The Australian Competition and Consumer Commission (ACCC) has outlined 23 recommendations spanning competition law, consumer protection, media regulations and privacy law in its final 619-page Digital Platforms Inquiry report, which identifies the adverse effects of dominant digital platforms Google and Facebook on publishers and consumers.
The ACCC said that the dominance of the leading digital platforms and their impact across Australia’s economy, media and society must be addressed with “significant, holistic reform”.
In an opinion piece in the Sydney Morning Herald, Australian Treasurer Josh Frydenberg said the ACCC’s report is “truly a world first”.
“For every $100 spent by advertisers on online advertising, excluding classifieds, $47 goes to Google, $24 to Facebook, and $29 to other participants,” Frydenberg said.
Australians require greater accountability & transparency about the use of their data by digital platforms. The @accc‘s report highlights vital issues for consumers, privacy & competition & the Aus Govt is committed to reform. My Op-Ed is in the @smh : https://t.co/ylEoVH0yId pic.twitter.com/4yWm3a8e8I
— Josh Frydenberg (@JoshFrydenberg) July 27, 2019
The ACCC said that the 23 recommendations made in the final report reflect the intersection of issues arising from the growth of digital platforms.
Adverse effects associated with digital platforms, many of which flow from the dominance of Google and Facebook, found within the report 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’,” ACCC Chair Rod Sims said.
Addressing the publisher/digital platform imbalance
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 harmonising the media regulatory framework
- Targeted grants to support local journalism of about A$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: introducing an ombudsman
Throughout this Inquiry, the ACCC identified some problematic data practices with the potential to cause consumer harm. 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.
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.
Changes to the Privacy Act
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.
“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.
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.
Australian Information Commissioner and Privacy Commissioner Angelene Falk said “The changes recommended by the inquiry will strengthen our ability to protect personal information under the Privacy Act. These initiatives will also help close the gap between community expectations and privacy practices that fall short of these standards.”
“The proposed Privacy Code for digital platforms should include specific requirements for notice and consent to allow people to make an informed choice about the use of their data,” Commissioner Falk said.
“In developing the Code, we’ll look at additional requirements for handling children’s data so that its collection, use and disclosure is minimised, particularly for targeted advertising and online profiling.”
Future inquiry into ad-tech services
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.
Next steps
The Government will finalise its response to the report following a 12-week public consultation.
The final report can be read here: Digital Platforms Inquiry final report.
