Published on the 14/12/2018 | Written by Heather Wright
Google and Facebook are ‘unavoidable business partners’ for Aussie business, says watchdog…
The ACCC has served up 11 recommendations, including the establishment of a new regulatory authority, as it looks to crack down on digital platforms – with Google and Facebook firmly in its sights.
Rod Sims, ACCC chair, says the Digital Platforms Inquiry has also uncovered some ‘concerns’ that certain digital platforms have breached competition or consumer laws, with the ACCC currently investigating five allegations to determine if enforcement action is warranted.
The 374-page preliminary report in the Digital Platforms Inquiry, which says Google and Facebook have ‘substantial’ market power locally, outlines the ACCC’s concerns over the market power held by key platforms and their impact on Australian businesses, as well as concerns on the extent of consumer data collected and used to enable targeted advertising.
“It is very important that governments … be proactive in reacting to and anticipating challenges and problems.”
Sims says while many of the changes brought by digital platforms have been positive, the platforms are also ‘unavoidable business partners for many Australian businesses’.
“Google and Facebook perform a critical role in enabling businesses, including online news media businesses, to reach consumers. However, the operation of these platforms’ key algorithms in determining the order in which content appears is not at all clear,” Sims says.
The preliminary recommendations include a call for a regulatory body to monitor areas including how the platforms rank and display advertisements and organic content and whether the acquisition of a product or service from the same digital platform affects the ranking, and the impact of any related business of a digital platform, such as how referral links appear in search engine results.
Further analysis and assessment on the creation of a digital platform ombudsman is also on the cards, though not a recommendation at this point. It is one of nine areas which the ACCC says requires further analysis and assessment, alongside the likes of deletion of user data and monitoring of intermediary pricing.
The report also proposes strengthened merger laws. It says the ACCC intends to ask large platforms to provide advance notice of the acquisition of any business with activities in Australia to provide sufficient time to enable a thorough review of likely competitive effects.
“If such a commitment were not forthcoming from the major digital platforms other options could be considered to address this issue,” the report warns.
Changes to the Competition and Consumer Act 2010 are also proposed, highlighting the impact of removal of a potential competitor and the amount and nature of data the purchaser would gain access to through the acquisition.
In a move highlighting its unease over Google and its Chrome and Google Search offerings, the ACCC is also considering recommending that suppliers are required to provide consumers with options for internet browsers and search engine, rather than providing default offerings.
An enforceable code of practice, under the Privacy Act, for digital platforms is also proposed, covering how personal information is collected, used and disclosed.
Other preliminary recommendations cover copyright, take-down orders and the review of existing, disparate media regulations.
The ACCC has repeatedly noted its concerns over data gathering and the potential issues created by the concentration of market power and broader impacts of digital platforms as companies such as Google and Facebook change the way consumers communicate, access news and view advertising online.
Algorithms have also been an increasing focus for the organisation – in September it took action against Trivago, alleging the site is prioritising advertisers willing to pay the highest cost per click – and the report notes a lack of transparency in the operations of Google and Facebook’s key algorithms, and the other factors influencing the display of results on Google’s search engine results page and the surfacing of content on Facebook’s news feeds.
“This lack of transparency makes it difficult for advertisers to understand the factors influencing the display of their advertising to consumers and, in particular, to identify whether Google or Facebook are favouring their own business interests at the expense of advertisers.”
The report says it is not clear that the appropriate balance has been struck between avoiding the risk of businesses ‘gaming’ key algorithms and ensuring advertisers are appropriately informed.
The ACCC says its concerns extend to intermediary services offered by Google and other businesses to advertisers and websites in order to match advertising demand and supply.
“It is very important that governments recognise the role digital platforms perform in our individual and collective lives and to be responsive, and indeed proactive, in reacting to and anticipating challenges and problems.”
The report notes that the ACCC will be sharing and discussing its findings and recommendations with regulators internationally.
Submissions close 15 February 2019.
