Insights + Resources

10 October, 2019

The Power of the Platform: ACCC Takes Aim at Facebook & Google

Introduction

In June 2019, the Australian Competition and Consumer Commission (‘ACCC’) released its’ final report from the Digital Platforms Inquiry (‘Inquiry’). The Inquiry was established to conduct research into and make recommendations about the impact of digital media platforms’ business models on Australian consumers and marketplace competition.

The ACCC’s 600+ page report ultimately consists of 23 recommendations to be considered by the Federal Government, with an official response due in December 2019. The recommendations of the Inquiry can be broadly sorted into 4 areas:

  1. Increasing platforms’ accountability and strengthening competition law relevant to platform behaviours;
  2. Strengthening consumer privacy law;
  3. Protecting or equalising traditional news media markets; and
  4. Preventing the dissemination of disinformation.

A key theme that has emerged from the Inquiry is that the ACCC’s regulatory focus for digital media platforms is extending beyond the traditional bounds of competition and consumer issues.  The Inquiry delves into the broader impact on consumers and society, making observations about data protection and privacy, which are areas traditionally the domain of the Australian Information Commissioner. Thus, perhaps in some ways mirroring the mercurial growth of the digital platforms themselves, the Inquiry focuses on what the ACCC regards as the increasingly intersecting domains of competition, consumer protection and data privacy.

The Government has expressed support for the ACCC’s recommendations, stating that it accepts “the ACCC’s overriding conclusion that there is a need for reform – to better protect consumers, improve transparency, recognise power imbalances and ensures that substantial market power is not used to lessen competition in media and advertising services markets.”

Google, Facebook and modern Australian life

It is beyond question that Google and Facebook play an increasingly omnipresent (and omnipotent) role in Australians’ lives. Today over 40% of Australians’ collective online time is spent on Google and Facebook owned properties, and the following graphic shows the number of Australians on these platforms every month:

Man holding burning newspaperAnd beyond their dominance of personal time, these platforms exercise power over both small and large businesses that rely on these behemoths to reach customers.  On 23 September 2019, user-generated content aggregator, Stackla, an Australian founded start up based in Silicon Valley, filed a lawsuit against Facebook in the US District Court, claiming that Facebook’s decision to block its’ access to the platform was anti-competitive. This follows similar actions in England and Australia by Australian start up Unlockd against Google, when Unlockd successfully obtained injunctions to prevent Google removing its’ apps from the Android Play Store.

The ACCC Recommendations

1. Increasing platforms’ accountability and strengthening competition law specifically in respect of platforms

To address concerns regarding Google and Facebook’s significant market power, the Inquiry recommends large digital media platforms be subject to more proactive and sustained scrutiny and accountability. Australians spend over 40% of their internet time on those two platforms alone, effectively stifling meaningful competition. The focus of the Inquiry is to strengthen competition law to contain their market power and protect small businesses that advertise on those platforms. This is one of the key ways in which the Inquiry is potentially beneficial for smaller Australian businesses. The recommendations address the concerns rising from Facebook and Google’s virtual monopoly, demonstrated by the graph provided by the ACCC below.

 

 

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Recommendation

1Strengthening s 50(3) of the Competition and Consumer Act 2010 (‘CCA’).
2Requiring large digital platforms to provide advance notice to the ACCC of any proposed acquisitions potentially impacting competition.
3Requiring Google to provide Australian Android users with the ability to choose their default search engine and internet browser.
4Establishing a specialist digital platforms branch within the ACCC to proactively monitor, investigate and enforce market issues in which digital platforms operate.
5Directing the above branch to hold an inquiry into competition for the supply of ad tech services and online advertising services by advertising and media agencies.
6Developing a platform-neutral regulatory framework to oversee entities involved in content production/delivery to promote competition in Australian media and advertising markets.
8Implementing a mandatory industry code to govern the take-down processes of digital platforms operating in Australia to enable rights holders to ensure the effective and timely removal of copyright-protected content from digital platforms.
20Amending the CCA so that unfair contract terms are prohibited (not merely voidable).
21Amending the CCA to include a sufficiently defined and targeted prohibition on certain unfair trading practices.
22Facilitating minimum internal dispute resolution standards applicable to digital platforms.
23Establishing an independent Ombudsman scheme to resolve complaints and disputes between consumers and digital platforms, and businesses and digital platforms.

2. Strengthening privacy law 

The ACCC has taken legally progressive steps in treating privacy implications as a consumer law protection issue. The basis for the ACCC’s concern is that a large number of Australians use Facebook and Google daily. 19.2 million Australians use Google searches and 17.3 million access Facebook, allowing these platforms to collect enormous volumes of data. Facebook and Google’s business models do not require users to pay subscription fees; instead, the majority of profits arise from advertising revenue. Considering the effectiveness of target advertising, this makes data highly valuable for Google and Facebook.

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Recommendation

16 {Updating the Privacy Act by:

1.     Clarifying that the ‘personal information’ definition captures technical data (e.g. IP addresses);

2.     Requiring collection of personal information to be accompanied by a notice from the data collector;

3.     Requiring consumer consent when personal information is collected, used or disclosed by the data collector;

4.     Enabling erasure of personal information;

5.     Introducing direct rights of action for individuals for interference with privacy; and,

6.     Increasing the penalties for interference with privacy.

17Refining Australia’s privacy regime to ensure it continues to effectively protect consumers’ personal information.
18Requiring the Office of the Australian Information Commissioner to develop an enforceable privacy code of practice for digital platforms to enable proactive and targetted regulation of digital platforms’ data practices.
19Introducing a statutory tort for serious invasions of privacy to protect individuals against serious invasions of privacy law that may not be captured within the scope of the Privacy Act.

 

3. Protecting traditional news media markets

The traditional news media market has been adversely affected by the rise of digital media platforms. The Inquiry demonstrates the ACCC’s support for the traditional news and journalism industry by recommending better funding and protection. The ACCC believes this is in consumer interest because news and journalism generate “important benefits for society through the production and dissemination of knowledge, the exposure of corruption and holding governments and other decision makers to account.” 

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Recommendation

7Requiring designated digital platforms to prescribe codes of conduct governing relationships between digital platforms and news media businesses, and provide these to ACMA to ensure news media businesses are treated fairly and transparently.
9Providing the ABC and SBS with stable and adequate funding to recognise their role in addressing the risk of under-provision of public interest journalism.
10Introducing a platform-neutral targeted grants program that provides greater funding to support production of original local and regional journalism.
11Amending tax settings to establish new categories of charitable purpose and deductible gift recipients status for not-for-profit organisations that create, promote or assist the production of public interest journalism.

 

4. Preventing dissemination of misinformation

The ACCC has raised concerns regarding large digital media platforms’ instantaneous and wide dissemination of disinformation because of its serious potential harm to consumers. The Inquiry addresses this issue by recommending measures to increase digital media literacy and the implementation of independent regulators and conduct codes.

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Recommendation

12Improving digital media literacy in the community by establishing a government program to fund and certify non-government organisation for the delivery of digital media literary resources and training to community centres, libraries, schools and senior centres.
13Considering and appropriately adjusting the approach to digital media literary education in Australian schools in the 2020 review of the Australian Curriculum.
14Directing an independent regulator to monitor the voluntary initiatives of digital platforms to enable users to identify the reliability, trustworthiness and source of news content featured on their services.
15Requiring digital platforms with over 1 million monthly active users in Australia to implement an industry code of conduct to handle disinformation complaints relating to content presented as news and journalism.

 

Conclusion

The ACCC’s recommendations form part of a global trend calling for increased scrutiny of large digital media platforms, which play increasingly dominant roles in people’s lives and businesses. In July 2019, the UK Competition Market Authority released the Online Platforms and Digital Advertising Market Study, and the US Department of Justice conducted a review into Big Tech’s market power.

Deconstructing the ACCC’s recommendations sheds light on the Inquiry’s aim to address the implications of large digital media platforms on competition, consumers and society. Whilst the recommendations suggest significant changes, the ACCC has emphasised that it does not necessarily question the competence of our current legislative framework; instead, it focuses on sharpening its investigative tools by calling for greater scrutiny of digital media platforms.

The ACCC predicts a pattern of increasingly intersecting regulatory domains of competition, consumer protection and data privacy, requiring more vigilant and agile solutions for an age of large digital platform dominance.

The Government has expressed support for these recommendations, and we are yet to see how and whether they will be implemented.

 

Key take-aways:

  • The ACCC has released an Inquiry providing recommendations that address concerns relating to the rise of large digital media platforms;
  • The recommendations for the Government aim to strengthen competition, consumer protection and privacy law, protect traditional news media, and prevent the dissemination of disinformation.
  • The recommendations propose the creation of legal tools to help protect Australian businesses and consumers in a realm (the internet) of traditionally light touch regulation.

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