ACCC Releases Digital Platforms Inquiry, Crackdown Expected On Google And Facebook

The Australian Competition and Consumer Commission (ACCC) has released the final report on the market power of big technology platforms such as US-based tech giants Facebook and Google. The inquiry focused on several adverse effects associated with digital platforms on competition in the Australian media and advertising services markets. The report, which has been submitted by the organisation to Treasurer Josh Frydenberg, recommended to address the issue with significant, holistic reform.

In December 2017, the ACCC was engaged to prepare a report on the impact of social media platforms, search engines and other online aggregation sites on the industry competition. The commission unveiled its preliminary report for the inquiry in December 2018.

In its final investigative report released on 26 July 2019, the commission has made 23 recommendations, including consumer protection, competition law, media regulation and privacy law and issues as a result of digital platform growth, aimed at curtailing the power of big tech companies.

Based on the Digital Platforms Inquiry, the ACCC recommended the government to enforce more regulations on Google and Facebook, two of the largest tech companies in the world, on the use of personal data and measures, in order to protect the privacy of the public. The report recommends a need for reforms aimed at making the leading tech companies accountable and their activities more transparent. In the report findings, the ACCC has expressed concerns related to the collection as well as aggregation of huge amount of commercially sensitive and personal data by digital platforms like Facebook and Google.

Major Issues Uncovered

The ACCC, during the course of its inquiry, identified several issues arising from the dominance of digital platforms. Some of them are:

  • Growing mistrust of news and disinformation are resulting in a major impact on the Australian society.
  • Creators of new content experience challenges in monetising the content, despite being dependent on the leading digital platforms.
  • Many digital platforms do not inform their customers adequately regarding the collection and use of their data. Also, consumers don’t have much control on the type of their data collected by digital platforms.
  • There is no certainty regarding money flows in the digital advertising markets. In Australia, Google accounts for about 90% of internet searches from computers and 98% from mobile devices.
  • The dominance and impact of Facebook and Google, which are among the most powerful and valuable companies in the world, on other digital platforms is distorting competition in the Australian media, advertising and a range of other markets.

Let us have a look at the major recommendations made by the ACCC.

Recommendations to Protect Individual Privacy/Consumer Empowerment

As the regulator believes Australians lack protection, it has suggested a range of privacy-related reforms including bolstering protections in the Privacy Act and broadening reform of the privacy law framework of the country. It has also recommended the establishment of a new privacy code of practice for digital platforms. Moreover, based on the report findings, the organisation recommended creating a statutory tort for serious invasions of privacy.

The ACCC recommended to give more power to Australians on how their information is collated as well as used and disclosed by digital platforms, as the report identified some problematic data practices that could harm consumers. Moreover, the organisation advised to introduce a general prohibition on unfair commercial practices, protecting consumers by enabling them to make informed and genuine choices.

Recommendations to Protect Media Businesses

In light of the impact of digital platforms on media & news industry in the country, the organisation recommended harmonising the media regulatory framework in order to deal with the regulatory imbalance between news media houses and digital platforms. Currently, digital platforms have a major control on the dissemination of news and journalism.

It recommended that designated digital platforms should provide codes to the Australian Communications and Media Authority (ACMA) to deal with the regulatory imbalance.

Moreover, an annual grant of $ 50 million was recommended to aid local journalism, ensuring publications not only survive but thrive. ACMA should be directed to monitor reliability and trustworthiness of news featured on the digital platforms. Digital platforms code to handle complaints related to news content that is incorrect and harmful, in addition to a compulsory take down ACMA code to aid in copyright enforcement on digital platforms were also suggested.

Recommendations to Foster Competition

Based on its inquiry, the ACCC has recommended making amendments to merger laws, factoring in the likely increase in the market power of a big digital platform when it acquires a start-up. The ACCC claimed that such acquisitions remove competitive threats in the future, as well as increase data access for big digital platforms.

Moreover, the government was recommended to include a notification protocol, which wold require large digital platforms to notify the ACCC when they plan to make an acquisition that could have an impact on competition in the concerned industry. Additionally, the ACCC suggested asking Google to enable new as well as existing Android device users in Australia to decide which internet browser and search engine they want to use. Currently, the default or standard internet browser on several Android devices in Australia is Google Chrome.

Recommendations on Continued Digital Platform Scrutiny

The government has been suggested to create a specialist digital platforms branch within the ACCC organisation to scrutinise digital platforms. The ACCC branch will hold the responsibility of monitoring as well as carrying out investigations into potential anti-competitive conduct by tech giants. Moreover, the branch will undertake rolling market studies and keep an eye on any misconduct related to the country’s consumer laws.

The new unit will regularly update the government regarding any issues related to the supply of ad-tech services and online advertising services by media and advertising agencies. Additionally, the branch will play a major role in sharing learnings and responses with Australia’s overseas counterparts.

Recommendations to Broaden the Role of Current Regulators

The Australian Competition and Consumer Commission has recommended enabling the ACCC, the Australian Communications and Media Authority (ACMA), the Office of the Australian Information Commissioner (OAIC) and other current regulatory agencies to deal with law enforcement and regulation of digital platforms in the future.

Based on the recommendations, the government is considering several changes to the way tech giants are operating in the country and is expected to propose regulations by the end of 2019.

The ACCC crackdown put the Australian tech stocks under pressure as the S&P/ASX 200 Information Technology closed -0.92% at 1,396.4. While the benchmark index S&P/ASX 200 was down 0.36%, closing at 6,793.4.


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