ACCC wants broad changes to curb Facebook, Google

By Chris Pash | 26 July 2019

The final report on the Australian Competition and Consumer Commission’s (ACCC) Digital Platforms Inquiry has landed with a long list of recommendations to deal with the market power of Google and Facebook.

Among the actions wanted by the ACCC is an inquiry into adtech and advertising agencies over programmatic pricing transparency concerns, an update to merger laws, better protections for the privacy of consumers, stricter rules on unfair trading and a code of conduct when the platforms interact with the media.

Treasurer Josh Frydenberg said: "Make no mistake, these companies are among the most powerful and valuable in the world and they need to be held to account and their activities need to be more transparent."

He released the report, which makes 23 recommendations, but kicked off a public consultation process before the government finalises its response, probably by the end of the year. 

“It [the government] therefore accepts the ACCC’s overriding conclusion that there is a need for reform - to better protect consumers, improve transparency, recognise power imbalances and ensure that substantial market power is not used to lessen competition in media and advertising services markets,” Frydenberg says.

“The government also accepts that there is a need to develop a harmonised media regulatory framework.”

Rod Sims, ACCC chair, highlights that consumers lack understanding of how much of their data is captured by big tech and what it’s used for, saying that Google and Facebook’s privacy policies give the “illusion” of protection.

The final report rejected the preliminary recommendation for a “digital watchdog” to oversee Google and Facebook’s algorithms. Instead, it suggests new divisions within the ACCC to look at algorithms.

It also stopped short of recommending that big techs be broken up, an idea backed by News Corp Australia in its submission to the inquiry.

Here’s a look into the recommendations:

Facebook and Google's market power
Looking into the market power that the big techs hold, the ACCC found that Google has substantial market power in the supply of general search services and search advertising services in Australia. It also found it has substantial bargaining power in its dealing with news media business.

The ACCC also found that Facebook has substantial market power in the supply of social media services and the supply of display advertising in Australia. It also found it has substantial bargaining power in its dealings with news media businesses in Australia.

The ACCC says it has carefully considered the threat of potential new social media players.

“While the ACCC considers that the threat of new entry may, in theory, provide a competitive constraint on Facebook, the considerable scale and reach of Facebook (over 20 times that of MySpace at its peak) appears to protect it from dynamic competition,” the report states.

To help curb Facebook and Google’s hold on the market, the ACCC recommends that changes to merger laws be made to take into account whether an acquisition has the “effect or likely effect” of substantially lessening competition.

It also recommends that the large digital platforms agree to a protocol to notify the ACCC of proposed acquisitions, which is currently voluntary, that may impact competition in Australia. It also recommends that there be changes to search engine and internet browser defaults to give Australians greater choice between the big two.

The ACCC also highlights data portability for digital platforms as an area it will continue to look into.

Google and Facebook power

Advertisers
Looking at the relationship between digital platforms and advertisers, it recommends an inquiry into the supply of ad tech services and advertising agencies. It notes that there are issues around transparency, such as advertising agencies, or their holding companies acting as intermediaries and purchasing advertising opportunities from large platforms or media for resale to clients.

“This is a complex area and the ACCC’s experience in this Inquiry suggests that advertisers and others may be unwilling to publicly identify their concerns,” the report states.

“In order to consider these issues more fully and to comprehensively assess whether the ad tech supply chain is operating efficiently, the ACCC recommends that an inquiry into ad tech services and advertising and media agencies be held.

“Such an inquiry would assist in increasing the transparency in the operation of the ad tech supply chain and the operation of advertising and media agencies, and in determining whether any competition or efficiency concerns exist.

Fixing the imbalance between digital platforms and traditional media
The ACCC also looked at the long-running issue of regulation between old media and new media, with the latter largely unregulated.

It recommends that media regulatory frameworks be updated to be platform neutral where possible and “meaningful sanctions” be imposed.

It also suggests that Google and Facebook be required to separately provide a "code of conduct" to the Australian Communications and Media Authority (ACMA) to ensure they treat news media businesses “fairly, reasonably and transparently”. If this deadline isn’t met, it suggests ACMA create a “mandatory standard” for the digital platforms instead.

The code from Facebook and Google will contain commitments around sharing data with news media companies and notifying them of changes to their algorithm ahead of time. Digital platforms should also outline ways to compensate new media companies, such as by sharing advertising revenue, where they obtain value from sharing their content. 

Data concerns
The ACCC also suggests consumers be given more power of their data, criticising the lengthy, complex and ambiguous terms around data agreements between big tech and consumers. It also criticised “take-it-or-leave-it” terms for limiting consumers’ ability to make informed and “freely given consent”. The ACCC suggests unfair contract term be made illegal.

See here for the full report

Additional recommendations made in the report include:

  • Mandatory ACMA take-down code to assist copyright enforcement on digital platforms
  • Stable and adequate funding for the public broadcasters 
  • Grants for local Tax settings to encourage philanthropic support for journalism
  • Improving digital media literacy in the community
  • Digital media literacy in schools
  • Monitoring efforts of digital platforms to implement credibility signalling
  • Digital Platforms Code to counter disinformation
  • Strengthen protections in the Privacy Act
  • Broader reform of Australian privacy law
  • Statutory tort for serious invasions of privacy
  • Prohibition against unfair contract terms
  • Prohibition against certain unfair trading practices
  • Digital platforms to comply with internal dispute resolution requirements
  • Establishment of an ombudsman scheme to resolve complaints and disputes with digital platform providers

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