Australian consumers and businesses encounter significant harmful practices across a range of digital platform services without sufficient laws in place, the final report of the ACCC’s Digital Platform Services Inquiry has found.
Gina Cass-Gottlieb, the competition watchdog’s chair, said digital platform services are “critically important” to Australian consumers and businesses and are major drivers of productivity growth.
“While these services have brought many benefits, they have also created harms that our current competition and consumer laws cannot adequately address,” she said.
“This is why we continue to recommend that targeted regulation of digital platform services is needed to increase competition and innovation, and protect consumers in digital markets.”
The report, which concludes the ACCC’s five-year inquiry, has reiterated support for measures including an economy-wide unfair trading practices prohibition, an external dispute resolution body for digital platform services and a new digital competition regime.
The inquiry found that there continues to be significant risk of consumer and competition harms on digital platforms.
Consumers continue to face unfair trading practices in digital markets including manipulative design practices, such as user interfaces that direct consumers to more expensive subscriptions or purchase options.
“72 per cent of Australian consumers surveyed by the ACCC reported that they had encountered potentially unfair practices when shopping online, such as accidental subscriptions or hidden fees. An unfair trading practices prohibition is required to protect consumers from these kinds of tactics, both online and offline,” Cass-Gottlieb said.
“Our consumer survey also found 82 per cent of respondents agree that there should be a specialised independent external dispute resolution body for users of digital platform services to escalate complaints which cannot be resolved with platforms directly.”
“An external dispute resolution body would also help Australian small businesses who rely on digital platforms to reach their customers – for example, when a fake review is made about their business on a search engine or marketplace, or when they have an account deactivated and lose their means of accessing their customers on social media,” Ms Cass-Gottlieb said.
The ACCC has also observed conduct by the most powerful digital platforms that is distorting the competitive process over the course of this inquiry.
This conduct includes denying interoperability, self-preferencing and tying, exclusivity agreements, impeding switching and withholding access to important hardware, software and data inputs.
“A lack of competition in digital markets can lead to higher prices, less choice, lower quality or even greater harvesting of personal data, ultimately impacting everyday users,” Cass-Gottlieb said.
“There is broad international recognition that there is anti-competitive conduct in digital markets that needs to be addressed. Several jurisdictions have already introduced regulation to improve competition in digital markets, including the European Union, the United Kingdom, Germany and Japan.
“It is timely to progress a new digital competition regime in Australia which will increase contestability, benefit both local and foreign companies that rely on access to these platforms to conduct business in Australia, and support a growing economy.”
The final report has also outlined how emerging services and technologies, like cloud computing and generative AI, may exacerbate existing risks to competition and consumers in Australia or give rise to new ones.
Cloud computing is continuing to grow globally, which benefits both businesses and consumers, but the ACCC has flagged a range of potential competition risks in this sector.
“We found that the major providers of cloud computing in Australia – Amazon, Microsoft and Google – are vast, incumbent digital platforms that are vertically integrated across the cloud technology stack,” Cass-Gottlieb said.
“Vertically-integrated cloud providers may be incentivised to engage in conduct that could harm their competitors – for example, anti-competitively bundling their own services across different layers of the cloud stack.”
The report also found that generative AI developers and deployers generally require access to significant cloud computing power to train and deploy their products, however, cloud providers may be incentivised to anti-competitively bundle or self-preference their own products above those of competitors.
“Harms to competition in the generative AI sector could hamper innovation, result in lower quality products and services, and force Australian businesses and consumers to pay more than they otherwise would to utilise this technology,” Cass-Gottlieb said.
“To protect against these kinds of risks, it is critical that the proposed digital competition regime enable the ACCC to continue monitoring changes to services it has previously examined, as well as new technologies that emerge over time.”
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