The Australian Competition and Consumer Commission yesterday published the Preliminary Report arising from its year long inquiry into Digital Platforms.

The Preliminary Report deals a blow to major digital platforms and marks a new stage in the Era of Internet Accountability. According to the ACCC’s media release:

The ACCC has reached the view that Google has substantial market power in online search, search advertising and news referral, and Facebook has substantial market power in markets for social media, display advertising and online news referral. 

The report outlines the ACCC’s concerns regarding the market power held by these key platforms, including their impact on Australian businesses and, in particular, on the ability of media businesses to monetise their content. The report also outlines concerns regarding the extent to which consumers’ data is collected and used to enable targeted advertising.

Hot on the heels of the Copyright Amendment (Online Infringement) Act 2018 which is the first legislation in the world to extend site blocking to search engines such as Google, the ACCC has proposed a range of measures to regulate digital platforms such as Google and Facebook. The Digital Platforms Inquiry has also led the ACCC to launch five investigations under its existing powers.

Recommendations

  1. 1.Measures to regulate market power including the amendment of mergers law to take into account:

    (a) the likelihood that an acquisition would result in the removal of a potential competitor, and
    (b) the amount and nature of data which the acquirer would likely have access to as a result of the acquisition.

  2.  Asking large digital platforms (such as Facebook and Google) to provide advance notice of the acquisition of any business with activities in Australia and to provide sufficient time to enable a thorough review of the likely competitive effects of the proposed acquisition. If such a commitment were not forthcoming from the major digital platforms other options could be considered to address this issue.
  3. Suppliers:

    (a) operating systems for mobile devices, computers and tablets be required to provide consumers with options for internet browsers (rather than providing a default browser), and

    (b) of internet browsers be required to provide consumers with options for search engines (rather than providing a default search engine).

    Where options for internet browsers and search engines are presented, no option should be pre-selected.

    4.  The establishment of a  regulatory authority  to monitor, investigate and report on whether digital platforms, which are vertically integrated and meet the relevant threshold (eg more than $100 million in revenue in Australia), are engaging in discriminatory conduct (including, but not limited to, conduct which may be anti-competitive) by favouring their own business interests above those of advertisers or potentially competing businesses.

    5. The establishment of regulatory authority to monitor, investigate and report on the ranking of news and journalistic content by such digital platforms and the provision of referral services to news media businesses.

    6. A separate, independent review to design a regulatory framework that is able to effectively and consistently regulate the conduct of all entities which perform comparable functions in the production and delivery of content in Australia, including news and journalistic content, whether they are publishers, broadcasters, other media businesses, or digital platforms.

    7.  A Mandatory Standard regarding digital platforms’ take-down procedures for copyright infringing content to enable effective and timely take-down of copyright-infringing content.

    8. Amendments to the Privacy Act  to better enable consumers to make informed decisions in relation to, and have greater control over, privacy and the collection of personal information.

    9. Development of an enforceable code of practice under Part IIIB of the Privacy Act to provide Australians with greater transparency and control over how their personal information is collected, used and disclosed by digital platforms.

    10. Adopting the Australian Law Reform Commission’s recommendation to introduce a statutory cause of action for serious invasions of privacy to increase the accountability of businesses for their data practices and give consumers greater control over their personal information.

    11.Making  unfair contract terms  illegal (not just voidable) under the Australian Consumer Law, and that civil pecuniary penalties should apply to their use, to more effectively deter digital platforms, as well as other businesses, from leveraging their bargaining power over consumers by using unfair contract terms in their terms of use or privacy policies.

    Other Measures

    In addition, the Commission has proposed eight further areas for consideration including the creation of a Digital Platforms Ombudsman and mechanisms such as tax offsets to create incentives for digital platforms to invest in news and journalism. 

    As the ACCC Chairman has noted at the press conference, these recommendations are world leading in regulating digital platforms and the ACCC is planning to work closely with its international counterparts.

    The ACCC is inviting submissions by 15 February 2019 and is due to report by 3 June 2019. This means that it will not be considered until after the Federal election which is expected in May 2019.

    Until then, it will be a busy summer of lobbying and submission writing for stakeholders.

     


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