ACCC boss warns digital platforms about conduct as inquiry continues
Competition regulator Rod Sims has warned digital platforms including Google and Trivago about their use of algorithmic ‘black boxes’ and overreaching terms and conditions as the ACCC continues its inquiry into the digital economy.
Sims was speaking at a legal conference in Sydney looking at the local and global issues in regulating the digital economy and the options available to the ACCC over data and competition issues in the digital sector.
ACCC chair Rod Sims said Google’s representations on the DoubleClick acquisition were “clearly not accurate”
In his speech, Sims flagged Google’s $US3.1bn acquisition of DoubleClick in 2007 where the company went back on previous assurances to regulators with a simple change in its terms and conditions as an example of the difficulties in regulators.
“In that case, the key issue was the magnitude of data that Google was able to collect as a result of these two businesses. While there was some appreciation of the significance of personal data to advertising businesses at the time, it is fair to say that the true significance of such data and the Google/DoubleClick combination has only become apparent recently.
“But it is also worth noting that in that case, Google submitted to the regulators that it would be contractually prevented from using ‘that part of its enlarged database originating from DoubleClick to improve, for example, targeting of search ads on Google’s sites or contextual ads in the Adsense network.’
“In 2014, Google combined the Google and DoubleClick databases and let users know by virtue of an update to its privacy policy. Their previous representation was clearly not accurate.”
Sims also cited the current misleading conduct case against Trivago as part of the difficulties in enforcing consumer law over companies relying on big data and algorithms.
“In August this year, the ACCC commenced proceedings in the Federal Court against Trivago, alleging it made misleading hotel pricing representations in its television advertising and website, in breach of the Australian Consumer Law.
“We allege that Trivago ran TV advertisements presenting its website as an impartial and objective price comparison service that would help consumers identify the cheapest prices for hotel rooms when in fact, Trivago’s website prioritised advertisers who were willing to pay the highest cost per click fee to Trivago.
“The case, which is still before the court, underscores our growing concerns in relation to comparison platforms, and on how algorithms present search results to consumers.
“In some respects, this is consumer protection 101; there is nothing new in allegations that a company says one thing, expressly or by implication, but does another either overtly or surreptitiously. But the new way in which this conduct is emerging does raise some challenges in terms of identifying matters and investigating the black box.”
Sims flagged the regulator is taking a closer look at how companies gather data along with the terms and conditions they apply to users, warning that “unrestricted unilateral variation terms” need to “disappear from the landscape.”
“Beyond algorithms, we are also on the record as having an interest in and looking at the gathering and use of data by platforms and others online,” he said. “On the gathering front, we are looking at instances in which firms may have failed to disclose the extent of gathering, changed their position on gathering or use of data and not adequately informed or obtained consent.
“We are also looking at terms and conditions which go to gathering and use and whether they may be unfair contract terms. While new in some respects, nothing is new with the classic unrestricted unilateral variation terms that we have seen in many consumer and small business contracts and which really need to disappear from the landscape. We are seeing these in the online environment and in relation to the collection and use of data, and we will be following through with our concerns in this area.
“Finally, I should mention that we look closely at the competition effects of conduct by businesses that share commercially sensitive data either directly or indirectly through a third party. Such data might include prices or information allowing market shares to be determined or even information that discloses bids for work. Huge amounts of data can now be shared very efficiently on a real time basis. Often such sharing can make markets operate more efficiently.
“The nature of the information shared, the people with whom it is shared, the conditions of sharing and the impact of the sharing on the operation of markets is something that we are now finding ourselves looking at closely in many markets that rely of exchange of data.”
The ACCC is to hand down a preliminary report on the digital platforms inquiry by 3 December 2018, with a final report due by 3 June 2019.
