What led CCI to target GroupM and big tech firms?

New Delhi: The dust is far from settling following the CCI raids that induced a storm in the Indian advertising industry. While it would be far-fetched to talk about the outcome of the raids, there is more clarity on the reasons leading to the raids beyond just speculation.

On the first day of the raid on Tuesday, BestMediaInfo.com reported quoting sources that the raids targeted alleged collusion between big tech companies and agencies.

Three days later, it emerged that the collusion between media agencies and big tech companies, such as Meta, Google, and others, was the likely target of the CCI action.

BestMediaInfo.com was the first to report on Thursday that, while the raids involved seven top agencies and three industry bodies, GroupM was the primary target.

Sources confirmed that it all started between November 2023 and January 2024 when a leniency petition was filed by a large agency.

The authorities remained silent through August 2024 until someone filed a complaint with CCI building on the leniency petition, which triggered the fresh investigation, at least six different sources across the stakeholders told BestMediaInfo.com, highlighting that this was around the same period when the anti-trust body was scrutinising the Viacom18-Disney Star merger.

"Do you remember BARC's case when the then-CEO Sunil Lulla filed a police complaint against certain broadcasters around July 2020? The matter remained under the carpet until Mumbai Police found a reason in Arnab Goswami to turn it into a high-profile TRP scam case," said one of the sources.

Similarly, someone saw an opportunity in that leniency petition to target GroupM and big tech companies until a fresh complaint was filed by a smaller agency.

The pattern was similar to the TRP scam case. If you recall, a small local cable operator in UP was made to file another case so that the Enforcement Directorate could enter, the source quipped.

It is alleged that a small agency filed a complaint with the CCI against GroupM's monopoly, resulting in alleged undue benefits from both advertisers and platform sides.

"GroupM has been acting as a gatekeeper," the complaint alleged.

It was alleged that GroupM acquired smaller agencies in a manner that the acquisitions did not cross the threshold of attracting CCI approvals.

"This is a big disadvantage for other smaller agencies operating in the market," the complaint alleged.

"GroupM's servicing of rival companies through its different agencies was also under scrutiny, which eventually kills the competition," sources familiar with the complaint told BestMediaInfo.com.

The complaint further alleged that GroupM started playing games in collusion with big tech companies, such as Meta and Google.

"They are transferring the businesses from traditional platforms to these big tech companies. There, too, the beneficiaries are big tech companies and not the clients," the complaint alleged.

GroupM India, in its annual This Year Next Year (TYNY) report released last month, said that India's adex is expected to reach Rs 1,64,137 crore in 2025.

The agency predicted that the digital adex share will reach 60% in 2025, cornering close to Rs 1 lakh crore of the overall adex.

Out of this, about Rs 85,000 crore alone goes to the big tech firms, leaving all the Indian players, including top OTT platforms such as JioHotstar, SonyLIV, Zee5, and other digital platforms, to accommodate within the remaining digital advertising budgets.

"GroupM was alleged to be working as the reseller of big tech companies," the complaint alleged.

GroupM predicted television ad revenues to decline by 1%.

This implies that the largest tournament, IPL, may not meet its revenue target from television. The only growth area, according to GroupM's predictions, is digital, but 85% of digital revenues going to big tech firms would make it difficult for the rights holder to break even in the current rights cycle.

GroupM predicted that out of Rs 10,730 crore of incremental advertising this year, digital alone is expected to take Rs 10,225 crore.

Thus, Meta, Google, and retail will continue to take away close to Rs 9,000 crore, leaving about Rs 1,300 crore to be distributed among Indian firms.

"Look at the economics of digital advertising for Indian publishers. If a brand pays about Rs 80 per CPM to Google, publishers get between Rs 5-10 per CPM. Where is the 90% margin going," asked an industry expert adding that some correction is much needed in the way the entire ecosystem is functioning.