Gov’t responds to digital platform inquiry

Denham Sadler
Senior Reporter

The competition watchdog gets an additional $27 million to fund a new unit to monitor Facebook and Google, while new codes of conduct will be developed and the Privacy Act reviewed as part of the federal government response to the ACCC’s “ground-breaking” report on digital platforms.

The Coalition will act immediately on a handful of the recommendations, but will conduct further consultations on most of the more contentious areas of potential reform, with consideration of these recommendations to stretch across the next two years.

The government response comes six months after the ACCC’s final report was released, and more than two years after the digital platforms inquiry was launched.

Scott Morrison on the digital platforms inquiry

Prime Minister Scott Morrison, along with Treasurer Josh Frydenberg and Communications Minister Paul Fletcher, announced the government’s response in Melbourne on Thursday morning.

“I want Australia to be in the leadership pack, if not even at the front of that pack when it comes to our success in the digital economy and that means we need to modernise our regulatory environment,” Mr Morrison told the media.

“We want to be the model jurisdiction in the world for how we are dealing with digital platforms. It’s not about trying to regulate a sector, this is about ensuring a whole new area of our economy operates on the same rules as the physical economy,” he said.

“We have to work to establish the same rules and expectations in the digital place as apply in the real space.”

The Coalition has been stuck between giant tech companies like Facebook and Google and media giant News Corp as both sides lobbied intensely in the lead-up to the response.

Five of the recommendations from the competition watchdog will be responded to immediately by the Coalition.

The government will give the ACCC $26.9 million over four years to establish a new Digital Platforms Branch to monitor and report biannually on the digital platforms, take necessary enforcement action and conduct new inquiries, the first of which will be on ad-tech services and the supply of online advertising.

Major digital platform companies will be asked to develop a voluntary code of conduct for dealing with disinformation and improving news quality, with the ACMA to have an oversight role and report back to government on these documents.

Another voluntary code will also be developed to address bargaining imbalances between digital platforms and media companies, with the ACCC to report back to government on the progress towards this by May next year. This code will be finalised by next November.

The code will only be binding for companies that choose to sign up, but the government will consider a mandatory code if the voluntary one isn’t developed successfully.

“The companies are on notice – the government is not messing around. We will not hesitate to act. What we are seeking to do here is not only to minimise the harm but to maximize the opportunities for all Australians and for the economy as a whole,” Mr Frydenberg said.

Recommendations to strengthen privacy laws and significant reforms to the Privacy Act were some of the most controversial aspects of the ACCC reform.

In its response, the government pointed to its existing commitments to increase penalties for data breaches and introduce a binding online privacy code, while also pledging to conduct a new review of the Privacy Act.

The review will “ensure it empowers consumers, protects their data and best serves the Australian economy” and identity areas where consumer privacy protection will be improved and to ensure the privacy regime “operates effectively for all elements of the community and allows for innovation and growth of the digital economy”.

It will also extend current consultations on the Act to seek input on some of the ACCC’s recommendations, including that the definition of personal information be broadened to include technical data, existing notice and consent requirements be strengthened, and to introduce a direct right of action for users to bring actions in court to seek compensation for privacy breaches.

A staged process of media regulation reform will be conducted, with an aim to reach a platform neutral regulatory framework.

Of the other recommendations made by the competition watchdog, the government will either by conducting more consultation on them next year, or has rejected them outright.

“While a number of the ACCC’s recommendations will be progressed immediately and several of the recommendations align with existing commitments, others will need further consideration and engagement given the complexity of the issues and the potential to have economy-wide effects,” the ministers said.

Mr Frydenberg said the government would not take “knee-jerk” actions, and that “when you are talking about putting in place state of the art regulatory devices you need to get it right”.

A major recommendation from the report was for the establishment of a new Ombudsman, or the expansion of the Telecommunications Industry Ombudsman’s powers, to oversee complaints relating to digital platforms.

The Coalition has not committed to going ahead with this and will instead launch a pilot external dispute resolutions scheme which will be assessed over the course of next year, with a final decision made on the need for a new Digital Platforms Ombudsman in 2021.

Another contentious issue emerging from the inquiry was the need for reforms to merger laws to ensure tech giants don’t gobble up early-stage tech firms that could potentially become competitors. The ACCC recommended reforms to merger laws which would require these matters, and how much data would change hands, to be more closely scrutinised.

The government has also not committed to this, and will be launching a “broad consultation process” on the proposed amendments next year. This recommendation was criticised by a number of startup and tech organisations, and the government noted that the changes would “affect businesses across the Australian economy and not just digital platforms”.

In its response, the government rejected the ACCC’s calls for a mandatory copyright take-down code, warning against potential unintended consequences of such a scheme that emerged during consultations.

“There was certainly strong agreement as to the nature of the issue and our government is concerned about whether the digital platforms are facilitating content being displayed which infringes the copyright of owners, but the view we got quite strongly from many across the sector was they didn’t feel that particular copyright tool was appropriate,” Mr Fletcher said.

It also rejected the report’s call to make changes to the tax settings to support public interest journalism.

Do you know more? Contact James Riley via Email.

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