Competition Landscape in the AdTech Industry in India: A concern addressed sooner than later
Introduction
The Indian government is currently busy with a host of legislation to regulate digital markets in
the pipeline. While some of the changes like the Competition (Amendment) Act, 2023, and ecommerce rules have already been notified, others like the Digital Competition and Digital India
Act are still at the inception stage. Even the Data Protection Act is yet to be passed by the
Parliament with an additional pace gaining on regulation around generative AI. What, however,
is yet to obtain focus is the potential regulatory concern in the AdTech market under the broad
header of digital competition.
Structure and Significance of ‘AdTech (Advertisement Technology)’ market
The overall size of the Indian economy is over $3.5 trillion 1. Companies spend, at least, two per
cent of their total revenues on buying advertisements thereby making it a sizable chunk for
economic regulation. AdTech can largely be defined as a dynamic ecosystem through which the
sellers (read ‘publishing houses’) and buyers (read ‘advertisers’) are connected through the usage
of technology on a micro-second basis so that relevant advertisements are displayed to the
consumer.
There is a myriad of entities on the supplier and buyer side of the AdTech ecosystem. At least,
ten publishing houses and thousands of companies regularly sell and buy advertisement space
on each side of the market. There are primarily five players involved in the supply chain of
AdTech, i.e. advertisers (buyers), demand-side platforms (DSPs), Ad Exchange (intermediary),
supply-side platforms (SSPs) and publishers (sellers). Out of these five players, DSPs and SSPs do
not act on their own, and execute the directions given to them by the buyer/ seller, or the
1
https://economictimes.indiatimes.com/news/economy/finance/indias-nominal-gdp-to-be-usd-3-5-trillion-byend-march-economic-survey/articleshow/97498963.cms
intermediary based on the ownership pattern. Recently, this structure of the market has come
into dispute where there have been, at least, three information complaints filed by various
advertisers before the competition watchdog alleging violation of the Indian competition law.
Regulatory Concerns in the AdTech Space
The informant parties have stated that Google Inc. as a tech intermediary has been imposing onesided terms and conditions on the supply side of the market. It has been alleged that the
intermediary has been monetising zero-click searches on the basis of the content generated by
member entities of Informant Parties (IPs), however, this revenue isn’t shared with the publishers
which are the original content creators. This denies them their fair share of revenue. It has been
further stated that the intermediary is withholding crucial data pointers from the publishers
which limits their ability to understand the decision-making process in the market.
Position across the globe
Competition concerns in the AdTech industry have been a subject of intense debate and scrutiny
across the globe. Some of the evolved jurisdictions have already taken a view on the conduct of
the intermediary in this space.
United States (US)
The Department of Justice in a recent complaint has held that intermediaries involved in the
AdTech industry are building structural barriers to entry in the market 2. The Department further
held that Google Inc. specifically debars publishers from multi-homing publisher Ad servers and
restricts the development of technology by rival entities thereby withholding efficient
matchmaking of demand and supply on a real-time basis. The overall conduct of Google has been
such that it increases its dependency on publishers and advertisers, thereby further cementing
2
https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies
its dominant position in the AdTech space. The Department is looking for multi-pronged action
against the firm to correct the anomalies. In another case, the same intermediary has been
accused of deleting evidence which was very much required to prove a case of wrongdoing.
United Kingdom (UK)
The Competition and Markets Authority (CMA) in the UK recently conducted a study to identify
competitive constraints in the digital advertising space. The regulator held that apart from the
market structure being tipped off in favour of a few dominant firms, AdTech in the country is
plagued with ‘black-box’ decision-making where the publishers are provided with limited
information to meaningfully question or challenge the decision-making of the intermediary3. The
tech platform withholds crucial information on how the advertisements are allotted to publishing
houses and consumer traffic is diverted. The report published by the CMA also flagged concerns
around the possibility of self-preferencing and conflict of interest when it comes to integrating
various products and technologies in the vertical chain by the intermediary.
Australia
Australian Competition and Consumer Commission (ACCC) has possibly done one of the most
seminal works when it comes to inquiring competition concerns in the AdTech space. In a report
published by the regulator, the authority has paid detailed reliance not only on the submissions
made by the parties before itself, but also across competition authorities around the world in
understanding the nuances of the AdTech market and capabilities of servers deployed by tech
intermediaries. The ACCC held that there are weak competitive constraints in the AdTech
industry and that the concerned tech intermediary has been making conflicting statements
before different regulators across the globe. The Commission found out that while Google has
been stating that its servers are incapable of providing certain data pointers related to the
performance of advertisements, it has given a contrary commitment to the French competition
3
https://assets.publishing.service.gov.uk/media/5fa557668fa8f5788db46efc/Final_report_Digital_ALT_TEXT.pdf
authority in order to circumvent detailed proceedings and the possibility of hefty fines 4. Apart
from these contradictory statements, the Australian authority further found out that the tech
platform indulges in creating an artificial shortage of inventory by controlling the supply and gets
into dubious practices of collecting first-party data thereby having a bearing on the data privacy
of the consumers. The ACCC further held that the current legal framework is insufficient to
address the regulatory concerns in the AdTech space and recommended the government to
enact separate legislation so that issues related to economic concentration and consumer harm
could be addressed.
Interface with ‘digital markets’
The Standing Committee on Finance recently published a report where they have identified
competition concerns in the Big Tech industry. The Committee has identified standard anticompetitive practices (ACPs) adopted by the Big Tech firms in its report and has held that
separate legislation should be enacted, apart from the existing Competition Act, so that the
market opportunities aren’t concentrated in favour of few firms. As seen in some of the mature
jurisdictions, standard ACPs in digital markets like bundling/ tying and self-preferencing are
prevalent even in the Indian AdTech industry with an additional concern around opacity practised
by the intermediaries on both sides of the market. This may require the Indian competition
commission to adopt a more nuanced approach while looking into AdTech.
Requirement of a calibrated approach
The growing size of the GDP and efficient markets has been a long-sought goal for governments
across the globe and India is no different. In such a case, the enhancement brought to the table
by the tech intermediaries through the deployment of advanced technologies like ‘header
bidding’ and ‘exchange bidding’ should be given due weightage. In fact, the ubiquitous usage of
such a product on both sides of the market is a testament to this proposition. This is where the
4
https://www.accc.gov.au/system/files/Digital%20advertising%20services%20inquiry%20-%20final%20report.pdf
role of a competition regulator becomes even more complex. The point of inquiry has to be
effective where the proposed remedy lifts any structural barriers to entry in the market, and
nimble at the same time so that it doesn’t disincentivize the incumbents to undertake product
and economic innovation. Swift action, if not taken at an appropriate time, has the potential to
cause immense damage to the growing Indian digital economy.
Conclusion
The time is ripe for the Indian competition commission to take swift action in the AdTech industry
to minimise the harm caused to the relevant stakeholders, as has been already argued in a white
paper published by the Centre for Competition Law and Economics. Based on the past precedent,
the DG investigation may itself take more than a year to complete thereby distorting the market
in favour of the incumbents. The need of the hour is not only to conduct exhaustive research but
also in a timely manner so that efficient outcomes are achieved. The Commission should not shy
away from adopting new-age techniques to achieve these outcomes and implementation of the
recently incorporated commitment and settlement scheme may be a first step in this direction.
This would ensure free and fair participation in the market.