Mid-way through its 5 year inquiry into digital platform services, the Australian Competition & Consumer Commission (ACCC) has released a discussion paper seeking feedback on whether an enhanced regulatory framework is required to address the practices of digital platforms.
The Australian Government accepted many of the regulatory reform recommendations from the ACCC’s important Digital Platforms Inquiry, which was finalised in 2019. Some of these reforms, such as the successful Mandatory News Media Bargaining Code, have been put in place. However, many others, including the wide ranging review of the Australian Privacy Act, are still in the process of development and consultation and therefore have not yet been implemented.
Since 2019, the work of the ACCC in its Digital Advertising Services Inquiry (Adtech Inquiry), completed in late 2021, as well as its findings to date from the 2020-2025 Digital Platform Services Inquiry (5 Year Inquiry), have highlighted a number of additional competition and consumer protection concerns. This has led the ACCC to consider the question of whether it has sufficient regulatory tools to address problematic issues that it sees as recurring themes across the markets for different types of digital platforms services.
The ACCC is therefore consulting on whether it should make recommendations to the Australian Government to update the Competition and Consumer Act 2010 (Cth) (CCA), including the Australian Consumer Law (ACL). Submissions on the ACCC’s Updating Competition and Consumer Law for Digital Platform Services Discussion Paper (Discussion Paper) are due by 1 April 2022. The ACCC is required to report to the Australian Treasurer on its conclusions by the end of September 2022 and that report is likely to be made public by the end of October 2022.
Following the completion of the Digital Platforms Inquiry, the ACCC has commenced numerous consumer protection cases against the behemoth digital platforms:
The ACCC is considering commencing antitrust proceedings against Apple for its practice of restricting third party access to its near-field communication (referred to as NFC) technology, meaning Apple mobile devices may only be used to provide mobile payment services using Apple Pay and against Google regarding its practices in providing adtech services, as uncovered in the course of the Adtech Inquiry.
After the issue of the Discussion Paper, the ACCC commenced a further misleading and deceptive conduct case against Meta for misleading conduct in publishing scam celebrity crypto ads on Facebook. In addition to alleging that the actions of Meta are directly misleading, the ACCC has alleged in those proceedings that Meta has aided and abetted the scam advertisers, which is an additional breach of the ACL. Outgoing Chair Rod Sims stated in reference to this litigation:
“We allege that the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads, that Meta assured its users it would detect and prevent spam and promote safety on Facebook, but it failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam ads on its pages or warn users.”
Notwithstanding these cases, the ACCC considers that its enforcement action may provide limited benefits as:
The Discussion Paper highlights the market power that is possessed by key global digital platforms, focusing on Google, Meta and Apple. This power has been created, in the opinion of the ACCC, at least in part through acquisitions by digital platforms of nascent competitors; the position of platforms as unavoidable gatekeepers connecting businesses to consumers; and the characteristics of digital markets.
In discussing the characteristics of digital platforms, and the positions of Google, Meta and Apple specifically, the ACCC noted:
Reduced competition in digital platforms markets has, the ACCC believes, meant that consumers and businesses are likely paying higher prices (including in the case of consumers, through providing more personal data than most consumers would wish for the services that are provided) and obtaining lower quality products and services (including because innovation has been inhibited) than would be the case in competitive markets. This may have flow on effects in related markets. For example, higher adtech services prices may result in higher prices for goods and services (as advertisers pay more than they should for digital advertising) and less revenue for publishers (as publishers receive less than they should).
The behaviour of digital platforms that the ACCC has focused on in the Discussion Paper includes:
Other harms to consumers
The ACCC identified significant direct consumer harms such as excessive online tracking of individuals in ways those individuals would not agree to if choice was provided; insufficient monitoring by platforms of online scams and the like and a lack of interoperability between different systems leading to reduced choice for consumers who may be “locked in” to using particular services because of the difficulty in changing ecosystems, for example, changing an iPhone to an Android device would mean a consumer lost all of the apps and data on their iPhone. The use of “dark patterns” is also criticised by the ACCC in the Discussion Paper. A simple example of a dark pattern would be where choice architecture makes it easy to sign up for a digital subscription but very difficult to unsubscribe.
Unfair trading practices and a lack of transparency
In looking at unfair trading practices the ACCC has focused on business users. Not only small businesses but also large businesses suffer from unfair trading practices in their engagement with large digital platforms. This is because, even for the largest Australian businesses, there is a significant bargaining power imbalance when dealing with those platforms. This imbalance means many Australian businesses that deal with these large platforms have little option but to accept the terms offered by the platforms. In the case of small businesses, the ACCC referred for example to broad discretions to remove content and suspend or terminate accounts as unfair terms.
The difficulties of businesses in engaging with digital platforms are compounded by a lack of transparency in relation to services provided. For example, in the operation of app marketplaces, search algorithms and the conditions that must be met to feature in editorials, important for the sale of apps, are very opaque. The Adtech Inquiry also extensively commented on the lack of transparency in adtech services markets.
The ACCC does not believe these concerns are necessarily able to be addressed under the CCA, including the ACL. It has suggested that new powers may be required in the following areas:
The ACCC is seeking views as to the manner in which any new regulation should be implemented. In addition to asking whether the new rules should be implemented by legislation, the ACCC is asking for feedback on whether codes of practice, rule making powers, an enhanced investigative regime and/or an access scheme similar to the existing telecommunications access regime in Part XIC of the CCA could be effective.
Rod Sims has now retired as Chair of the ACCC. Mr Sims has stated that the work he has done in relation to digital platforms, particularly the Digital Platforms Inquiry and the Mandatory News Media Bargaining Code, is some of the most important work of his term as ACCC Chair.
There is a question whether the ACCC, under new leadership, will maintain the same enthusiasm for shining a light on the practices of digital platforms. The recommendations to Government from this inquiry will demonstrate the views of the new ACCC Chair, Gina Cass-Gottlieb.
Author: Angela Flannery
 Paragraph 6.2.1, page 63 of the Discussion Paper.
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