More regulatory oversight is justified by the strong market position of digital platforms like Google and Facebook, in the ACCC’s view. The ACCC has released a preliminary report in its Digital Platforms Inquiry with 11 recommendations.

Preliminary recommendations

The preliminary recommendations include proposals:

  • to prevent Chrome being installed as a default internet browser and Google’s search engine being installed as a default search engine.
  • to strengthen merger laws, by requesting advance notice of acquisitions by large digital platforms and making it clearer that the following are relevant factors: (a) the likelihood that an acquisition would result in the removal of a potentialcompetitor, and (b) the amount and nature of data which the acquirer would likely have access to.
  • to change the Privacy Act to better enable consumers to make informed decisions about privacy and the collection of personal information. Changes include: increasing penalties, introducing direct rights of action for individuals, strengthening notification requirements, introducing an independent third-party certification scheme, strengthening consent requirements, enabling the erasure of personal information, and expanding resourcing for the OAIC.
  • for the OAIC to help develop an enforceable Code of Practice for digital platforms.
  • to introduce a statutory cause of action for serious invasions of privacy.
  • that unfair contract terms should be illegal (not just voidable) and that civil pecuniary penalties should apply to their use.
  • to give a new or existing regulator the task of investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content — to discover any discriminatory conduct favouring the platforms’ own business interests.
  • dealing with copyright, and take-down orders, and the review of existing, disparate media regulations.

Areas for further analysis

The ACCC is consulting on its 11 preliminary recommendations and eight areas for further analysis. These eight areas include the proposed “badging” by digital platforms of media content, produced by an accountable media business, and options to fund news production and journalism (eg tax deductions or subsidies), a digital platforms ombudsman to investigate complaints and provide timely, cost effective dispute resolution, and a proposal for digital platforms to allow consumers to opt out of targeted advertising.

Submissions are due by 15 February 2019. Stakeholder forums may be held in early 2019. The ACCC’s final report is due by 3 June 2019.

ACCC’s concerns

The ACCC is investigating five allegations that certain digital platforms have breached competition or consumer laws.

In the ACCC’s opinion, “Google has substantial market power in online search, search advertising and news referral and Facebook has substantial market power in markets for social media, display advertising and online news referral”.

The report sets out the ACCC’s concerns about their market power, and their impact on Australian businesses, especially media businesses’ ability to monetise their content and the extent to which consumers’ data is collected and used for targeted advertising.

The “operation of these platforms’ key algorithms determining the order in which content appears is not at all clear”.

“The report found that key digital platforms, Google and Facebook, had both the ability and incentive to favour related businesses or those businesses with which they may have an existing commercial relationship. The platforms’ algorithms rank and display advertising and news content in a way that lacks transparency to advertisers and news organisations”.

Such organisations were more than pure intermediary distributors of news in Australia. They increasingly perform similar functions as media businesses, such as selecting, curating and ranking content. However, digital platforms face less regulation than many media businesses.

The ACCC observed that Google and Facebook are now the dominant gateways between news media businesses and audiences, and noted that this could reduce the brand value and recognition of media businesses. Traditional media businesses (especially in print) have lost advertising revenue to digital platforms. This has threatened the business model of print media.

“News and journalism perform a critical role in society. The downturn in advertising revenue has led to a cut in the number of journalists over the past decade”.

“The ACCC’s preliminary view is that consumers face a potential risk of filter bubbles, or echo chambers, and less reliable news on digital platforms”. The evidence of filter bubbles on digital platforms in Australia is not yet strong, however, the issue is important.

The ACCC is concerned with the large amount and variety of data which digital platforms (such as Google and Facebook) collect on Australian consumers, going beyond the data that users actively provide.

The ACCC is particularly concerned “about the length, complexity and ambiguity of online terms of service and privacy policies, including click-wrap agreements with take-it-or-leave-it terms”.

Sources:

ACCC preliminary report, Digital Platforms Inquiry, December 2018

ACCC media release, “ACCC releases preliminary report into Google, Facebook and Australian news and advertising”, 256/18, 10 December 2018