Denham Sadler
December 10, 2018

ACCC sets target: Google, Facebook

Policy

ACCC sets target: Google, Facebook

Rod Sims: The ACCC has set sights on the digital platform giants on advertising

A powerful new regulatory body would be established to oversee tech giants like Google and Facebook as part of far-reaching reforms recommended by Australia’s competition watchdog to curtail the market dominance of the tech giants.

The ACCC has released its draft report as part of its “world-first” digital platforms inquiry. Its recommendations include the strengthening of privacy laws, a new Ombudsman, better transparency around data practices, and amended merger rules.

The draft report includes 11 recommendations and eight areas for further consideration, with the ACCC now running consultations before releasing its final report mid-next year.

Under proposed new regulations, the tech giants would have to notify the ACCC about planned acquisitions in advance, allow for third-party tracking of advertising costs, and to allow for options outside of their own services as the default.

The ACCC’s inquiry, which was launched by the federal government in December last year and has garnered the attention of the world, has focused on the concentration of market power and the implications of the growth of the tech giants.

The central issues outlined in the draft report are the market power of Google and Facebook, a lack of transparency in how they operate, the favouring of related businesses, targeted advertising, a lack of consumer protections, and the risk of filter bubbles and unreliable news.

The report’s executive summary calls on government to be on the front foot and to regulate the market dominance of these global companies.

“We are at a critical time in the development of digital platforms and their impact on society. Digital platforms have fundamentally changed the way we interact with news, with each other and with government business,” it said.

“It is also clear that the markets in which digital platforms and news media businesses operate will continue to evolve.

“It is very important that governments recognise the role digital platforms perform in our individual and collective lives and to be responsive, and indeed proactive, in reacting to and anticipating challenges and problems.”

The strongest – and sure to be most controversial – recommendation from the draft report is for the creation of a new regulatory authority to oversee the market power of the likes of Facebook and Twitter.

The authority would be tasked with monitoring, investigating and reporting on factors impacting the ranking and displaying of advertisements and news content.

It would have the powers to refer matters to the government for investigation, ensure algorithms are not being used to favour certain businesses and report publicly on the performance and impact of key algorithms such as the one used by Facebook to rank content in the NewsFeed.

The authority would also be given a similar role in terms of cracking down on “discriminatory behaviour” from the tech giants in favouring their own businesses above others.

It would consider the ranking and displaying of advertisements and whether acquisitions affect the displaying of content.

The authority would have powers over any digital platform that generates more than $100 million annually from digital advertising in Australia, and would have powers to investigate complaints, initiate its own investigations, make referrals to agencies and publish reports and recommendations.

The competition watchdog is also considering recommending that Google be forced to not make Chrome and its own search engine the default option on its operating systems.

The ACCC has floated the possibility of a new digital platforms ombudsman which would deal with complaints from consumers, advertisers and media companies about digital platforms, resolving disputes and investigating complaints.

The draft report recommended that the Office of the Australian Information Commissioner be better resourced and to work on an enforceable code of practice to provide Australians with “greater transparency and controls over how their personal information is collected, used and disclosed by digital platforms”. This would allow for “proactive and targeted regulation of digital platforms’ data collection”.

It also called on amendments to the Privacy Act to strengthen data protection and security for these digital platforms.

The government should also conduct a separate review of the regulatory frameworks in order to identify “unnecessary regulation” and ensure current rules are applied “effectively and consistently across business types”.

“Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content. Yet, digital platforms face less regulation than many media businesses,” ACCC chair Rod Sims said.

“The ACCC considers that the strong market position of digital platforms like Google and Facebook justifies a greater level of regulatory oversight. Australian law does not prohibit a business from possessing significant market power or using its efficiencies or skills to ‘out compete’ its rivals,” he said.

“But when their dominant position is at risk of creating competitive or consumer harm, governments should stay ahead of the game and act to protect consumers and businesses through regulation.”

The ACCC will now be accepting submissions on its recommendations and draft report until mid-February, and is expected to deliver its final report to government by June.

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