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ACCC boss reveals four key questions being considered in digital platforms inquiry

The effects of Facebook and Google’s domination of the digital advertising industry is one of the key questions the government’s digital platforms inquiry hopes to answer, ACCC boss Rod Sims said today.

“How we approach the proliferation of digital platforms, and how they collect and manage our data, is one of the defining questions of our age,” Sims said in a speech in Sydney .

Sims: “We are also looking at the impact of the digital platforms on the quality of news and journalism in this country”

The inquiry was called last year following the passage of the government’s media reforms to report on disruptive effect of digital platforms on society. Its first round of public comments saw 57 submission put before the inquiry with Google and Facebook highlighting the positive effects of their services, while media companies focused on a range of complaints including market abuse, copyright infringement and the lack of a level playing field between publishers and the online services.

Sims said there were four key questions he believed the inquiry needs to address from the ACCC’s  point of view as a consumer and competition regulator.

“The first question requires us to examine whether platforms have substantial ‘market power’ and, if so, how is that market power being used,” he said.

Sims went on to say the second question is whether online services were sufficiently transparent in the collection and use of consumer data and were complying with the Australian Consumer Law: “We do not believe that consumers are generally well-informed about how digital platforms collect and use their data,” he said.

“The issue is not just about the wording of a privacy policy. We will be also examining whether users appreciate the value of the data they are providing to these platforms, both when they are using these platforms, and also when they are not. In other words, are users ‘selling’ their data too cheaply in exchange for convenience?”

Sims said the third question was: “Do digital platforms have an unfair competitive advantage due to the unequal treatment of regulation?”

“The digital platforms are clear competitors to media companies in the case of attracting advertising spend but the relationship on the content side is more complicated and there are a number of important questions: ‘Are the platforms subject to defamation law or journalism’s codes of conduct?’ ‘Should they be, and how practical is this?’ ‘How does copyright law apply to the digital platforms?’,” Sims said.

“Finally, we are also looking at the impact of the digital platforms on the quality of news and journalism in this country. Quality is extremely hard to assess, but broadly speaking we will be investigating whether the reduction in advertising revenue prevents publishers and broadcasters from delivering quality journalism, by which we mean investigative, verified and diverse journalism.”

Last month, Group M’s survey of the global advertising industry found Facebook and Google had increased their domination the online marketing sector in taking 135% of new ad spending in 2017.

At the time of announcing the inquiry, the Federal government directed the ACCC to consider a number of key issues:

  • the extent to which platform service providers are exercising market power in commercial dealings with the creators of journalistic content and advertisers;
  • the impact of platform service providers on the level of choice and quality of news and journalistic content to consumers;
  • the impact of platform service providers on media and advertising markets;
  • the impact of longer-term trends, including innovation and technological change, on competition in media and advertising markets; and
  • the impact of information asymmetry between platform service providers, advertisers and consumers and the effect on competition in media and advertising markets.

Sims said: “It is important that governments examine the role digital platforms are playing in society and, as with other companies, determine if polices are needed to curb their pursuit of profit given the problems such pursuit will cause.”

“The question of the impact of digital platforms on society is a vital one, for both Australia and the world.”

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