Denham Sadler
September 16, 2019

Facebook cranks up attack on ACCC

Policy

Facebook cranks up attack on ACCC

Rod Sims: Having a crack at Google and Facebook over market behaviour

The competition watchdog’s landmark Digital Platforms Inquiry report does not understand the tech industry and has the potential to “adversely impact Australia’s economy”, Facebook has said in a scathing submission to government.

It comes just days after the Australia Competition and Consumer Commission (ACCC) chair Rod Sims slammed both Google and Facebook for not taking responsibility for their own platforms, saying that the “pressure for change is coming”.

The ACCC’s final report was released in July, and included 23 recommendations to the federal government for “significant, holistic” reform to curb the market dominance of the likes of Facebook and Google.

These recommendations focused on competition law, consumer protection, media regulation and privacy law.

The government is now consulting on these recommendations, with submissions to Treasury closing last week.

The ACCC’s “world-first” report was discussed at a meeting in New York of about 30 heads of competition and antitrust agencies from around the globe, with its intent and recommendations welcomed by the worldwide regulators.

Mr Sims also went on the offensive, hitting back at Google and Facebook for trying to avoid responsibility for the platforms they have created.

“Google and Facebook are very different businesses, but the thing that strikes me is how little responsibility they take for their platforms. They say, ‘we’re just technology platforms so don’t blame us’. I think that’s outrageous,” Mr Sims told The Sydney Morning Herald.

“They not only created these platforms but they are actively influencing them through their algorithms and making a huge amount of money out of it. The longer they take the view that they are just a ‘dumb pipe’, the more intrusive governments and regulators are going to be.”

In its submission, Facebook argues that several of the ACCC’s significant recommendations lack any evidence, are based on assumptions, and are out of step with international laws.

Facebook’s 141-page submission slams many aspects of the ACCC’s 18-month inquiry and is significantly more critical than DIGI’s submission to government, the Australia-based industry group of which Facebook is a founding member, along with Google and Twitter among others.

Facebook has supported just 15 of the 29 broader recommendations, supporting five in principle, noting four and opposing five outright. 

The tech giant took particular issue with a call to strengthen Australian privacy laws, changes to merger rules, and a new copyright take-down regime.

Of the recommendations it does support, Facebook has still warned that the “devil is in the detail” and more work is needed to identify the “best policy frameworks for the internet”.

In its submission, Facebook also hit back at the competition watchdog for grouping it in with Google, and that some of the recommendations are based on “misunderstandings about competitive dynamics of our industry and a mischaracterisation of aspects of our service”.

The overarching conclusion of the report, that there is an imbalance in the relationship between these tech giants and advertising and media companies, is not backed by evidence, Facebook said. The tech company is arguing that the ACCC “buried the lead”.

“Its 18 month inquiry, including an exhaustive review of our business, found no evidence of anti-competitive conduct on the part of Facebook nor does it accurately reflect the unique, unmatched power and influence of media companies in Australia,” Facebook said in the submission.

“We do not believe that the final report demonstrates a deeper understanding of the dynamic nature of our industry and services. Designing regulatory solutions that conflate Facebook and Google...will not address the important policy considerations for the role of data and technology in Australia’s economy.”

“The final report concludes that significant remedies are warranted, even in the absence of any finding of anti-competitive conduct.”

The ACCC called for reforms to Australia’s merger laws to better consider whether a potential competitor is being acquired, and the amount of data that will be bought. This recommendation has been criticised by a number of tech groups and companies for potentially stifling innovation and blocking a potential exit for local founders.

Facebook said this recommendation is based on “speculative analysis” and is “not supported by evidence of any existing gap in Australia’s merger laws”.

The social media giant also railed against many of the several privacy law reforms included in the ACCC’s final report. According to Facebook, these changes are out of line with international laws and represent a “dangerous strategy”.

The tech giant accused the ACCC of “cherry picking” from the European Union’s recently introduced General Data Protection Rule, creating an “inconsistent and more inefficient privacy framework”.

“Such a strategy may present risks to Australia’s future engagement with the global digital economy by making Australia a less desirable jurisdiction in which to do business. It would not be wise for Australian privacy laws to diverge from developing international standards in this area,” it said.

The changes are out of step with the GDPR, which has the support of Facebook, the submission said. The changes would be “GDPR minus, not GDPR plus”, it said.

“The final report’s proposal is a substandard version of European privacy laws that would ultimately be a detriment to consumers and the Australian economy,” Facebook said.

“Technology is a great equaliser for Australia and the final report’s proposal would increase barriers to trade and limit the benefits to Australians, without any increase in consumer welfare. It is possible to have robust privacy laws, suitable for the digital age, and we believe the GDPR provides that model.”

The ACCC’s recommendation for stronger requirements for tech companies to obtain informed consent from users and defaulting to more privacy-friendly settings represent a “radical expansion” of existing rules, Facebook argued, and would lead to “consent fatigue and disengagement by consumers”.

A call for the Office of the Australian Information Commissioner to develop a privacy code for digital platforms was also rejected by Facebook, with the submission saying that it would create confusion amongst consumers about who their privacy rights apply to.

Facebook also slapped back at the report’s recommendation for a mandatory code to govern the notice and takedown of copyright infringing content hosted by these platforms, instead calling for the expansion of the safe harbour regime to tech firms.

In the scathing submission, Facebook also said the competition watchdog has overestimated the referral traffic that Facebook provides to advertisers, and argued that its own platform isn’t an “essential channel”.

Facebook’s highly critical submission follows DIGI’s own offering last week, which also hit back at a number of the more significant reforms proposed.

The industry group claimed that the ACCC has gone beyond its remit for the inquiry and that many of the recommendations would lead to “unintended consequences” that could stifle innovation and damage the broader economy.

The government is expected to reveal its response to the ACCC report and recommendations by the end of the year.

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