Australia’s Consumer Watchdog Calls for Reform of Facebook, Google, etc

The dominance of the leading digital platforms and their impact across Australia’s economy, media and society must be addressed with significant, holistic reform, according to the final report of the ACCC’s Digital Platforms Inquiry. 

The report contains 23 recommendations, spanning competition law, consumer protection, media regulation and privacy law, reflecting the intersection of issues arising from the growth of digital platforms.

“Our recommendations are comprehensive and forward looking and deal with the many competition, consumer, privacy and news media issues we have identified throughout the course of this Inquiry,” ACCC Chair Rod Sims said. “Importantly, our recommendations are dynamic in that they will provide the framework and the information that governments and communities will need to address further issues as they arise. Our goal is to assist the community in staying up to date with these issues and futureproofing our enforcement, regulatory and legal frameworks.” 

During the course of its Inquiry, the ACCC identified many adverse effects associated with digital platforms, many of which flow from the dominance of Google and Facebook.

These include:

  • The market power of Google and Facebook has distorted the ability of businesses to compete on their merits in advertising, media and a range of other markets
  • The digital advertising markets are opaque with highly uncertain money flows, particularly for automated and programmatic advertising
  • Consumers are not adequately informed about how their data is collected and used and have little control over the huge range of data collected
  • News content creators are reliant on the dominant digital platforms, yet face difficulties in monetising their content
  • Australian society, like others around the world, has been impacted by disinformation and a rising mistrust of news.

“The dominant digital platforms’ response to the issues we have raised might best be described as ‘trust us’,” Mr Sims said. “There is nothing wrong with being highly focused on revenue growth and providing increasing value to shareholders; indeed it can be admired. But we believe the issues we have uncovered during this Inquiry are too important to be left to the companies themselves.”

“Action on consumer law and privacy issues, as well as on competition law and policy, will all be vital in dealing with the problems associated with digital platforms’ market power and the accumulation of consumers’ data,” Mr Sims said.

Australian media businesses and news consumers

The ACCC has made a series of recommendations to address the digital platforms’ impact on Australian media businesses and how Australians access ­­­­­­news.

These include:

  • Requiring designated digital platforms to each provide the Australian Communications and Media Authority (ACMA) with codes to address the imbalance in the bargaining relationship between these platforms and news media businesses and recognise the need for value sharing and monetisation of content
  • Addressing the regulatory imbalance that exists between news media businesses and digital platforms, by harmonizing the media regulatory framework
  • Targeted grants to support local journalism of about AU$50 million a year
  • Introducing measures to encourage philanthropic funding of public interest journalism in Australia
  • ACMA monitoring the digital platforms’ efforts to identify reliable and trustworthy news
  • Requiring the digital platforms to draft and implement an industry code for handling complaints about deliberately misleading and harmful news stories
  • Introducing a mandatory take-down ACMA code to assist copyright enforcement on digital platforms.

Promoting competition

The Inquiry notes the acquisition of startups by large digital platforms has the potential to remove future competitive threats. Acquisitions may also increase the platforms’ access to data. Both situations may further entrench a platform’s market power.

The ACCC recommends changes to Australia’s merger laws to expressly require consideration of the effect of potential competition and to recognise the importance of data. The ACCC also recommends that large digital platforms agree to a notification protocol that would alert the ACCC to proposed acquisitions that may impact competition in Australia.

The report also calls on Google to allow Australian users of Android devices (new and existing) to choose their search engine and internet browser from a number of options, as proposed in Europe, rather than being provided with defaults.

Empowering consumers

Effective consumer protections are critical to addressing issues associated with dominant digital platforms. Throughout this Inquiry, the ACCC has identified some problematic data practices with the potential to cause consumer harm.

The ACCC is well advanced with investigations into some of these data practices to determine whether there has been a contravention of the Australian Consumer Law.

To deal with further data practices that do not fit neatly within the existing consumer law, the ACCC also recommends introducing a general prohibition on unfair commercial practices.

“Introducing this broad, flexible prohibition will increase consumer protections in fast-moving digital markets to safeguard consumers’ ability to make informed and genuine choices,” Mr Sims said.

The ACCC has also again recommended unfair contract terms should be prohibited and should attract civil pecuniary penalties, and not just be voidable as they are now.

The ACCC further recommends a mandatory standard to bolster a digital platforms’ internal dispute resolution processes and that an ombudsman scheme be established, to assist with resolving disputes and complaints between consumers and digital platform providers.

Protecting privacy

In light of the overlapping nature of privacy, competition and consumer protection issues in digital markets, the ACCC has made a range of privacy-related recommendations, including:

  • Strengthening protections in the Privacy Act
  • Broader reform of the Australian privacy law framework
  • The introduction of a privacy code of practice specifically for digital platforms
  • The introduction of a statutory tort for serious invasions of privacy.

The Inquiry found that digital platforms’ privacy policies are long, complex, vague and difficult to navigate and that many digital platforms do not provide consumers with meaningful control over the collection, use and disclosure of user data.

Problematic data practices include the use of click-wrap agreements and take it or leave it terms.

“We’re very concerned that current privacy policies offer consumers the illusion of control but instead are almost legal waivers that give digital platforms’ broad discretion about how they can use consumers’ data,” Mr Sims said. “Due to growing concerns in this area, we believe some of the privacy reforms we have recommended should apply economy wide.”

The recommended amendments to the Privacy Act should be supplemented by an enforceable privacy code of practice, developed by the Office of the Australian Information Commissioner (OAIC), and address data practices specific to digital platforms.

Continued scrutiny of digital platforms

The ACCC recommends the Government establish a specialist digital platforms branch within the ACCC, with standing information-gathering powers, to proactively monitor and investigate potentially anti-competitive conduct by digital platforms and conduct that may breach our consumer laws, and to undertake rolling market studies.

“We believe continuing scrutiny is necessary given the critical position that digital platforms occupy in the digital economy, their continued expansion and the opacity and complexity of the markets in which they operate,” Mr Sims said.

One of the first tasks of the new branch should be to conduct an inquiry into the supply of ad-tech services and the supply of online advertising services by advertising and media agencies.

The inquiry would identify whether any competition or efficiency concerns exist and help achieve greater transparency in the supply of these services. 

“The ACCC branch will also provide regular reports to Government on issues as they arise, work closely with other arms of government to help co-ordinate work in this vital area, and be the crucial link with our overseas counterparts to share learnings and responses,” Mr Sims said. 

Expert regulators and agencies to play complementary roles

The ACCC recommends future law enforcement and regulation of digital platforms be dealt with by the current regulators including the ACMA, the OAIC and the ACCC.

“The ACCC, the ACMA and the OAIC are already working together closely and have now built up expertise in the areas covered by this Inquiry,” Mr Sims said. “There has been global interest in this timely Australian inquiry and the many significant international reports and external developments in the past 18 months. These reports demonstrate the shared concerns and momentum for reform.”

“The world has now recognised the impact of the digital platforms’ market power and the impact this has on consumers, news, businesses and society more broadly. Continuing national and world action will now follow,” Mr Sims said.

The ACCC report has been welcomed by a number of industries players, including the Australian Communications and Media Authority (ACMA), Free TV, Commercial Radio Australia. and Network 10.

“The ACMA welcomes the Government’s acceptance of the ACCC’s conclusion that there is a need for reform and in particular, the development of a harmonised media regulatory framework,” said ACMA Chair Nerida O’Loughlin. “We will review the report in detail and stand ready to participate and contribute to the Government’s public consultation process and consideration of the recommendations.”

Free TV CEO, Bridget Fair said, “The ACCC’s ground-breaking report lays bare the unprecedented levels of market dominance of Google and Facebook and the impact that they have had on media companies and the millions of Australians that rely on them.

“We have been calling for a strong regulatory response that allows our members to fairly monetise their content on the digital platforms since our initial submission to this inquiry in April 2018. The ACCC Final Report goes a long way towards delivering this outcome.  

“We particularly congratulate the ACCC on its recommendation for a Code of Conduct which would force Google and Facebook to negotiate fairly with Australian news media businesses. The ability of Australian media companies to monetise their content on the digital platforms is critical for their future.

“Free TV has also consistently stated that our media laws have failed to keep pace with the dramatic changes in the media landscape. Pleasingly the ACCC has recognised the need for a harmonised media regulatory framework. We hope that the most obvious cases of regulatory disparity can be addressed quickly.

“Commercial television broadcasters are the cornerstone of the Australian production sector and invest significantly in trusted news and local journalism, as well as Australian entertainment, drama and live sport.

“Minister Fletcher highlighted the importance of cultural policy objectives. Our focus is having a regulatory framework that supports the ability of Free TV broadcasters to continue playing our critical role in meeting this objective.

“Accountability and transparency are central to curbing the unrestricted market power of Google and Facebook. We welcome the increased focus on anti-competitive conduct that will come from having a dedicated digital markets team within the ACCC.

“On the taking down of illegal material, the ACCC has clearly identified the deficiencies in the current processes for seeking removal. We need a rapid and efficient process of having illegal material removed from the digital platforms. We think that the proposed mandatory standard on takedown of pirated copyright material to be issued by the ACMA is a positive step towards this outcome.

“We look forward to working with the Government over the next 12 weeks to implement the ACCC’s recommendations,” Ms Fair said.

Meanwhile, Joan Warner, chief executive officer of peak industry body Commercial Radio Australia, said, “We congratulate the ACCC on delivering a landmark report into the significant and complex issues raised by the rapid growth of the digital platforms in Australia.

“We’re pleased the report recognises action is needed to address issues of market power and regulatory imbalances between the digital platforms and Australian media businesses.

“The recommendations are comprehensive and will take time to work through, but overall it’s a positive outcome for consumers and the local media industry.

“Greater transparency into how digital platforms operate in the advertising market will only be good for the wider industry and all Australian businesses making investment decisions on advertising expenditure.

“We support the development of a code of conduct to govern relationships between digital platforms and media businesses.

“The radio industry looks forward to actively engaging in the 12-week consultation process.”

 Network 10’s chief operating officer Annabelle Herd, said, “This world-first report recognises that while these companies have changed the world in so many ways, not all of those changes are good.

“It has taken a long time to get to this point and there is still a way to go to implement most of the recommendations. These are complex issues and, no doubt, there will be heavy push back.

“However, it does feel like the glamour of the global digital players has worn off in Canberra and for the first time there seems to be a strong political will to address big issues like inadequate regulation, lack of transparency, and the impact on Australian media companies, consumers and local content producers.”

Download the full report at https://www.accc.gov.au/publications/digital-platforms-inquiry-final-report 


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