What Australia’s competition boss has in store for Google and Facebook



Google will find it harder to expand, but there’s only so much the ACCC can do.
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Caron Beaton-Wells, University of Melbourne

Central to the Australian Competition and Consumer Commission’s Digital Platforms inquiry were two questions:

  • do Google and Facebook hold substantial power in crucial digital markets?

  • does this power pose a risk to competitive processes?

In its Final Report released by the government on Friday, the ACCC correctly answered both with a resounding “yes”.


ACCC, July 28, 2019

The ACCC did not set out to determine whether either company has broken the competition rules. That can only be determined in an investigation of specific conduct based on specific facts and evidence.

The report itemises six such investigations already underway.

Having identified risks, the ACCC did set out to determine how they might be contained.

Its proposals are rightly cautious, reflecting the complexities of digital markets and the challenges in ensuring that any intervention protects the competitive process rather than individual competitors.

With market power comes dangers

The ACCC points out that substantial power won by serving consumers is not against the law.

It acknowledges that Google and Facebook provide services that are highly valued.

And it emphasises the distinctive features of digital markets that contribute to this power: extraordinary economies of scale, network effects, massive accumulations of data and the use of highly sophisticated data analytic techniques.

These features help Google dominate internet search and internet search advertising and help Facebook dominate social networks and display advertising.

While they also help deliver value for consumers, they can be used against new entrants that may offer a better deal and against other businesses (such as traditional media companies) that have come to rely on Google and Facebook to deliver services to customers.

The ACCC wants to reduce the risks…

There are no quick fixes. The ACCC rightly rejected the idea that platforms such as Google and Facebook be broken up.

Given the highly interconnected complex nature of the markets in which the major platforms participate, divestiture would not guarantee, and might in fact harm, consumer welfare.

The report recommends instead building up the ACCC’s capacity to aggressively enforce the competition rules and to review acquisitions that would further entrench the dominant players’ market power.

Many of the other recommendations are designed to ameliorate imbalances in information and bargaining power between the platforms and business users, and between the platforms and consumers in relation to the collection and use of their personal data.




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Implementing these recommendations presents challenges, not the least of which is to ensure they don’t themselves damage competition.

…hunt out abuses…

The ACCC proposes the establishment of a new specialist branch within the ACCC to build and sustain the skills needed to continue studying digital platforms and enforcing their competition and consumer rules.

This is a welcome initiative. It replicates similar capacity-building initiatives in the United States and Europe.

The report is peppered with references to European cases in which Google has been subject to thundering fines for various abuses of dominance. It also invokes the European mantra that these powerful companies have “special responsibility”.

But the Australian misuse of market power prohibition may not be flexible as the one in Europe. The ACCC has recommended broadening the unfair trading law in order to allow it more flexibility, and not only for use in dealing with digital platforms.

The recently amended section 46 of the Competition and Consumer Act will play a role, but it is yet to be taken for a proper run and, in the digital context, its application will be complicated by the rapid pace of innovation in digital markets.

…and scrutinise mergers…

In an acknowledgement that digital mergers are different, the ACCC wants to ensure the merger laws pay attention to mergers with potential as well as actual competitors, and to mergers with the owners of data assets.

It also wants Google and Facebook to voluntarily notify it of any future acquisitions. This is a polite request backed by a thinly veiled threat of repercussions.

But the report also implies that neither of these proposals may be enough.

Still more changes to the merger law might be needed to persuade judges of the need to stem unhealthy concentration in the Australian economy generally.

Australia almost certainly needs a compulsory notification regime, triggered by a combination of turnover and transaction value thresholds to ensure nascent competitors are not snuffed out.




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ACCC wants to curb digital platform power – but enforcement is tricky


Both of these are bigger conversations that the Commission needs to engage government and business in.

…while not offering much for legacy media…

The Commission has stepped away from a proposal in its preliminary report that there be a special regulator to oversee the relationships between platforms and media organisations, significant business users and advertisers.

It might have listened to criticism that the proposal would benefit traditional players in disrupted industries more than it benefits consumers.

The advertising industry is highly fragmented, complex and constantly changing. The evidence that the new platforms are distorting competition in the industry is questionable at best. The ACCC has sensibly suggested it needs to thoroughly examine dynamics in the ad tech supply chain before firming up any recommendation.

For the media industry, the compromise is that each platform be required to negotiate a code of conduct to be overseen and enforced by the Australian Communications and Media Authority.

Whether this will address media concerns about the appropriation of their content and about short notice periods for algorithm changes that can make their products hard to find remains to be seen.




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Digital platforms. Why the ACCC’s proposals for Google and Facebook matter big time


But, recognising that the platforms are themselves knee-deep in the media business, the ACCC has called for a wholesale overhaul of media regulation to level the playing field and remove regulatory impediments to competition, an idea the government seems to have accepted.

…and upgrading protections for privacy

The call for broad ranging reform of our privacy laws to wrench them into the digital age is also likely to be accepted by government.

The platforms might grumble at additional privacy requirements imposed country by country without an international standard, but the proposal to work with them on the development of an enforceable code at least allows them a seat at the table, and a chance to ensure the regulations are workable.

The challenge will be to ensure that the regulatory burdens don’t disproportionately hurt small businesses and prospective entrants, the ones the ACCC wants to help.

An imminent ACCC-led reform that will help both new entrants and consumers is the Consumer Data Right, which will give consumers more control of their data and enable them to move it between suppliers.




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We can put a leash on Google and Facebook, but there’s no saving the traditional news model


The ACCC’s work on digital platforms has just begun and there is a long and bumpy road ahead. The government should give it the time and money it will need to get on with it.


Caron Beaton-Wells is host of the Competition Lore podcast, exploring competition policy and law in a digital age.The Conversation

Caron Beaton-Wells, Professor, Melbourne Law School, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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We can put a leash on Google and Facebook, but there’s no saving the traditional news model


Amanda Lotz, Queensland University of Technology

Living with two preteens, I get almost daily requests to approve new apps. My standard response is to ask my kids to describe the app, why they want it, and how it makes money.

The last question is important, and not just to avoid to avoid in-app charges. Understanding the forces that drive the online economy is crucial for consumers, and increasingly citizens. All the new tools we access come at a cost even when they seem to be free.

How technology companies make money is a good question for digital media users of any age. It lies at the heart of the Australian Competition and Consumer Commission’s inquiry into the power and profits of Google and Facebook, the world’s two most ubiquitous digital platforms.


Australians’ time spent online.
ACCC Digital Platforms Inquiry Final Report

The competition watchdog’s job was to look at how online search engines, social media and digital content aggregators wield power in media and advertising, how that undermines the viability of traditional journalism (print in particular), and what can be done about it.

Limited recommendations

Its final report makes a swag of recommendations to limit these platforms’ market dominance and use of personal data.




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What Australia’s competition boss has in store for Google and Facebook


One example is requiring devices to offer consumers a choice of search engine and default browsers. Google now requires Android phones to pre-install Google apps. This feeds a “default bias” that contributes to it being used for 95% of Australian searches.

Another is reforming Australia’s privacy laws to address the digital environment. Platforms’ “take it or leave it” policies now give consumers little choice on having their data harvested.




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But on the area of concern central to the inquiry’s establishment –
the decline in journalism – the recommendations are relatively minor:

  • a code of conduct to treat news media businesses “fairly, reasonably and transparently”
  • “stable and adequate” government funding for the ABC and SBS
  • government grants (A$50 million a year) to support original local journalism
  • tax incentives to encourage philanthropic support for journalism.

The reality is that there is little governments can do to reverse the technological disruption of the journalism business.

Targeted revolution

The internet has made stark that news organisations aren’t primarily in the journalism business. The stories they produce play an incomparable social role, but the business model is to deliver an audience to advertisers.


Australian advertising expenditure by media format and digital platform.
ACCC

Social media and search give advertisers better tools to target messages to more precise groups of potential consumers. It is a phenomenally better mousetrap.

Traditional advertising is expensive and inefficient. An advertiser pays to reach a broad audience, most with no interest in what is being advertised.

Search allows advertisers to pay to reach people precisely when they are looking for something. Google knows what you are interested in, and serves up advertising accordingly. In the last quarter alone advertising in its properties (Search, Maps, Gmail, YouTube, Play Store and Shopping) made US$27.3 billion in revenue.

Social media platforms have a different model, but one no less damaging to the old newspaper business model. It’s a bit more like traditional mass media advertising, selling the attention of users to advertisers, but in a far more targeted way.

To the extent Facebook, Instagram, Twitter and so on capture your attention, and effectively monetise content made by others through sharing, they also undercut traditional news businesses.

Follow the money

No regulation can fix this. As the competition watchdog’s report notes, Australian law does not prohibit a company from having substantial market power. Nor does it prohibit a company “from ‘out-competing’ its rivals by using superior skills and efficiency”.

No one – not even the tech companies – is necessarily to blame for the technological innovation that has disrupted traditional news organisations.

To see that, as with my kids understanding how their apps make money, it’s just a case of following the money.The Conversation

Amanda Lotz, Fellow, Peabody Media Center; Professor of Media Studies, Queensland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Consumer watchdog calls for new measures to combat Facebook and Google’s digital dominance



Facebook and Google potentially face fresh curbs on their market power.
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Rob Nicholls, UNSW and Katharine Kemp, UNSW

The Australian Competition and Consumer Commission (ACCC) has called for “holistic, dynamic reforms” to address the online dominance of digital behemoths such as Google and Facebook.

A 600-page report, released today, makes 23 recommendations for regulating digital platforms – covering competition law, consumer protection, media regulation, and privacy.

Most of the suggested reforms are aimed squarely at countering the dominance of Facebook and Google, which the ACCC says has distorted a range of markets including advertising and media.




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The ACCC recommends forming a new branch to deal specifically with Google and Facebook. But it doesn’t propose itself as the sole watchdog: the report also recommends a regulatory role for the Australian Communications and Media Authority (ACMA).

Meanwhile, the Office of the Australian Information Commissioner (OAIC) is called upon to develop an enforceable code to regulate platforms’ use of data. And even the Australian Tax Office will potentially be involved, as part of a proposal to introduce measures to encourage philanthropic funding of public-interest journalism.

Digital platforms with more than a million active users in Australia will be required to provide ACMA with codes to address the imbalance in the bargaining relationship between these platforms and news media businesses. These codes are expected to recognise the need for value-sharing and monetisation of news content.

Under the recommendations, ACMA would also be expected to monitor digital platforms’ efforts to identify reliable and trustworthy news, and to manage a mandatory take-down code for content that breaches copyright.

Market muscle

The ACCC report highlights the “substantial market power” enjoyed by Google and Facebook in their respective domains of web searching and social media. While it is not unlawful for firms to have this degree of power, it does mean they are likely to be subject to the (as yet untested) misuse of market power law introduced in 2017.

The ACCC is concerned that current merger laws do not go far enough, given large platforms’ ability to remove future competitive threats by simply buying start-ups outright. Such acquisitions may also increase the platforms’ access to data. The ACCC considers that either or both of these could entrench a platform’s market power.

As a result, the report recommends changes to Australia’s merger laws to expressly require consideration of the effect of potential competition, and to recognise the importance of data. It also recommends that platforms should be obliged to notify the ACCC in advance of any proposed acquisition.

This is not a substantial change to the existing law, which already allows consideration of anti-competitiveness. But it is a signal that the ACCC will be focusing on this issue.

The ACCC also wants Google to allow Australian users of Android devices to choose their search engine and internet browser – a right already enjoyed by Android users in the European Union.

Empowering consumers

The ACCC recommends substantial changes to Australian Consumer Law, to address the huge inequalities in bargaining power between digital platforms and consumers when it comes to terms of use, and particularly privacy.

The report’s most significant proposal in this area is to outlaw “unfair practices”, in line with similar bans in the US, UK, Europe, Canada, and elsewhere. This would cover conduct that is not covered by existing laws governing the misuse of market power, misleading or deceptive conduct, or unconscionable conduct.

This could be relevant, for example, where a digital platform imposes particularly invasive privacy terms on its users, which far outweigh the benefits of the service provided. The ACCC also called for digital platforms to face significant fines for imposing unfair contract terms on users.

The report recommends a new mandatory standard to bolster digital platforms’ internal dispute resolution processes. This would be reinforced by the creation of a new ombudsman to assist with resolving disputes and complaints between consumers and digital platforms.

Protecting privacy

The ACCC found that digital platforms’ privacy policies are long, complex, vague, and hard to navigate, and that many platforms do not provide consumers with meaningful control over how their data is handled.

The report therefore calls for stronger legal privacy protections, as part of a broader reform of Australian privacy law. This includes agreeing with the Australian Law Reform Commission on the need for a statutory tort for serious invasions of privacy.

Legal action ahead?

The ACCC also highlighted several matters on which it is considering future actions. These include the question of whether Facebook breached consumer law by allowing users’ data to be shared with third parties (potentially raising similar issues to the investigation by the US Federal Trade Commission, which this week resulted in a US$5 billion fine against Facebook), and whether Google has collated users’ location data in an unlawful way.




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In a statement, Treasurer Josh Frydenberg and federal communications minister Paul Fletcher accepted the ACCC’s overriding conclusion that there is a need for reform.

The federal government will now begin a 12-week public consultation process, and said it expects to release its formal response to the report by the end of the year.The Conversation

Rob Nicholls, Senior lecturer in Business Law, UNSW and Katharine Kemp, Senior Lecturer, Faculty of Law, UNSW, and Co-Leader, ‘Data as a Source of Market Power’ Research Stream of The Allens Hub for Technology, Law and Innovation, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

A tale of two media reports: one poses challenges for digital media; the other gives ABC and SBS a clean bill of health



File 20181213 178579 1im07g8.jpg?ixlib=rb 1.1
The competitive neutrality report has given the ABC, and SBS, a clean bill of health.
Shutterstock

Denis Muller, University of Melbourne

Two reports out this week – one into the operations of Facebook and Google, the other into the competitive neutrality of the ABC and SBS – present the federal government with significant policy and political challenges.

The first is by far the more important of the two.

It is the interim report by the Australian Competition and Consumer Commission of its Digital Platforms Inquiry, and in a set of 11 preliminary recommendations it proposes far-reaching changes to media regulation.

Of particular interest are its preliminary recommendations for sustaining journalism and news content.

These are based on the premise that there is a symbiotic relationship between news organisations and the big digital platforms. Put simply, the news organisations depend heavily on these platforms to get their news out to their audiences.

The problem, the ACCC says, is that the way news stories are ranked and displayed on the platforms is opaque. All we know – or think we know – is that these decisions are made by algorithms.




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The ACCC says this lack of transparency causes concerns that the algorithms and other policies of the platform giants may be operating in a way that affects the production of news and journalistic content.

To respond to this concern, the preliminary recommendation is for a new regulatory authority to be established. It would have the power to peer into these algorithms and monitor, investigate and report on how content – including news content – is ranked and displayed.

The purpose would be to identify the effects of the algorithms and other policies on the production of news and journalistic content.

It would also allow the authority to assess the impact on the incentives for news and journalistic content creation, particularly where news organisations have invested a lot of time and money in producing original content.

In this way, the ACCC is clearly trying to protect and promote the production of public-interest journalism, which is expensive but vital to democratic life. It is how the powerful are held to account, how wrongdoing is uncovered, and how the public finds out what is going on inside forums such as the courts and local councils.

So far, the big news media organisations have concentrated on these aspects of the ACCC interim report and have expressed support for them.

However, there are two other aspects of the report on which their response has been muted.

The first of these is the preliminary recommendation that proposes a media regulatory framework that would cover all media content, including news content, on all systems of distribution – print, broadcast and online.

The ACCC recommends that the government commission a separate independent review to design such a framework. The framework would establish underlying principles of accountability, set boundaries around what should be regulated and how, set rules for classifying different types of content, and devise appropriate enforcement mechanisms.

Much of this work has already been attempted by earlier federal government inquiries – the Finkelstein inquiry and the Convergence Review – both of which produced reports for the Gillard Labor government in 2012.

Their proposals for an overarching regulatory regime for all types of media generated a hysterical backlash from the commercial media companies, who accused the authors of acting like Stalin, Mao, or the Kim clan in North Korea.

So if the government adopts this recommendation from the ACCC, the people doing the design work can expect some heavy flak from big commercial media.

The other aspect of the ACCC report that is likely to provoke a backlash from the media is a preliminary recommendation concerning personal privacy.

Here the ACCC proposes that the government adopt a 2014 recommendation of the Australian Law Reform Commission that people be given the right to sue for serious invasions of privacy.

The media have been on notice over privacy invasion for many years. As far back as 2001, the High Court developed a test of privacy in a case involving the ABC and an abattoir company called Lenah Game Meats.

Now, given the impact on privacy of Facebook and Google, the ACCC has come to the view that the time has arrived to revisit this issue.

The ACCC’s interim report is one of the most consequential documents affecting media policy in Australia for many decades.

The same cannot be said of the other media-related report published this week: that of the inquiry into the competitive neutrality of the public-sector broadcasters, the ABC and SBS.

This inquiry was established in May this year to make good on a promise made by Malcolm Turnbull to Pauline Hanson in 2017.




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He needed One Nation’s support for the government’s changes to media ownership laws, without which they would not have passed the Senate.

Hanson was not promised any particular focus for the inquiry, so the government dressed it up in the dull raiment of competitive neutrality.

While it had the potential to do real mischief – in particular to the ABC – the report actually gives both public broadcasters a clean bill of health.

There are a couple of minor caveats concerning transparency about how they approach the issue of fair competition, but overall the inquiry finds that the ABC and SBS are operating properly within their charters. Therefore, by definition, they are acting in the public interest.

This has caused pursed lips at News Corp which, along with the rest of the commercial media, took this opportunity to have a free kick at the national broadcasters. But in the present political climate, the issue is likely to vanish without trace.

While the government still has an efficiency review of the ABC to release, it also confronts a political timetable and a set of the opinion polls calculated to discourage it from opening up another row over the ABC.The Conversation

Denis Muller, Senior Research Fellow in the Centre for Advancing Journalism, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

ACCC wants to curb digital platform power – but enforcement is tricky


Katharine Kemp, UNSW

We need new laws to monitor and curb the power wielded by Google, Facebook and other powerful digital platforms, according to the Australian Competition and Consumer Commission (ACCC).

The Preliminary Report on the Digital Platforms Inquiry found major changes to privacy and consumer protection laws are needed, along with alterations to merger law, and a regulator to investigate the operation of the companies’ algorithms.

Getting the enforcement right will be key to the success of these proposed changes.




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Digital platforms. Why the ACCC’s proposals for Google and Facebook matter big time


Scrutinising accumulation of market power

The report says Google and Facebook each possess substantial power in markets such as online search and social media services in Australia.

It’s not against the law to possess substantial market power alone. But these companies would breach our November 2017 misuse of market power law if they engaged in any conduct with the effect, likely effect or purpose of substantially lessening competition – essentially, blocking rivalry in a market.

Moving forwards, the ACCC has indicated it will scrutinise the accumulation of market power by these platforms more proactively. Noting that “strategic acquisitions by both Google and Facebook have contributed to the market power they currently hold”, the ACCC says it intends to ask large digital platforms to provide advance notice of any planned acquisitions.

While such pre-notification of certain mergers is required in jurisdictions such as the US, it is not currently a requirement in other sectors under the Australian law.

At the moment the ACCC is just asking the platforms to do this voluntarily – but has indicated it may seek to make this a formal requirement if the platforms don’t cooperate with the request. It’s not currently clear how this would be enforced.

The ACCC has also recommended the standard for assessing mergers should be amended to expressly clarify the relevance of data acquired in the transaction as well as the removal of potential competitors.

The law doesn’t explicitly refer to potential competitors in addition to existing competitors at present, and some argue platforms are buying up nascent competitors before the competitive threat becomes apparent.




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A regulator to monitor algorithms

According to the ACCC, there is a “lack of transparency” in Google’s and Facebook’s arrangements concerning online advertising and content, which are largely governed by algorithms developed and owned by the companies. These algorithms – essentially a complex set of instructions in the software – determine what ads, search results and news we see, and in what order.

The problem is nobody outside these companies knows how they work or whether they’re producing results that are fair to online advertisers, content producers and consumers.

The report recommends a regulatory authority be given power to monitor, investigate and publish reports on the operation of these algorithms, among other things, to determine whether they are producing unfair or discriminatory results. This would only apply to companies that generate more than A$100 million per annum from digital advertising in Australia.




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These algorithms have come under scrutiny elsewhere. The European Commission has previously fined Google €2.42 billion for giving unfair preference to its own shopping comparison services in its search results, relative to rival comparison services, thereby contravening the EU law against abuse of dominance. This decision has been criticised though, for failing to provide Google with a clear way of complying with the law.

The important questions following the ACCC’s recommendation are:

  • what will the regulator do with the results of its investigations?
  • if it determines that the algorithm is producing discriminatory results, will it tell the platform what kind of results it should achieve instead, or will it require direct changes to the algorithm?

The ACCC has not recommended the regulator have the power to make such orders. It seems the most the regulator would do is introduce some “sunshine” to the impacts of these algorithms which are currently hidden from view, and potentially refer the matter to the ACCC for investigation if this was perceived to amount to a misuse of market power.

If a digital platform discriminates against competitive businesses that rely on its platform – say, app developers or comparison services – so that rivalry is stymied, this could be an important test case under our misuse of market power law. This law was amended in 2017 to address longstanding weaknesses but has not yet been tested in the courts.




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Privacy and fairness for consumers

The report recommends substantial changes to the Privacy Act and Australian Consumer Law to reduce the power imbalance between the platforms and consumers.

We know from research that most Australians don’t read online privacy policies; many say they don’t understand the privacy terms offered to them, or they feel they have no choice but to accept them. Two thirds say they want more say in how their personal information is used.

The solutions proposed by the ACCC include:

  • strengthening the consent required under our privacy law, requiring it to be express (it may currently be implied), opt-in, adequately informed, voluntary and specific
  • allowing consumers to require their personal data to be erased in certain circumstances
  • increasing penalties for breaches of the Privacy Act
  • introducing a statutory cause of action for serious invasion of privacy in Australia.



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This last recommendation was previously made by the Australian Law Reform Commission in 2014 and 2008, and would finally allow individuals in Australia to sue for harm suffered as a result of such an invasion.

If consent is to be voluntary and specific, companies should not be allowed to “bundle” consents for a number of uses and collections (both necessary and unnecessary) and require consumers to consent to all or none. These are important steps in addressing the unfairness of current data privacy practices.

Together these changes would bring Australia a little closer to the stronger data protection offered in the EU under the General Data Protection Regulation.

But the effectiveness of these changes would depend to a large extent on whether the government would also agree to improve funding and support for the federal privacy regulator, which has been criticised as passive and underfunded.

Another recommended change to consumer protection law would make it illegal to include unfair terms in consumer contracts and impose fines for such a contravention. Currently, for a first-time unfair contract terms “offender”, a court could only “draw a line” through the unfair term such that the company could not force the consumer to comply with it.

Making such terms illegal would increase incentives for companies drafting standard form contracts to make sure they do not include detrimental terms which create a significant imbalance between them and their customers, which are not reasonably necessary to protect their legitimate interests.




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The ACCC might also take action on these standard terms under our misleading and deceptive conduct laws. The Italian competition watchdog last week fined Facebook €10 million for conduct including misleading users about the extent of its data collection and practices.

The ACCC appears to be considering the possibility of even broader laws against “unfair” practices, which regulators like the US Federal Trade Commission have used against bad data practices.

Final report in June 2019

As well as 11 recommendations, the report mentions nine areas for “further analysis and assessment” which in itself reflects the complexity of the issues facing the ACCC.

The ACCC is seeking responses and feedback from stakeholders on the preliminary report, before creating a final report in June 2019.

Watch this space – or google it.




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The Conversation


Katharine Kemp, Lecturer, Faculty of Law, UNSW, and Co-Leader, ‘Data as a Source of Market Power’ Research Stream of The Allens Hub for Technology, Law and Innovation, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Digital platforms. Why the ACCC’s proposals for Google and Facebook matter big time


File 20181210 76971 17q2g3x.jpeg?ixlib=rb 1.1
The Competition and Consumer Commission is worried about the ability of the platforms we use to determine the news we read.
Shutterstock

Sacha Molitorisz, University of Technology Sydney and Derek Wilding, University of Technology Sydney

The Australian Competition and Consumer Commission has released the preliminary report of its Digital Platforms Inquiry, and Google and Facebook won’t be happy.

Rather than adopting a gently-gently approach, the ACCC has produced draft recommendations that are extensive and dramatic.

If implemented, they would significantly affect the way the digital platforms make their money, and help direct the content we consume.

What’s more, the inquiry is touted as a world first. Its findings will be closely monitored, and perhaps even adopted, by regulators internationally.

Who should care?

The digital platforms themselves should (and do) care.

Any new regulations designed to foster competition or protect individual privacy (both are among the ACCC’s recommendations) have the potential to harm their revenues.

They’ve a lot to lose. In 2017, nearly A$8 billion was spent on online advertising in Australia, and more than half went to Google and Facebook (p3).

News organisations whose output is disseminated by those platforms should (and do) care too.

As the ACCC notes, more than half of the traffic on Australian news websites comes via Google and Facebook (p8).




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Increasingly, news producers depend on social media and search engines to connect with consumers. Google is used for 95% of searches (98% on mobile devices).

The rise of Google, Facebook and other digital platforms has been accompanied by unprecedented pressures on traditional news organisations.

Most obviously, classified advertising revenue has been unbundled from newspapers.

In 2001, classified advertising revenue stood at A$2 billion. By 2016, it had fallen to A$200 million. The future of newspapers’ ability to produce news is under a cloud, and digital platforms help control the weather.

Of course, advertisers care too.

But the stakeholders with the most to gain or lose are us, Australian citizens.




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Our lives are mediated by Google, Facebook, Apple, Amazon, Twitter and others as never before. Google answers our search queries; Facebook hosts friends’ baby snaps; YouTube (owned by Google) distributes professional and user-generated videos; Instagram (owned by Facebook) hosts our holiday snaps.

As the ACCC notes, they have given us tremendous benefits, for minimal (apparent) cost.

And they’ve done it at lightning speed. Google arrived in 1998, Facebook in 2004 and Twitter in 2006. They are mediating what comes before our eyes in ways we don’t understand and (because they keep their algorithms secret) in ways we can’t understand.

What does the ACCC recommend?

The ACCC’s preliminary recommendations are far-reaching and bold.

First, it suggests an independent review to address the inadequacy of current media regulatory frameworks.

This would be a separate, independent inquiry to “design a regulatory framework that is able to effectively and consistently regulate the conduct of all entities which perform comparable functions in the production and delivery of content in Australia, including news and journalistic content, whether they are publishers, broadcasters, other media businesses, or digital platforms”.

This is a commendable and urgent proposal. Last year, cross-media ownership laws were repealed as anachronistic in a digital age. To protect media diversity and plurality, the government needs to revisit the issue of regulatory frameworks.




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Second, it proposes privacy safeguards. Privacy in Australia is dangerously under-protected. Digital platforms such as Google and Facebook generate revenue by knowing their users and targeting advertising with an accuracy unseen in human history.

As the ACCC puts it, “the current regulatory framework, including privacy laws, does not effectively deter certain data practices that exploit the information asymmetries and the bargaining power imbalances that exist between digital platforms and consumers.”

It makes a number of specific preliminary recommendations, including creating a right to erasure and the requirement of “express, opt-in consent”.

It also supports the creation of a civil right to sue for serious invasions of privacy, as recommended by the Australian Law Reform Commission.

Australians lack the protections that Americans enjoy under the US Bill of Rights; we certainly lack the protection afforded under Europe’s sweeping new privacy law.




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It wants the penalties for breaches of our existing Privacy Act increased. It recommends the creation of a third-party certification scheme, which would enable the Office of the Australian Information Commissioner to give complying bodies a “privacy seal or mark”.

And it wants a new or existing organisation to monitor attempts by vertically-integrated platforms such as Google to favour their own businesses. This would happen where Google gives prominence in search results to products sold through Google platforms, or prominence to stories from organisations with which it has a commercial relationship.

The organisation would oversee platforms that generate more than A$100 million annually, and which disseminate news, or hyperlinks to news, or snippets of news.

It would investigate complaints and even initiate its own investigations in order to understand how digital platforms are disseminating news and journalistic content and advertising.

As it notes,

The algorithms operated by each of Google and Facebook, as well as other policies, determine which content is surfaced and displayed to consumers in news feed and search results. However, the operation of these algorithms and other policies determining the surfacing of content remain opaque. (p10)

It makes other recommendations, touching on areas including merger law, pre-installed browsers and search engines, takedown procedures for copyright-infringing content, implementing a code of practice for digital platforms and changing the parts of Australian consumer law that deal with unfair contract terms.

Apart from its preliminary recommendations, there are further areas on which it invites comment and suggestions.




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These include giving media organisations tax offsets for producing public interest news, and making subscribing to news publications tax deductible for consumers.

Platforms could be brought into a co-regulatory system for flagging content that is subject to quality control, creating their own quality mark. And a new ombudsman could deal with consumer complaints about scams, misleading advertising and the ranking of news content.

All of these recommendations and areas of interest will generate considerable debate.

What’s next?

The ACCC will accept submissions in response to its preliminary report until February 15.

At the Centre for Media Transition, we played a background role in one aspect of this inquiry.

Earlier this year, we were commissioned by the ACCC to prepare a report on the impact of digital platforms on news and journalistic content. It too was published on Monday.

Our findings overlap with the ACCC on some points, and diverge on others.




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Many thorny questions remain, but one point is clear: the current regime that oversees digital platforms is woefully inadequate. Right now, as the ACCC notes, digital platforms are largely unregulated.

New ways of thinking are needed. A mix of old laws (or no laws) and new media spells trouble.The Conversation

Sacha Molitorisz, Postdoctoral Research Fellow, Centre for Media Transition, Faculty of Law, University of Technology Sydney and Derek Wilding, Co-Director, Centre for Media Transition, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.