ACCC recommends mass reforms as a result of digital platform inquiry with Google and Facebook in the crosshairs

The Australian Competition and Consumer Commission (ACCC) has made 23 recommendations for the federal government in an attempt to desperately curb the dominance of Facebook and Google in Australia. The final report from the consumer watchdog’s Digital Platforms Inquiry paints a bleak picture about the future of journalism and publishing if the recommendations are not followed.

The wide-reaching 600+ page report covers everything from competition law, consumer protection, media regulation and privacy law, to a reflection on the intersection of issues arising from the growth of digital platforms.

The 12-month investigation into digital platforms, with a heavy focus on Google and Facebook as the two biggest players in the Australian landscape, kicked off in December 2017 with the preliminary report released December 2018. Over 120 submissions were received after the preliminary report, which went into the process of forming the final report released today.

Considering the impact of Facebook and Google on media content creators, advertisers and consumers, with a particular focus on news and journalism, the investigation has resulted in a series of recommendations which will aim to curb the market power of Google and Facebook, and the way the two businesses have distorted the ability for others to compete with them in advertising, media and a range of other markets, as well as their inability to correctly inform users on how their data is being used.

“Make no mistake, these companies are among the most powerful and valuable in the world. They need to be held to account and their activities need to be more transparent,” said Treasurer Josh Frydenberg, who released the report today.

“The world has never before seen so much commercially sensitive and personal data collected and aggregated in just two companies.

“Our legislative and regulatory framework could not and did not anticipate such a new paradigm.”

Codes of conduct recommended, but no new regulatory body

One of the 23 recommendations laid out by the ACCC was that designated digital platforms should provide codes of conduct governing their relationship to media businesses to ACMA. The codes would need to ensure the platforms treat news media businesses fairly, reasonably and transparently, including a commitment for the sharing of data with news media businesses, notifications for changing of ranking or display of news content and a promise that the digital platform’s actions will not impede news media businesses’ opportunities to monetise their content appropriately on either the digital platform’s sites or apps, or the media businesses’ sites or apps. There would also need to the inclusion of a shared revenue system for value obtained by the digital platforms, either directly or indirectly as a result of the media’s content.

Australians’ time spent online (Click to enlarge)

Once these codes are passed on to the Australian Communications and Media Authority (ACMA), the body would then be in charge of monitoring the digital platform’s adherence to them. ACMA would consult with the ACCC on the guidelines for the creation of the codes, which digital platforms will be given nine months to provide, and if they do not comply, ACMA would create a mandatory standard to apply.

The ACCC also recommended a mandatory industry code which would assist publishers in stopping the spread of copyright infringements across the digital platforms. The code, which would again be enforced by ACMA, would have sanctions and penalties and enable rights holders to ensure the quick and effective removal of copyright-protected content from the digital platforms.

According to the report, ACMA should also be charged with monitoring the digital platforms’ adherence to voluntary initiatives which would help users identify the reliability, trustworthiness and source of news content featured on their services. This is in response to Google, Facebook and Bing’s work with the ‘Trust Project’ which incorporates independent assessments of news sources in the display of stories on the platform. In the report, the ACCC said that while the platforms are to be commended for taking these steps, it isn’t enough, and an independent body should be involved in monitoring the continuation and progress of this initiative.

“Our recommendations are comprehensive and forward looking and deal with the many competition, consumer, privacy and news media issues we have identified throughout the course of this inquiry,” ACCC chair Rod Sims said.

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

What’s missing from the final report?

Despite a plea from News Corp Australia, which was submitted to ACCC in April 2018, that the inquiry look at platforms outside Google and Facebook, including Apple, and that Google be forced to separate its search engine from its advertising business in Australia, the ACCC stopped short of recommending any split of ownership for the digital platforms.

Also missing from the report was anything to address requests from bodies like union Media Entertainment and Arts Alliance (MEAA) which suggested that Facebook and Google should be classified as media companies and held to the same rules, regulations and targets as such. This was an opinion backed up by Nine CEO Hugh Marks who said at the National Press Club event addressing journalistic freedom that he thought both digital platforms should be considered publishers.

However, the ACCC has recommended that a platform-neutral regulatory framework be put in place to ensure effective regulatory oversight of all entities involved in content production or deliver in Australia, which will include media businesses, publishers, broadcasters and digital platforms. Given how significant this would be, the ACCC has recommended it occur in stages, but has suggested it would need to cover underlying principles, determination of the appropriate extent of regulation, content rules and advertising restrictions. It would complement a specialist digital platforms branch established within the ACCC which would give the body more power over tech giants operating in Australia.

Addressing the press today, Frydenberg said he accepted the findings of the report, but that the federal government wouldn’t provide a response until after a consultation period, meaning the recommendations won’t be fully addressed until the end of 2019.

Data privacy a key focus

The ACCC report comes as Facebook is hit with a US$5bn fine as a result of the Cambridge Analytica data scandal, and faces further investigation from the Department of Justice and the FTC in the US.

Data collection was a big focus of the final report, with a strong recommendation that digital platforms are no longer able to use data with no restrictions or transparency.

“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,” the ACCC’s Sims said.

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

These reforms include a recommendation to strengthen protections in the Privacy Act and a broader reform of Australian privacy law. The ACCC has also recommended a privacy code for digital platforms be developed and enforced by Office of the Australian Information Commissioner (OAIC).

Mergers and monopolies

The report also included recommendations to help prevent further monopolies in the digital platform space. The key focus is on changes to merger laws, with section 50(3) of the Competition and Consumer Act 2010 (CCA) to be amended to incorporate additional factors, and advance notice of any acquisitions which could potentially impact competition in Australia provided to the ACCC according with a minimum advance notification period.

In a further bid to amend the current monopoly, the ACCC has flagged that Google should provide Australian Android users with the same options being rolled out to existing Android users in Europe, including the ability to choose their default search engine and default internet browser from a number of options.

The bleak future of journalism

Another area of focus by the ACCC in the final digital platforms inquiry report was the impact on the production of news and journalism in Australia. While the body admitted that digital platforms have created opportunities and cost-saving options for online media, it said the negative impact of digital platforms has also been undeniable.

Australian advertising expenditure by media format and digital platform (Click to enlarge)

“Australian commercial media, and in particular traditional print media (now print/online media), first suffered a significant reduction in advertising revenue through the unbundling of classified advertisements from newspapers,” read the ACCC report.

“This resulted in a decline from AU$2 billion in classified advertising revenue in 2001 to AU$200 million in 2016 (nominal figure). If these figures are adjusted for inflation, the decline over the same period is from AU$3.7 billion to AU$225 million.

“During this same period, Australian traditional print media (now print/online media) faced increased competition from international sources and other media providers, both commercial and publicly funded.

“Over the past decade, a strong fall in the print advertising revenue of commercial Australian media publishers has been accompanied by a rise in spending on online advertising. It is clear that digital platforms have taken an increasing share of advertising expenditure, with a significant portion of the increase in online advertising revenue from 2014-2018 going to Google and Facebook.”

As a result of this, the ACCC recommended that both digital platforms and the federal government look at funding options for news and media companies, in a bid to offset the damage being done elsewhere.

Consistent and adequate funding was recommended for both the ABC and SBS in the report, something which has been in contention since the last election when opposition leader Bill Shorten promised additional funding for the broadcasters before losing the election.

The ACCC also recommended that the existing Regional and Small Publishers Jobs and Innovation Package should be replaced by a targeted grants program which supports the production of original local and regional journalism. The program would need to be platform-neutral and “administered at arm’s length from government”, with a total of $50m in funding on offer. Further media literacy in communities and schools was also recommended in the report.


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