ACCC digs deeper into digital platforms

Denham Sadler
National Affairs Editor

The competition watchdog’s new $27 million digital platforms unit has been put straight to work, with two inquiries launched into some of the biggest tech companies in the world.

Treasurer Josh Frydenberg has directed the Australian Competition and Consumer Commissioner (ACCC) to look into advertising technology as well as to keep the spotlight on digital platforms over the next five years.

The two new inquiries are part of the federal government’s response to the ACCC’s “ground-breaking” inquiry into digital platforms, which was completed last year.

Josh Frydenberg
Josh Frydenberg: Putting a spotlight on digital platforms

“Digital technologies are going to be an increasingly important part of our economic and social landscape. Our reforms will ensure we get the balance right and position Australia as a leading digital economy,” Treasurer Josh Frydenberg said.

“The government is delivering a regulatory framework that is fit for purpose and better protects and informs Australian consumers, addresses bargaining power imbalances between digital platforms and media companies and ensures privacy settings remain appropriate in the digital age.”

They will be conducted by the ACCC’s new 20-person digital platforms unit, which has received $26.9 million in funding over four years.

Under the Competition and Consumer Act 2010, the ACCC has the legal authority to compel companies to provide relevant information or documents to its inquiries. It will likely force the likes of Facebook and Google to provide information on how it uses the data of its users to sell advertising and relevant revenue data.

The Act allows the ACCC to request “within the specified period and in the specified manner, specified documents” or information.

As directed by government, the competition watchdog will continue to monitor digital platforms like Facebook and Google over the next five years, delivering interim reports every six months.

Through this inquiry the ACCC will look at competition for the supply of digital platform services, practices of the tech companies which may lead to consumer harm, market trends in the space and developments in the market around the world.

It will cover digital platforms that are internet search engines, social media platforms, digital content aggregators, media referral services and electronic marketplace services. The ACCC will also be looking at digital advertising services supplied to these companies and their data handling practices.

The watchdog’s other inquiry is more targeted, focused on competitiveness and the efficiency of markets in advertising technology.

Its scope covers the availability to publishers and advertisers of information on activities in these markets, the concentration of power, the auction and bidding processes, the impact of mergers and acquisitions, the distribution of digital display advertising expenditure and how competition may impact the supply of services.

The ACCC plans to release an issues paper next month and is set to deliver an interim report by the end of the year. The final report due at the end of August 2021.

In its Digital platforms inquiry, the ACCC raised concerns with “significant opacity” in the operation of ad tech.

“There is a lack of transparency in the pricing of services used to facilitate automated or programmatic online display advertising. This means that both advertisers and websites lack visibility over pricing,” it said.

“The ACCC has concerns about the potential for the misuse of market power within advertising and other markets, and about the potential for other market inefficiencies to be caused by a lack of transparency.”

The watchdog completed its 18-month inquiry into the market dominance of digital platforms midway through last year. It made 23 “significant” recommendations to government to curb the market dominance of the likes of Facebook and Google, including changes to competition law, consumer protection, media regulation, privacy laws and merger laws.

The Coalition responded to the report at the end of last year, acting immediately on a handful of recommendations but mostly consulting further on the more contentious areas of reform.

The Opposition warned the response would lead to a “backlog of policy work”, saying the Coalition’s “heart was never in the reform agenda”.

Do you know more? Contact James Riley via Email.

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