ACCC sharpens data focus

James Riley
Editorial Director

The ACCC has sharpened its focus on competition issues within the fast-emerging data economy and underscored a greater willingness to investigate inside the blackbox to better understand the specific design of an algorithm.

Speaking in Sydney, Australian Competition and Consumer Commission chairman Rod Sim also outlined longer term plans for the Consumer Data Right, and for the first time unveiled some early thinking about what a data access regime might look like for data.

Mr Sims said that the value of data was only now beginning to become apparent, presenting challenges for regulators in understanding the specific impact on access to data on market competition.

This has been particularly the case in relation to Big Tech, where regulators have struggled to understand – or to predict – the impact on competition of mergers and acquisitions where data, rather than revenues are the primary feature.

Mr Sims pointed to Google’s acquisition of DoubleClick in 2008 and Facebook’s acquisition of WhatsApp as seismic demonstrations of the impact on market power of acquisitions where the value is based on the data and the channels to collect it.

The ACCC is mid-way through its Digital Platforms Inquiry, with a preliminary report expected to be handed to the Treasurer in early December.

On the Consumer Data Right which comes into effect next Mr Sims reaffirmed that its role simply as a data portability right, aimed at reducing the costs consumers incur when switching between providers, and also lowering the barriers to entry for new providers. Competition should be enhanced as a result, leading to better prices for consumers as well as more product innovation.

But he poured cold water on some expectations among FinTech’s and non-banks that the CDR was an access regime by another name.

“There is no general right of access for competitors or potential rivals to data held by an incumbent, in the banking sector or elsewhere,” Mr Sims said. “The rights created in the regime belong to the consumer not to a competitor.”

However, he outlined some early thinking about how a data access regime might work – including potentially the extension of the CDR – if it were found to be a good mechanism for improving competition and innovation.

The regulation of the data economy is emerging as a key talking point. Reinventure Group co-founder and managing director Danny Gilligan said it was good to see the commissioner acknowledging the role of network effects in digital businesses, but argues that data network effects have different characteristics from underlying networks of the marketplace.

“To me it shows the challenges the regulators have in getting up the learning curve around technology and data,” Mr Gilligan said.

“One observation I have is that it highlights the point I made in my Global Data Wars paper that we have too much of our regulatory and policy framework fragmented across multiple agencies.”

“We need to have a national strategy that covers all domains and ideally a single ‘RBA for Data’ that balances the need to develop the data economy into a globally competitive market whilst advancing the protections around security, privacy and transparency,” he said.

Broadly Mr Sims said that while data and data markets presented some challenges to regulators, they were “fresh incarnations of the same issues that we encounter in market definition and merger assessments. There is nothing new under the sun, after all.”

He said the current ACCC against travel website Trivago, where the commission alleges “Trivago ran TV advertisements presenting its website as an impartial and objective price comparison service that would help consumers identify the cheapest prices for hotel rooms when in fact, Trivago’s website prioritised advertisers who were willing to pay the highest cost per click fee to Trivago.”

“The case, which is still before the court, underscores our growing concerns in relation to comparison platforms, and on how algorithms present search results to consumers.

“In some respects, this is consumer protection 101; there is nothing new in allegations that a company says one thing, expressly or by implication, but does another either overtly or surreptitiously.

“But the new way in which this conduct is emerging does raise some challenges in terms of identifying matters and investigating the black box.”

Matters involving data and algorithms had been signalled as a priority for the ACCC in 2018, and commission had invested in an internal team, the Strategic Data Analysis Unit, as a new investigations resource.

“The Unit has turned out to be instrumental in allowing us to analyse data and algorithms across a range of investigations that we are currently undertaking in both the competition and consumer areas, including in our growing market study work. The unit played a pivotal role in our Trivago case,” Mr Sims said.

Beyond algorithms, the ACCC is also increasingly looking at the gathering and use of data by platforms and others companies online. Specifically, it is focused on instances where companies have failed to disclose the extent of gathering, changed their position on gathering or use of data and not adequately informed or obtained consent.

It is also investigating terms and conditions related to data gathering and use to determine whether they may represent unfair contracts.

“The nature of the information shared, the people with whom it is shared, the conditions of sharing and the impact of the sharing on the operation of markets is something that we are now finding ourselves looking at closely in many markets that rely of exchange of data,” Mr Sims said.

“We analyse the competitive problems looking carefully at any obstacles to competition created by market participants and the interactions between parties which might amount to anti-competitive concerted practices or even collusion.”

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