The ACCC wants to regulate the substantial power of Google and Facebook in Australia

Joe Mann / AFP / Getty Images
  • The ACCC has released its preliminary report into Google, Facebook and Australian news and advertising.
  • And the competition watchdog says it is concerned by the substantial power wielded by the digital media giants.
  • The ACCC’s preliminary report contains 11 preliminary recommendations and eight areas for further analysis.

Google and Facebook need greater regulatory oversight in Australia to monitor their market power and the large amount of data they collect on Australian consumers, according to the preliminary results of an inquiry by consumer watchdog, the ACCC.

Google has built substantial market power in online search, advertising and news referral in Australia and Facebook has the same level of influence and power in markets for social media, display advertising and online news referral.

“The ACCC considers that the strong market position of digital platforms like Google and Facebook justifies a greater level of regulatory oversight,” says ACCC Chair Rod Sims.

The ACCC says it’s concerned with the large amount and variety of data which the digital platforms collect on Australian consumers, which go beyond the data which users actively provide.

One recommendation from the ACCC is that Google’s internet browser Chrome, and its search engine, be prevented from being installed as a default browser on mobile devices, computers and tables.

The preliminary report outlines the ACCC’s concerns over the market power by these key platforms, including their impact on Australian businesses and the ability of the media to monetise their content and the extent that consumer data is collected and used for targeted advertising.

The ACCC says Google and Facebook have transforming the way consumers communicate, access news and view advertising online.

The preliminary report, published today, contains 11 preliminary recommendations and eight areas for further analysis as the inquiry continues.

“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,” says Sims.

“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 determining the order in which content appears is not at all clear.”

Google and Facebook are now the dominant gateways between news media businesses and audiences, he says.

This can reduce the brand value and recognition of media businesses.

Traditional media businesses have lost advertising revenue to digital platforms. This has threatened the viability of business models of the print media and their ability to monetise journalism.

“News and journalism perform a critical role in society,” says Sims.

“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.”

The inquiry also looked at 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.

Sims says the evidence of filter bubbles on digital platforms in Australia is not yet strong but the importance of this issue means it requires close scrutiny.

Research commissioned as part of the inquiry indicates consumers are concerned about the extent and range of information collected by digital platforms.

The ACCC is 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.

Without adequate information and with limited choice, consumers are unable to make informed decisions, which can both harm consumers and impede competition.

The report found that 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,” says Sims.

“Yet, digital platforms face less regulation than many media businesses.

“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 proposes that a new or existing regulatory authority be given the task of investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content. Other preliminary recommendations suggest ways to strengthen merger laws.

The ACCC also notes that consumers will be better off if they can make informed and genuine choices as to how digital platforms collect and use their data, and proposes changes to the Privacy Act to enable consumers to make informed decisions.

The ACCC 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.

“The inquiry has also uncovered some concerns that certain digital platforms have breached competition or consumer laws, and the ACCC is currently investigating five such allegations to determine if enforcement action is warranted,” says Sims.

The ACCC is seeking feedback on its preliminary recommendations.

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