The competition watchdog is calling for a regulatory body to be given far reaching powers to investigate and monitor tech giants.
The ACCC has a released a preliminary report on its inquiry into the industry. The preliminary report contains 11 preliminary recommendations and eight areas for further analysis as the inquiry continues.
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.
ACCC Chair Rod Sims said, “Digital platforms have significantly transformed our lives, the way we communicate with each other and access news and information. We appreciate that many of these changes have been positive for consumers in relation to the way they access news and information and how they interact with each other and with businesses.”
“But digital 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.”
The inquiry has also considered important questions about the range and reliability of news available via Google and Facebook. The ACCC’s preliminary view is that consumers face a potential risk of filter bubbles, or echo chambers, and less reliable news on digital platforms.
The ACCC is further concerned with the large amount and variety of data which digital platforms such as Google and Facebook collect on Australian consumers, which go beyond the data which users actively provide when using the digital platform.
“News and journalism perform a critical role in society. The downturn in advertising revenue has led to a cut in the number of journalists over the past decade. This has implications across society because of the important role the media plays in exposing corruption and holding governments, companies, powerful individuals and institutions to account,” Sims said.
Research commissioned as part of the inquiry indicates consumers are concerned about the extent and range of information collected by digital platforms. The ACCC said it is in particular concerned about the length, complexity and ambiguity of online terms of service and privacy policies, including click-wrap agreements with take-it-or-leave-it terms.
The preliminary recommendations and the areas for further analysis identified in the preliminary report have been put forward as potential options to address the actual and potential negative impacts of digital platforms and contribute to the debate about the appropriate level of government oversight.
The report found that key digital platforms, Google and Facebook, had both the ability and incentive to favour related businesses or those businesses with which they may have an existing commercial relationship. The platforms’ algorithms rank and display advertising and news content in a way that lacks transparency to advertisers and news organisations.
“Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content. Yet, digital platforms face less regulation than many media businesses,” Sims said.
“The ACCC considers that the strong market position of digital platforms like Google and Facebook justifies a greater level of regulatory oversight.
“Australian law does not prohibit a business from possessing significant market power or using its efficiencies or skills to ‘out compete’ its rivals. But when their dominant position is at risk of creating competitive or consumer harm, governments should stay ahead of the game and act to protect consumers and businesses through regulation.”
The ACCC said it is further considering a recommendation for a specific code of practice for digital platforms’ data collection to better inform consumers and improve their bargaining power.