The Australian Competition and Consumer Commission (ACCC) has issued a preliminary report as part of its inquiry on digital platforms, which started at the end of 2017. The report carries 11 recommendations, and identifies nine areas for further investigation, which will likely be tackled in more detail by the final report to be published by June 2019. Stakeholders have time until February 2019 to provide their input on the comprehensive measures, which give a strong hint at the possible shape of platform regulation in Australia. The ACCC’s initiative is the most thorough and far-reaching regulatory initiative around online platforms so far – even more than the European Commission’s Platform-to-Business proposal, whose scope relates to the interaction between platforms and business users.
The ACCC finds Facebook and Google to have ‘substantial market power’
The ACCC has been looking at the impact of digital platforms, and at possible regulatory measures, for a year now. On 4 December 2017, the authority commenced an inquiry on request of the Federal Government, to understand how digital platforms operate and influence the Australian market, as advertising expenditure shifts from print newspapers to digital media. One of the ACCC’s key concerns is traditional media’s ability to fund content development, thereby affecting choice and quality of news produced in Australia. On 10 December 2018, the ACCC issued its preliminary report. It finds Google and Facebook each to have substantial market power in three markets: Google’s power relates to online search, search advertising, and news referral; Facebook has power in markets for social media, display advertising, and online news referral.
The report carries 11 recommendations, and suggests further investigation in nine areas. The most noteworthy recommendations include tasking a regulatory authority (either new or existing) to monitor, investigate and report on whether large, vertically integrated digital platforms are engaging in discriminatory conduct. The same regulatory authority could also investigate platforms’ ranking of news and journalistic content. Other recommendations call for improvements in consumers’ awareness of use and collection of personal data; this requires updating the Australian Privacy Act by introducing independent third-party notification schemes, strengthening consent requirements, enabling the erasure of personal data, and increasing the penalties for breaches. Among the nine areas for further investigation, the report considers measures to improve news literacy online, and to improve funding for news and journalism; these can include tax incentives and subsidies.
The report’s preliminary recommendations in detail
The report’s recommendations are, at this stage, preliminary: we will need to wait for the final report, scheduled for June 2019, to have a clearer idea of future action the ACCC will aim to take. However, these recommendations provide an indication of the shape platforms regulation is starting to take. The first three recommendations aim to address Google and Facebook’s market power, thereby suggesting the finding of substantial power may lead to some form of ex-ante regulation; the ACCC clearly says that barriers to entry and expansion in these markets are too high for competition to naturally exercise constraints on the two companies. As a result, the ACCC recommends amendments to merger law, also taking into account the amount and the nature of data the acquirer would likely have access to because of an acquisition; and requiring large digital platforms to provide advance notice of acquisitions of businesses active in Australia, so that the ACCC can review the likely effects on competition.
The authority also suggests a remedy similar to that enforced by the EC on Microsoft in 2009, by requiring mobile OS providers to give users more options for internet browsers, rather than a default option; in turn, internet browsers should allow users to choose a search engine, rather than providing a default one. Recommendations 4 and 5 relate to the monitoring of platforms’ activities and their consequences for news media and advertisers, due to the lack of transparency around the way algorithms and policies are operated; to address this, a regulatory authority should monitor whether digital platforms generating more than AUD100m per year in Australia are engaging in discriminatory conduct. The authority would have the appropriate investigatory powers, and be able to obtain information and documents from platforms on a regular basis.
Recommendation 6 calls for a review of regulatory frameworks for media, so that regulation can be consistent across different types of content publishers; the aim should be the implementation of a ‘platform-neutral framework’ to simplify existing regulations and get rid of unnecessary rules. The seventh recommendation is about removal of copyright infringing material: the Authority for Communications and Media (ACMA) should determine a Mandatory Standard for take-down procedures, to solve the uncertainties around liability for digital platforms; this should encourage timely and effective procedures for take-down of content infringing copyright. The last four recommendations aim to improve consumers’ bargaining power through better information; a strengthening of the data protection laws is recommended, with stronger consent and notification requirements, a new right to erasure personal data, and tougher penalties. A Code of Practice for digital platforms is also suggested, which would be overseen by the country’s data protection authority (OAIC). The tenth recommendation suggests the introduction of a statutory cause of action for serious invasions of privacy, whereas the last one proposes to make unfair contract terms entirely illegal, rather than simply voidable, so that platforms have a stronger deterrent when adopting them.
The ACCC aims to further investigate nine areas
The ACCC’s preliminary report bears indications of what will be included in the final report, by identifying nine areas for further investigation. The first three relate to how platforms tackle disinformation. The ACCC will look into ways to support of choice and quality of news and journalism, potentially by introducing badges or signalling for news providers which have committed to certain standards for the creation of news and content; it will consider the development of programmes to improve news literacy online for citizens; and ways to facilitate more funding to news and journalism, including tax incentives. The fourth, fifth, and sixth areas for further analysis relate to competition and commercial practices: the ACCC considers the creation of a ‘digital platforms ombudsman’ to mitigate advertisers’ difficulties in negotiating with Google and Facebook, as well as handle consumers’ disputes. A regulatory authority should be tasked with monitoring of prices for ‘intermediary services’ supplied to advertisers or websites for digital advertising purposes; the ACCC will also consider third-party measurements of advertisements served on digital platforms, to make sure advertisements are delivered to the intended audience and to check that ads’ performance is not overstated.
The last three areas of further investigation concern privacy and consumer protection. In line with the recommendations already set out, the ACCC aims to look more closely at: deletion of user data (going beyond a right to deletion, and considering automatic deletion after a set period of time); opt-in mechanisms for targeted advertising; and prohibitions against unfair practices. Such prohibitions could be targeted to practices which cause ‘substantial detriment’ to consumers, where such detriment cannot be reasonably avoidable and is not outweighed by ‘countervailing benefits’ to consumers or to competition. The ACCC is now seeking feedback on the recommendations, and on the further issues it has identified, until 15 February 2019, before it completes its final report by June 2019.
