Two years ago, competition tsar Rod Sims handed his landmark final report on digital platforms to the federal government.
But it was a decision 18 months earlier which laid the groundwork for the success of the Australian Competition and Consumer Commission’s (ACCC) inquiry into the market power of Facebook and Google, Mr Sims said, and placed Australia at the forefront of the global battle to curtail the power of Big Tech and which gave the ACCC a seat at the global table on these discussions.
While the thrust of the inquiry had been to address the impact of the market power of Facebook and Google on news and media companies, the broad terms of reference finalised by the federal government in late 2019 paved the way for its success, the ACCC chair told InnovationAus.
These terms of reference were extremely broad, with the ACCC directed to investigate the market power of large digital platforms in dealing with media companies, their impact on choice and the quality of news, their impact on media and advertising markets, the impact of information asymmetry between those involved, and longer-term trends on competition in media and advertising.
This allowed the competition watchdog to look more widely at the huge market power of Facebook and Google, and call for a number of significant recommendations that looked far beyond the media world, Mr Sims said.
“It was the broadest report on digital platforms that had been done to that point anywhere in the world, and that’s because we got that direction from government with very broad terms of reference,” he said.
“That allowed us to take a look at a wider range of issues than others had looked at, all in one place. So it allowed us to just deal with so much. We were able to look at the data issues, the privacy issues, the AdTech, the apps and the market power issues in great detail.
“We were fortunate to get that very broad inquiry which allowed us to really open up so many issues. People seeing them opened up in that broad way really had a big impact – we’ve come so far over the last couple of years.”
The ACCC handed the final report to the government in July 2019. It included 23 recommendations for “significant, holistic reform” to curb the market dominance of Facebook and Google, including changes to competition law, consumer protection, media regulation, privacy laws and merger rules.
Mr Sims said he is “extremely pleased” with the progress in the two years since the report was finalised, with several of its key recommendations now in train.
On the back of the digital platforms inquiry, the government has launched a wide ranging review of the Privacy Act, ordered the creation of a series of codes of conduct for the digital platforms, put into force a media bargaining code and stumped up nearly $30 million for a new Digital Platforms Unit within the ACCC to continue the work.
“We’ve had a pretty good hit rate, and there’s a long way to go. Virtually all the recommendations are being acted on, and a number of them are clearly being progressed in a very positive way,” Mr Sims said.
“Anybody who thinks you could do it quickly doesn’t understand how economic reform occurs. Everything takes time, but the speed at which these issues are being dealt with I think is incredibly impressive.”
Perhaps most crucially, the report has provided Australia with credibility on a world stage and given it more influence among other regulators, Mr Sims said.
“We’re much more in contact with our international colleagues. We’d always been in contact with them on so many antitrust issues, but the report has played us into being a bit of a central player with others with what’s going on around the world,” he said.
“We’ve linked in to our international colleagues in an amazing way. We’re sharing ideas with each other, we’re learning off each other and that’s the broad response that you need to take. Each jurisdiction has its own document it can point to, but I like to think our document really helped with a lot of other work.”
By far the recommendation that has received the most attention, and generated the most controversy, from the inquiry has been the news media bargaining code, which forces Facebook and Google to enter into arbitration to determine revenue sharing deals for the use of news content.
During the legislative process, both tech giants railed hard against the concept, with Facebook even moving to briefly ban all news content for Australian users. The bargaining code legislation was eventually passed by Parliament after a number of last minute amendments.
While the code is now law, the government is yet to designate either Facebook or Google under it, meaning it is not properly in effect.
But Mr Sims said the code is working even better than intended, with several media organisations already having secured lucrative deals with the tech giants.
“It has exceeded our expectations. You’ve got deals now completed with all of the three categories of media companies,” Mr Sims said.
“Virtually all media organisations are pretty happy with the deals they’ve got, and some are extremely happy. These are big amounts of money at the higher end of what we expected. That’s been good. I hear a lot of stories about extra journalists going to be hired, and extra property that’s going to be rented to accommodate that growth.”
The report catapulted Mr Sims and the ACCC to the forefront of Australia’s prominent fight with big tech, making them the public face of this high-profile battle. Mr Sims said he is comfortable with this role, and he’s not out to make any friends.
“We often find ourselves in a pretty upfront position that probably doesn’t win us many friends, but it’s the work we’ve got to do,” he said.
“I think at the moment in a worldwide perspective we’re just one of a number of jurisdictions with these issues and we’re all working very closely together. That just goes with our territory.”
And this work has only just begun, with the launch of the Digital Platforms Unit with long-term funding. The 27-person unit within the ACCC is currently looking at AdTech, apps and choice screens, and will be “crucial” to the competition watchdog’s longer term work in the space, Mr Sims said.
“We’ve got a very full agenda of things that we’re trying to deal with,” he said.
“Our next year in this area is going to be really exciting and hopefully will shape the way things go from here. I think the landscape is going to change enormously over the next one to three years.”
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