The ACCC’s proposed reforms would set the country apart in trying to tame big tech’s expansion into adjacent markets
ACCC sees expansion of big tech as cause for concern
On 27 November 2023, the Australian Competition and Consumer Commission (ACCC) published its September 2023 interim report for its ongoing Digital Platform Services Inquiry. The report, which is the seventh in the inquiry series so far, calls for new competition laws to address the expansion of big tech into adjacent markets. Using smart home devices and cloud services as examples, the report details how Amazon, Apple, Google, Meta and Microsoft have grown out of their traditional product areas, such as search and social networking, to dominate in a number of related products and services, such as voice assistants and media streaming. While the ACCC names no specific anti-competitive conduct in the report, it notes that some practices such as self-preferencing or unfairly leveraging gatekeeper roles are more likely to harm competition when firms have a dominant role in more than one adjacent market. Additionally, the regulator warns that firms have an increasing competitive advantage with each additional market they enter by gaining access to vast amounts of additional consumer data that can inform their business practices in other products or services. This data-driven advantage is exacerbated when consumers are ‘locked-in’ to one of these firm’s suite of products and subject to less favourable terms and conditions that allow for more aggressive data collection tactics.
The regulator envisages sector specific codes of conduct for digital markets
To remedy these threats to competition, the ACCC reiterates the recommendations it made in its September 2022 interim report. The regulator takes inspiration from a variety of recent global digital markets regimes, including the EU’s Digital Markets Act (DMA), in providing three recommendations for legislative reform:
Develop binding, service-specific codes of conduct targeted to a designated group of firms that have the ability to engage in anti-competitive behaviour. Obligations would address self-preferencing, default agreements and interoperability and switching;
Write a series of consumer provisions to address fake reviews, scams and harmful apps as well as improve dispute resolution procedures; and
Strengthen unfair contract term protections and implement an economy-wide unfair trading practices prohibition.
The ACCC also notes that some of these recommendations, including those on scams and unfair contract terms, were taken up by the Australian Government following the September 2022 report. However, ex-ante rules specifically for digital markets have only been considered through a consultation by the Department of the Treasury so far.
Australia would be unique in focusing ex-ante rules on cross-sector expansion
Australia would join a growing number of jurisdictions in writing news laws for digital markets if the ACCC’s recommendations are taken up by the Government. Like the EU’s DMA, the regime proposed by the ACCC would limit obligations to the biggest firms. However, the Australian approach would be unique in focusing on the impacts of cross-sectoral expansion on competition, as opposed to targeting dominant positions in individual markets. The ACCC has also diverged by separating out competition concerns related specifically to social media in a prior report before it took on big tech’s dominance in other markets. While the ACCC’s Digital Platform Services Inquiry is only expected to conclude in 2025, the open question becomes whether the Australian Government chooses to take up the regulator’s recommendations for improving competition and protecting consumers in digital markets before then.
