Competition law alert – ACCC releases its final report on the Digital Platforms Inquiry

On Friday, the Australian Competition and Consumer Commission (ACCC) released its Final Report on its Digital Platforms Inquiry (Digital Platforms Report). The Digital Platforms Report offers a broad review of digital platforms and makes a number of recommendations in relation to their relationship with advertisers, business users, and the media, the overriding regulatory framework which they operate within, their impact on the choice and quality of news and journalism, and their role in consumer data protection.

In New Zealand, we expect that in light of the other priorities and limited budget that the New Zealand Commerce Commission has to conduct market studies, it is most likely that the Digital Platforms Report recommendations will be considered within the New Zealand Government’s wider policy agenda relating to digital platforms, rather than a similar competition study being initiated here.

The Digital Platforms Report is available here. 

Background

The release of the Digital Platforms Report marks over a year and a half since the Australian Government directed the ACCC to consider the impact of digital platforms on competition in the media and advertising services markets.

The ACCC's inquiry focussed on online search engines, social media, and other digital content aggregators (collectively referred to as "digital platforms"). The inquiry focussed on three user groups within the advertising and media markets (advertisers, media content creators, and consumers) and had particular regard to the impact of digital platforms on news and journalism.

In February 2018, the ACCC's Issues Paper was published, followed by the Preliminary Report in December 2018. Over 180 submissions were received by the ACCC throughout its process.

Digital Platforms Report – summary

The ACCC found that digital platforms have grown rapidly in Australia over the past decade and are now an integral part of life for most Australians. The ACCC's view is that both Google and Facebook have obtained substantial market power in certain markets (including advertising services) and bargaining power in their dealings with news media businesses in Australia. No doubt that is not a view shared by all market participants, given the highly competitive nature of some of those digital markets.

While the Digital Platforms Report recognises that digital platforms have brought significant benefits to consumers and businesses, the ACCC’s position is that there are also issues that need to be addressed. Some of these include:

• difficulty in determining the standard of behaviour that digital platforms are meeting due to the confidentiality of key features of their operations and their presence in inter-related markets;
• the reduction in the production of particular types of news and journalism (including local government and local court reporting) and in advertising revenues for news media businesses;
• the distortionary treatment by regulation of content delivered via traditional broadcasting, as compared to digital platforms;
• the reliance of news content creators on digital platforms to reach customers and their exposure due to digital platforms incentives and ability to favour their own businesses;
• difficulty in determining the value of advertising via digital platforms due to its complex and opaque nature; 
• consumers that are not fully informed of, fully understand, or effectively control the scope of data that is being collected about them; and
• the provision of a new avenue for scammers to exploit consumers and businesses. 

In response to these and other adverse effects, the Digital Platforms Report contains 23 recommendations,¹ spanning consumer and competition law, privacy law, and media regulation.

Summary of the Digital Platforms Report recommendations

1. Amend Australian merger law to reflect the merger behaviour of digital platforms
2. Introduce a notification protocol whereby large digital platforms agree to provide advance notice to the ACCC of certain acquisitions 
3. Google to provide default search engine and browser options to Android device users
4. Establish a specialist digital platforms branch of the ACCC with the purpose of proactively investigating, monitoring and enforcing issues in markets in which digital platforms operate
5. Direct the specialist digital platforms branch to hold an inquiry into competition for the supply of ad tech services and online advertising services to advertising agencies
6. Develop a new platform-neutral regulatory framework for content production and delivery
7. Designated digital platforms to provide codes of conduct governing relationships between digital platforms and media businesses to the Australian Communications and Media Authority (ACMA).
8. Implement a mandatory ACMA take-down code to assist copyright enforcement on digital platforms
9. Provide stable and adequate funding for the public broadcasters
10. Introduce a targeted grants program that supports the production of original local and regional journalism
11. Amend tax settings to encourage philanthropic support for journalism
12. Establish a Government program to fund and certify non-government organisations for the delivery of digital media literacy resources in the community
13. Include the approach to digital media literacy in schools in the terms of reference for the review of the Australian Curriculum 
14. Direct an independent regulator to monitor efforts to implement credibility signalling
15. Large digital platforms implement an industry code of conduct to counter disinformation
16. Strengthen protections in the Australian Privacy Act, including updating the personal information definition, the notification and consent requirements, direct rights of action and erasure, and penalties
17. Conduct a broader reform of Australian privacy law having regard to the Australian Privacy Act's objectives, scope, standard of protections, treatment of information, overseas data flows, and third-party certifications
18. Office of the Australian Information Commissioner to develop a privacy code for digital platforms
19. Introduce a statutory tort for serious invasions of privacy
20. Amend Australian consumer law to prohibit unfair contract terms 
21. Amend Australian consumer law to prohibit certain unfair trading practices 
22. ACMA to develop minimum dispute resolution standards to apply to digital platforms
23. Establish an ombudsman scheme to resolve complaints and disputes with digital platform providers

​Next steps

The Australian Government is continuing to consider the Digital Platforms Report in consultation with the ACCC to decide next steps in relation to each recommendation. The ACCC has indicated it is also conducting a number of investigations into the alleged conduct of certain digital platforms to assess whether there have been any breaches of Australia's existing consumer and competition laws.

New Zealand context

The Digital Platforms Report reflects the trend across a number of jurisdictions of heightened regulatory scrutiny and enforcement activity against digital platforms.² 

To date, there has been no similar digital platforms inquiry in New Zealand. Given the other priorities and the budget that the Commerce Commission has to conduct studies of this nature, we do not expect a similar study to be a priority for the New Zealand Government to ask of the Commerce Commission. Rather, it is more likely that the New Zealand Government will closely observe the Australian Government's reaction, and then, within its wider legislative agenda relating to digital platforms, give consideration to incorporating some or all of any recommendations that are ultimately implemented in Australia.

If you have any questions on how the Digital Platforms Report or its findings may affect your business, please contact one of the contributors below.

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.