Denham Sadler
February 26, 2019

Tech giants reject ACCC report

Algorithms

Tech giants reject ACCC report

Tech giants: Unsurprising rejection of ACCC "algorithm regulator" proposal.

Tech giants Google and Facebook have unsurprisingly rejected the Australian competition watchdog’s proposed "algorithm regulator", the key recommendation from its "world-first" inquiry into digital platforms.

The two companies, which have been the main focus of the Australian Competition and Consumer Commission’s inquiry, released their submissions on the preliminary report late last week.

While both offered qualified support of the general themes contained in the report, the tech titans took issue with the central recommendation for the creation of a powerful new regulatory body to monitor, investigate and report on factors impacting the ranking and displaying of advertisements and news contents on these platforms.

The body would be tasked with ensuring the algorithms used are not being used to favour certain businesses over others, and reporting publicly on the performance and impact of these algorithms, such as the one used by Facebook to rank news content in the NewsFeed.

In a submission to the report, Facebook vice president of APAC policy Simon Milner said an "algorithm regulator is not the answer" to the issues facing competition in the sector and the journalism industry.

"The most striking recommendation by the ACCC with regard to sustainable journalism is for an algorithm regulator for ‘monitoring, investigating and reporting on the criteria, commercial arrangements for other factors used by relevant digital platforms to impact...the ranking and display of news and journalistic content with the aim of identifying the effects of algorithms or other policies on the production of news and journalistic content’," Mr Milner said.

"The ACCC has not made a case or provided any evidence for why they believe an algorithm regulator is necessary, effective and proportionate response to the business model challenges facing news media. More importantly, people, not regulators, should decide what they see in their NewsFeeds."

But Mr Milner did admit that there needs to be more transparency surrounding the use of algorithms by tech companies, and Facebook would be making "more announcements" on this later in the year.

"However, we do not believe that greater algorithmic transparency will solve the problem of how to support sustainable journalism in Australia or in other countries, nor will it make it easier for news organisations or individual journalists to monetise their content," he said.

In a separate submission, Google Australia managing director Mel Silva also hit back at the ACCC’s proposal, saying it "risks poor outcomes".

"We already provide extensive guidance on search ranking, including our 164-page Search quality rater guidelines, and the How Search Works guide. And, of course, Google Search results are open for all to see," Ms Silva said.

"We believe this approach balances the need for transparency against the risk of manipulation by bad actors and do not believe that an algorithm regulator would lead to higher quality search results or promote journalism."

The proposed new regulatory body would have widespread powers, and the target tech companies’ opposition to it is unsurprising. Under the preliminary recommendations, the body would have powers over any digital platform that generates more than $100 million annually from digital advertising in Australia.

It would have the power to investigate complaints, initiate its own investigations, make referrals to other agencies and publish reports and recommendations.

In its submission, Google also criticised the ACCC for not recognising that it already has a "lot of competition" in advertising and online searches.

"From an advertising perspective, search advertising is just one of many channels advertisers invest in and we compete directly for advertising dollars with other digital channels, as well as television, print, radio and outdoor advertising. The popularity of digital is, in part, due to the unprecedented ability it provides for advertisers to measure the impact of their ad spend and other media channels are fast catching up," Ms Silva said.

"This is not examined in the preliminary report and we believe there should be further consideration of the competition Google faces for user queries on search and the competition for advertising investment, both among digital providers and other forms of advertising."

Google also looked to differentiate itself from new policies that would be applied to social media sites. 

"Google News has no ads nor does the news results tab on the search page. Unlike social media sites, which operate in largely closed environments and benefit from users spending more time on the site, the success of Google Search relies on linking users with relevant results. This is an important distinction, highlighting the need to differentiate between digital platforms," Ms Silva said.

In its submission, Facebook said that stronger cross-industry public and private sector collaboration on products and programs is a "more sustainable and consistent" way to improve the situation.

"We support regulation that is effective, evidence-based, protects consumer interests and is pro-innovation for Australian businesses while reducing the harm that is intended to address, allowing governments to define what they want - and allowing companies to figure out how to meet that standards and allowing governments to certify the systems that companies put in place," Mr Milner said.

Other policies recommended by the ACCC included the strengthening of privacy laws, which Google has said should apply to all organisations currently subject to the Privacy Act.

The preliminary report was handed down in December last year, and the ACCC is expected to table the final report in June this year.

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