The Australian government has dropped its big report into big tech — here’s what it means for Google and Facebook

Google and Facebook are under the microscope in Australia
  • The Australian government has released the final report from its 18-month investigation into Facebook and Google’s online dominance and the impact on other digital platforms.
  • It is now considering major changes including forcing Google to provide its users alternatives to its Chrome internet browser and develop new codes of conduct to police fake news and make sure they negotiate fairly with traditional media companies.
  • It also stopped short of recommending some of the new rules called for by the media and politicians, such as that Google be broken up into separate divisions, supported by News Corp and US presidential candidate Elizabeth Warren.
  • It comes just two days after Facebook was fined $US5 billion in the US, with a whole tranche of new restrictions placed on the social media giant.

Two of the largest tech companies in the world, Google and Facebook, are anxiously watching the Australian government’s next moves, following the release of a major report into the dominance of these two players in the digital media market.

On Friday, it released the final report of its ‘Digital Platforms Inquiry’. The 600-page detailed report contains 23 recommendations for how Australia should curtail their insane market power and covers everything from how Facebook and Google use your personal data to the content they show you.

Treasurer Josh Frydenberg, who released the report on Friday, hailed it as a “world first” in curtailing the “immense” power of Facebook and Google.

“Make no mistake, these companies are among the most powerful and valuable in the world. They need to be held to account and their activities need to be more transparent,” he said.

While Frydenberg said the government accepted the thurst of the ACCC’s argument, he stopped short of committing the government to all of its recommendations. Instead, the government will consult with stakeholders on the road forward.

“Government accepts the ACCC’s overriding conclusion that there is a need for reform. The release of this report and the 12-week consultation process that will follow are designed to achieve this very end,” he said.

“The Government will provide its final response to the report’s recommendation before years end.”

The Australian report comes just two days after Facebook was clobbered with a $US5 billion fine for sharing user data in the Cambridge Analytica scandal. That penalty was combined with a whole list of restrictions on what the social media giant can and can’t do.

Now its Australia’s turn, with a new framework clearly setting out how they will be forced to operate down under.

Here’s what the new world looks like for Google and Facebook in Australia.

Google won’t be broken up

Most significantly, the ACCC did not recommend that Google be broken up, as demanded by News Corp Australia, owner of most newspapers including The Australian and Herald Sun and digital platform

The powerful media company had urged the federal government to break up Google’s Australian operations, forcing Google to sell or separate its search engine from its advertising business.

“Google enjoys overwhelming market power in both online search and ad tech services, and … is abusing its dominant position to the detriment of consumers, advertisers and publishers,” News Corp wrote in its submission.

“While News Corp Australia recognises that divestment is a very serious step … divestment is necessary in the case of Google, due to the unparalleled power that it currently exerts over news publishers and advertisers alike.”

It echoed the demands of presidential hopeful Elizabeth Warren in the US, among others including Facebook co-founder Chris Hughes.

But despite that pressure, the ACCC stopped short of suggesting a structural break-up in its preliminary report and did not make that recommendation in the end.

Facebook and Google should help fund Aussie journalism

By sharing the work of journalists, Google and Facebook ultimately are able to take profits from the media companies that employ them. This was a major concern shared by media companies and now the ACCC has recommended the tech titans pay it forward.

The ACCC recommended that the platforms contribute to a fund, “totalling in the order of AU$50 million per year”, to provide funds to publishers.

“(It would be) a targeted grants program that supports the production of original local and regional journalism, including that related to local government and local courts,” the ACCC wrote.

“The program should be platform-neutral and administered at arm’s length from Government, with eligibility criteria designed by an independent expert committee.”

It closely follows the ideas put forward by the Media Entertainment and Arts Alliance (MEAA), Australia’s media union in its submission.

“In the absence of Australian publishers and content creators being reasonably compensated for use of media content, an access-per-user fee or percentage of revenue charge be levied on digital platforms of scale, such funding to be retained for a contestable Public Interest Journalism Fund,” MEAA wrote in its submission.

They aren’t getting classified as media companies

Some media companies, as well as groups like MEAA, wanted digital platforms to be subject to the same regulations as media companies, levelling the playing field and reining in unscrupulous behaviour.

That would stop Google and Facebook profiting off media companies while playing by a different set of rules.

But the ACCC didn’t seem to agree, with that recommendation notably missing from the final report.

Both companies have long maintained they are not content creators, but technology companies — an important distinction in terms of the rules they are governed by and also their relationship with the traditional media.

They will face new rules around collecting your data

One of the most important recommendations suggested would stop digital platforms from being able to opaquely collect user data without restriction.

“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,” the ACCC said in its preliminary report.

It also said it is considering granting consumers the right of “data portability” — which would give them more power over their own personal information online and how it is transferred and collected — but stopped short of a formal recommendation.

The default Google Chrome browser will be scrapped

Currently, Google Chrome is the default or standard internet browser on many devices. That now seems destined to change, with the ACCC recommending users able to choose whether or not they want to use it.

“Google should provide Australian users of Android devices with the same options being rolled out to existing Android users in Europe; that is, the ability to choose their default search engine and default internet browser from a number of options,” the ACCC wrote.

If Google doesn’t make the change itself within six months, the ACCC said it will urge the government to force its hand.

Watchdog will have new powers over the tech giants

Instead of a new regulatory body set up — as previously suggested — the ACCC has asked for a “specialist digital platforms branch” to be set up within its own organisation (and presumably some fresh budget to go with it).

The new unit will police anti-competitive behaviour by the digital platforms and take action to enforce consumer laws.

In addition, it has called for a new independent Ombudsman to be set up to handle complaints from consumers.

A new five-year public inquiry to take place

If the tech giants thought this was the end of the public inquiry they can think again. The ACCC has asked for a new inquiry of “at least five years” into transparency in the advertising tech market.

They will be policed by new code of conduct to stop fake news

The report recommends a new industry code of conduct which platforms with more than 1 million monthly users will be subject to, focused on stopping the spread of “disinformation” online.

It recommends that a different regulator, the Australian Communications and Media Authority, be given the power to enforce the code.

“Designated digital platforms” will also need to set up individual codes of conduct policing their relationship with the media companies.

These codes will mandate how they share data and ensure the big tech companies don’t “impede news media businesses’ opportunities to monetise their content appropriately” and negotiate fairly with the media.

They will have nine months to come up with these codes and have to consult with the media companies in that time. Both Google and Facebook will no doubt be hiring for some more lawyers soon.

They get to keep control of their precious algorithms — or do they?

The report has not made any explicit recommendation that would threaten Google or Facebook’s control of their own algorithms underlying, for example, search results or the news feed function.

However, the report did mention that the new unit within the ACCC it wants to set up should have expertise in “the use of algorithms”, indicating it may have more to say about this in the future.

This line might worry Facebook in particular.

A spokesperson for the social network previously told The Sydney Morning Herald that “people, not regulators, should decide what they see in their News Feeds”.