2023 is only a week in and antitrust scrutiny is already roiling the American big tech cadre of Alphabet, Amazon, Apple, Meta and Microsoft.
Important antitrust actions are looming, the line between antitrust regulation and privacy protection continues to blur – and large platforms with their own ad businesses are starting to feel the heat as regulators dig in.
Consider how Amazon’s algorithm downranks products that don’t use Amazon fulfillment, or the question of whether Google Analytics data can be collected at all.
We zoom in on what 2023 holds for the big-five US tech giants, and particularly how antitrust suits could affect their ad revenue and ad tech prospects.
Apple
Apple’s antitrust concerns stem from its “services” revenue, which includes advertising and fees tied to app-based monetization.
Specifically, Apple’s lawyers will be busy with the EU’s Digital Markets Act (DMA), a law limiting the power of major consumer tech companies.
In December, a Paris court fined Apple $1 million for “abusive” App Store policies, including forcing developers to use Apple’s payment processing. Although the fine is inconsequential (and the court omitted any behavioral remedies that would force Apple to comply with specific changes, because Apple is already required to change its practices in order to comply with the DMA), the ruling is evidence that European regulators have their eye on Apple.
But there will also be major practical changes for Apple beyond Europe. Other countries are watching what’s happening in that market and devising antitrust strategies of their own.
The DMA, for instance, requires Apple to allow third-party app stores, like Microsoft, and outside payment services. These changes will take the spotlight in 2023.
But Apple’s advertising and ad tech could also come under scrutiny this year, including its SKAdNetwork attribution system and methods for crediting mobile conversions (largely in Apple’s own favor).
Replace “Apple” with “Google” and there’s no way these tactics would fly in the Play Store and on Android.
And as its ad revenue line grows, Apple becomes a more direct competitor with Meta and other mobile marketing platforms, which, as it happens, saw their ad businesses crippled by ATT just before Apple started building out its ad tech.
Microsoft
Microsoft’s 2023 antitrust-related headlines will be dominated by one question: Will Microsoft be allowed to acquire Activision Blizzard?
The $69 billion deal was proposed last January, but, in December, the FTC sued to block the deal.
But Microsoft Advertising isn’t feeling the heat. Nobody sued to stop the Xandr deal, after all … although that’s partly because Microsoft sets limits on its own ad business.
While Google Ads accesses identity data across Gmail, Maps, Chrome, Android and even Fitbit could contribute to the Google identity graph. Microsoft Advertising doesn’t have the same free rein. LinkedIn, for example, is a separate business with its own ad revenue (though Microsoft Advertising and LinkedIn have exclusive an commercial partnership).
Other Microsoft products are under the microscope, however. The EU is investigating Microsoft on antitrust grounds for bundling Teams, its business video messaging service, with Windows.
That investigation isn’t advertising related, but speaking of bundling, Microsoft Advertising does have a stake in growing of Xbox accounts and Microsoft cloud gaming subscriptions, because Xbox account data is part of the secret sauce for the Microsoft Advertising identity graph.
Alphabet
Alphabet is hemmed in on all sides by – sometimes conflicting – antitrust and privacy requirements.
For example, Google is pressured by laws and consumer privacy concerns to remove third-party cookies and bound by a legal agreement with the UK antitrust regulator, the CMA, not to phase out cookies without its approval, since removing cookies would have major competitive ramifications for publishers and ad tech.
Operating in a holding pattern on third-party cookies isn’t a problem for Google, because that doesn’t affect Google’s business. But there’s more urgency with Google Analytics, which has been shut down in EU nations. Certain aggressive regulators have fined site operators who continue to use GA.
Although European countries are banning GA on privacy grounds as a violation of GDPR, European regulators and legislators are also using privacy laws for antitrust purposes in order to give homegrown European tech and analytics a chance to replace Google Analytics, which has a super-majority market share.
Back stateside, the DOJ and Google are scheduled to go to court in September over alleged antitrust practices in search and advertising based on a lawsuit filed in 2020. Last year the DOJ reportedly rejected Alphabet’s concession offer, which was to set up its ad tech unit as a standalone subsidiary.
Google also has an ongoing antitrust case brought by a coalition of state attorneys-general, which was moved from Texas to New York.
And, since privacy and antitrust enforcement is converging, New York AG Letitia James, who heads the state antitrust coalition action against Google, separately fined the company $390 million last November in a privacy-related case for misleading location data collection practices.
Amazon
Unsurprisingly, Amazon’s antitrust disputes focus on its retail business.
But Amazon Advertising is also in the crosshairs, because its product ranking algorithm is affected by warehouse efficiency, fulfillment and multiple other factors that Amazon uses to ding brands on its platform.
For example, in September 2022, California Attorney General Rob Bonta sued Amazon to prevent price controls and discrimination. Amazon penalizes brands it carries if their products are cheaper on other sites. If Bonta wins, brands could sell for less at Walmart.com without fear of Amazon punishing them through its advertising and organic ranking system.
And, in Europe, Amazon has already agreed to concessions related to its “Buy Box” to head off an antitrust investigation.
Formerly, the “Buy Box,” a special piece of ad inventory right at the fold of the page (where a site loads on the screen, before a user scrolls down), was available exclusively to Amazon-owned products. Now, third-party sellers can buy in as well. Sellers can also access Prime customers without using Amazon fulfillment.
The “Buy Box” case is a useful example of how Amazon lost its argument to be regulated as a retailer, like Walmart, rather than as an online platform or marketplace.
Walmart and Target can give their private-label brands all sorts of exclusive placements in a store, and a company like CVS can place branded products on a shelf behind a locked window while private-label clones sit unguarded less than a foot away.
Amazon wanted the Buy Box and other exclusive placements on its site and app to fit into that retail mold. But, regulators just didn’t buy it.
Meta
Meta has been hit harder in the past year than the rest of the tech giants, and its market cap has dropped by two-thirds since late 2021, when it was briefly a trillion-dollar company.
But the antitrust scrutiny hasn’t slackened.
In December, the EU filed an antitrust charge against Meta for allegedly favoring its own platform for online classified ads by connecting social network accounts to Facebook Marketplace accounts.
Meanwhile, the FTC is suing to block Meta’s acquisition of Within, a VR app developer. Losing that case would signal that Meta essentially cannot acquire startups in potential growth categories – which would be tough to swallow if Microsoft’s Activision Blizzard deal squeaks by.
And, similar to Alphabet, Meta must deal with privacy suits that directly affect its ads business. Just this week, the EU fined Meta $414 million and ruled that it can no longer use its terms and conditions as a vehicle to collect consent for personalized advertising.
Although that fine is the result of a privacy violation under GDPR rather than an antitrust issue, the second-order effect is that Facebook and Instagram will have far fewer impressions for personalized advertising in the EU – thus removing a major advantage compared to other ad platforms.
