Three key takeaways from the ACCC Digital Platforms Inquiry – a marketer’s view

The ACCC’s long-awaited, 600-page Digital Platforms Inquiry is chock full of government recommendations for media, advertising and journalism practices – here are Marketing’s top takeaways.

The ACCC report includes a total of 23 recommendations around a variety of concerns prompted by the market dominance of ‘digital platforms’ – namely, Facebook and Google.

The recommendations include the impact digital platforms have on the dispersion of and access to Australian media and news; the concomitant effects of Google and Facebook’s ubiquity on consumer choice and competition; information privacy and the public’s general knowledge of how personal information is used by advertisers and digital platforms; and how digital platforms are monitored and scrutinised by government arms.

According to the ACCC, during the course of its inquiry it identified many adverse effects associated with the “dominance” of Facebook and Google.

ACCC report

“Importantly, our recommendations are dynamic in that they will provide the framework and the information that governments and communities will need to address further issues as they arise,” says ACCC chair Rod Sims

“Our goal is to assist the community in staying up to date with these issues and future-proofing our enforcement, regulatory and legal frameworks.” 

The ACCC says it sees no sign that Australians will slow down their use and engagement with these digital platforms. Though the ACCC says it has no concerns with growth and profitability, it does compel policymakers to consider the “extent to which important decisions about the dissemination of information, the collection of personal data and business’ interaction with consumers online, should be left to the discretion of certain large digital platforms, given their substantial market power, pervasiveness and inherent profit motive.”

1. Competition

As so eloquently put by the ACCC, “consumer behaviour favours the use of incumbents, particularly those with strong brands”. This is particularly relevant to the report and state of competition in terms of browsers and search engines.

According to the ACCC, Google benefits from its position as the default search engine not only on the Chrome browser (owned by Google), but the Safari browser (owned by Apple), which together account for more than 80% of the Australian market browser.

The ACCC estimates Google paid Apple US$12 (AU$17.37) billion in 2019 for its search service to remain the default across Apple’s device ecosystem (including Safari on the iPhone).

As the ACCC notes, competition agencies in other countries have also recognised the effect of default bias on consumer behaviour, particularly as it relates to inflating Google’s dominance of the search services market. Regulators in Europe, for example, have had Google implement changes to Android devices offered in Europe to provide consumers with a choice of search engine and internet browser.

While it’s yet to be seen if offering a choice of search engine to consumers will actually sway them from viewing Google as the default, the ACCC does consider that offering this choice to Australian consumers will have a positive effect on improving competition in the search services market.

Additionally, the ACCC is recommending changes to Australia’s merger laws to “expressly require consideration of the effect of potential competition and to recognise the importance of data.” In particular, the ACCC also recommends that large digital platforms agree to a notification protocol that would alert the agency to proposed acquisitions that may impact Australian competition.

2. Digital platforms and advertisers

The ACCC sees plenty of reason to be concerned with Google and Facebook’s dominance of the online advertising space in Australia also. According to the ACCC, there is a lack of transparency in the online advertising market; particularly in how Google and Facebook rank and display advertisements and the extent to which the platforms self preference their own platforms or businesses in which they have interests.

In February of this year, Facebook patently rejected the ACCC’s suggestion to introduce a mechanism to oversee journalistic algorithms on digital platforms – including Facebook. The suggestion first appeared in the ACCC’s preliminary report investigating Google, Facebook, Australian news and the advertising sector in December of last year. Read Marketing’s full coverage here »

The ACCC does have reason to suspect self-preferential treatment from Google at the very least. In 2017 the European Commission determined that Google had been systematically giving prominent placement to its own comparison shopping service (Google Shopping) and demoted rival comparison shopping services in its search results.

The ACCC seems fearful of the same practice negatively impacting competition in Australia.

“Discrimination may occur in multiple ways where a digital platform is active in related markets,” reads the report. The ACCC has also expressed concern over Google and Facebook’s near duopoly on the online advertising supply chain. “While the existing tools and goals of competition law and consumer law frameworks remain applicable to digital markets, the opacity and complexity of these markets make it difficult to detect issues and can limit the effectiveness of the broad principles.” 

According to the ACCC, the concerns with the adtech supply chain go beyond the operation of auctions and the risk of self-preferencing – the style of control held by digital platforms such as Facebook and Google mean there is little transparency as to the effective price paid for each adtech service also.

The ACCC says advertisers are therefore unable to determine whether services they purchase offer ‘value for money’, and competition is undermined. Similarly, website owners are unable to determine whether their adtech platforms are the most efficient or not.

The ACCC notes that during its inquiry, it found that advertisers and others may be unwilling to publicly identify their concerns.

As a result the ACCC is recommending another inquiry into the Australian space of adtech services and advertising and media agencies.

Furthermore, the ACCC also considers that existing investigative tools under competition and consumer law need to be supplemented with additional ‘proactive’ investigation, monitoring and enforcement powers to achieve better outcomes for both Australian consumers and businesses. Thus, the ACCC is proposing the creation of a branch within the ACCC to focus exclusively on digital platforms.

3. Privacy

The ACCC seems especially considered over the state of personal data held within these digital platforms – both in terms of their use and consumers’ understandings of the tradeoff.

“We’re very concerned that current privacy policies offer consumers the illusion of control but instead are almost legal waivers that give digital platforms’ broad discretion about how they can use consumers’ data,” Sims continues.

“Due to growing concerns in this area, we believe some of the privacy reforms we have recommended should apply economy-wide.”

The ACCC is recommending several strengthening provisions to the Australian Privacy Act, broader reform of the Australian privacy law framework, the introduction of a privacy code of practice specifically for digital platforms and the introduction of a statutory tort for serious invasions of privacy.

According to the ACCC, digital platforms’ privacy are “long, complex, vague and difficult to navigate”. Additionally, the ACCC says many digital platforms do not provide consumers with meaningful control over the collection, use and disclosure of their data. Additional problematic data practices include the use of ‘click-wrap agreements’ (otherwise known as click-through agreements) and ‘take it or leave it’ terms.

Further Reading:

Image credit: ACCC

Josh Loh
BY Josh Loh ON 29 July 2019
Josh Loh is assistant editor at MarketingMag.com.au