Australian watchdog calls for serious crackdown on Google and Facebook

The Australian Competition and Consumer Commission (ACCC) has slammed Google and Facebook’s dominance as digital platforms and called on the government to make serious policy changes tackling digital advertising, consumer privacy and potential future anti-competitive practices by the duopoly.

The ACCC today dropped the long-awaited final report from its inquiry into digital platforms, which began in December 2017. It contains 23 recommendations for the government to consider, many of which take aim at Google and Facebook’s practices and positions in the digital advertising and media space, but also take in news-media regulation and consumer privacy.

Google and Facebook

The report contains frequent findings of unfair or adverse affects that stem from Google and Facebook’s dominance, saying in a release that both companies “distorted the ability of businesses to compete on their merits in advertising, media and a range of other markets”.

As a result, the commission has recommended the creation of a specialist digital-platforms branch within the ACCC that has ongoing powers to monitor Google, Facebook and other digital platforms and investigate any potentially anti-competitive conduct.

The report is highly critical of Google and Facebook’s data practices regarding consumers and small businesses, and highlights that the ACCC is deep into investigation of whether the duopoly has broken consumer law. It recommends stronger consumers protections be added to Australia’s Privacy Act, including stronger consent provisions over collecting data, enabling erasure of personal information, and higher fines for breaching privacy law.

The ACCC slams Google and Facebook for their lack of transparency over exactly how they collect, use and sell consumer data, and also their use of “standard-form click-wrap agreements with take-it-or-leave-it terms and bundled consents”, which consumers have no choice but to accept.

“Consumers, once they understand what is being collected and how it is used, must be able to exercise real choice and meaningful control,” the report says.

A code of practice for digital platforms should also be established, according to the report, which target issues from opt-out provisions to children’s data protection, as well as making serious invasions of privacy a statutory tort, with strict liability for digital platforms.

The commission also recommended changing Australia’s merger law to require advance notice of any acquisitions from large platforms, namely Google and Facebook, that could potentially impact competition in the digital economy. In addition, Google must allow Australian Android users to choose their search engine, rather than be provided with Chrome as a default.

Agencies and ad tech firms

In a significant turn for adland, the ACCC has called for an inquiry into the adtech sector and digital advertising services provided by advertising and media agencies.

“Advertising and media agencies perform a key role in the purchase of advertising inventory, including the purchase of programmatic advertising,” the report states. “The ACCC has concerns about the lack of transparency in the way advertising and media agencies operate, including where the agencies or their holding companies act as intermediaries and purchase advertising opportunities from large platforms or media for resale to clients.”

The inquiry would take 18 months, the commission said, and look into all aspects of the digital advertising ecosystem, from supply chain transparency, to pricing of both ads and services, and relationships between suppliers and customers.

News and media businesses

The ACCC found that while the relationship between Google and Facebook and news media businesses can be mutually advantageous, there is a significant imbalance in the bargaining power that is strongly in favour of the duopoly when it comes to monetisation of content and value sharing. An example cited is Google or Facebook unilaterally changing their algorithms in a way that penalises publishers without any advance notice.

As such, the report calls for Google and Facebook to provide the Australian Communications & Media Authority with codes to address this imbalance, and an overall harmonising of media regulation that currently does not adequately cover digital platforms.

Platforms will have nine months to develop a code, with any breaches handled by the ACMA. The report also calls for more public funding of journalism and media literacy education to combat the rise of fake news.“Digital platforms increasingly perform similar functions to media businesses, such as selecting and curating content, evaluating content, and ranking and arranging content online,” the report says. “Despite this, virtually no media regulation applies to digital platforms.”

In response to the commission's findings, Industry group DIGI, which represents Google, Facebook, Twitter and others in Australia, defended the tech firms, saying the government should closely assess how the ACCC’s recommendations “will impact Australia’s digital industry at large and Australia’s global standing as a place to invest in technology”.

“We're closely reviewing these recommendations to ensure they don’t bring unintended consequences to all digital businesses and the choice of digital products available to Australian consumers,” said Sunita Bose, DIGI managing director.