The Sponsored Search Industry & Big Tech
Link: https://techcrunch.com/2021/10/28/android-search-choice-screen-is-needed-to-tackle-googles-market-power-says-australias-accc/
On the topic of the sponsored search industry, top tech companies have been making headlines over the past year with regards to their dominance in the industry, specifically the advertising market. It’s well known that large players like Google, Facebook, and Amazon have established themselves as the most prominent platforms, making them the most desirable places for smaller companies to buy advertising slots from. In conjunction with the lecture material on the search industry, we have seen how these processes work similar to the second price sealed bid auction model, in which individual advertisers hold a private value for each slot, the slots with the highest (lowest) clickthrough rates are assigned to the advertisers with the highest (lowest) values, and there exists market-clearing prices that maximize total valuation. On its face, this seems like an intuitive and reasonable method of awarding advertisers with their respective slots; however, what it fails to take into consideration is the advertisers’ choice of existing search engines and the implications on fairness of the high barriers to entry.
Interestingly, this article delves into this contrary side of the search industry, particularly on Google’s overwhelming dominance in the market. Focusing more on tech-related regulations in Australia, the article discusses how the ACCC (Australian Competition and Consumer Commission) has been actively taking action to promote a search choice screen and “organic search results” over “sponsored content” on new Androids models, citing the harmful 94% market share that Google has in the country. Regulators believe that this will effectively allow consumers to gain exposure to more marginalized search engine companies that have not had the capacity to compete with firms like Google, and provide a better structure than the current auction that Google runs for ad slots. With the increasingly critical perspectives towards advertising powerhouses throughout the past few years, it’s worth considering the way processes must evolve to ensure that competition is still healthy, and corporations like Google are not abusing their power and financial stability to monopolize the sponsored search industry in ways that harm smaller businesses and consumers alike.