on the app among Australians.

But, despite the time that users are spending on TikTok, the ACCC said it provided only a “weak” competitive constraint to Meta because of the different uses and users of its platforms.

At the centre of the ACCC’s problem with the lack of competition is the undesirable “take-it-or-leave-it” terms it imposes on users that lead to unwanted data collection and use of consumer data.

What’s more, the situation can lead to anti-competitive behaviour by the platforms through self-preferencing of services, making access to a service conditional on using another service or creating barriers to switching.

In fact, Meta’s dominance of the online advertising market is such that all of the top 20 businesses in the arts & entertainment, fast food & casual, restaurants, financial services, health & wellness and retail sectors advertise on Facebook, 99 per cent of those top 20 advertisers use Instagram.

Meanwhile, 64 per cent used TikTok and just 32 per cent used Snapchat.

For large businesses, Meta’s user and time-spent dominance would not be much of a concern.

However, for smaller Australian businesses, the ACCC said that the lack of competition could leave them stranded should something change.

It said that 79 per cent of SMEs managed their social media internally, and the average annual SME spend on social media advertising was $7,586, with medium-sized businesses spending almost triple the amount of small businesses on advertising.

As a result, SMEs have tended to consolidate their advertising into one or two platforms. In Australia, this would naturally be Facebook and Instagram. The Association for DataDriven Marketing and Advertising (ADMA) submitted to the ACCC that incumbent platforms were the best choices for SMEs.

But this can lead to problems and the ACCC said that digital platforms must comply with mandatory human dispute resolution from digital platforms. This would stop over- or under-reporting of advertising analytics and ensure that SMEs, in particular, get value for money and ensure that there is transparency in online advertising.

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