ACCC to Commence Inquiry Into Digital Platforms

Thursday 7 December 2017 @ 9.16 a.m. | IP & Media | Legal Research | Trade & Commerce

The Federal Government has announced that it has directed the Australian Competition and Consumer Commission (the ACCC) to hold an inquiry into the impact of digital platform services on the state of competition in media and advertising services markets.  The announcement came in the form of a joint media release issued by the Treasurer, Senator Scott Morrison and the Minister for the Arts, Senator Mitch Fifield, on Monday 4 December 2017.

The Federal Government's direction to the ACCC is made under section 95H(1) of the Competition and Consumer Act 2010 (Cth). Section 95H(1) relates to price inquiries by the ACCC and the power of the Government to direct the ACCC to undertake such inquiries.

In broad terms, this inquiry will give the ACCC the power to obtain information which will make digital platforms, such as Google and Facebook, more transparent. This will then enable the ACCC to test whether a case can be made for further intervention or use of the ACCC’s broader enforcement powers.

According to the joint Media Release, the inquiry forms part of the Government’s broader "Broadcast and Content Reform package" and was one of the measures agreed to with the Nick Xenophon Team in the Senate.

The Inquiry Terms of Reference

Under the terms of reference provided by the government the ACCC has been directed to consider:

  • 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 equality or equivalence between platform service providers, advertisers and consumers and the effect on competition in the media and advertising markets.

The ACCC's View of the Inquiry

In a separate Media Release the ACCC has described the inquiry as looking into the effect that digital search engines, social media platforms and other digital content aggregation platforms are having on competition in media and advertising services markets. The ACCC Chairman Rod Sims is quoted as saying that:

“The ACCC goes into this inquiry with an open mind and will study how digital platforms such as Facebook and Google operate to fully understand their influence in Australia, . . .”

The need for an inquiry is driven by the fact that advertising expenditure in print newspapers has been in decline for a number of years.  According to the ACCC, recent merger reviews have shown that most advertisers are spending less on print newspapers and finding alternative ways of reaching target audiences, including through digital media.

The ACCC have said that the inquiry is to examine whether digital platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers.  It will look closely at longer-term trends as well, such as the effect of technological change on competition in media and advertising.

A key concern is that the digital evolution of the media sector is affecting the "traditional media’s" ability to fund the development of content. The inquiry will look closely at the impact of digital platforms on the level of choice and quality of news and content being produced by Australian journalists. Holding the inquiry under Part VIIA of the Competition and Consumer Act 2010 (Cth) means the ACCC can use compulsory information gathering powers and hold hearings to assess the level of competition in the market. In this respect according ACCC Chairman Rod Sims the ACCC is:

“. . . keen to hear the views of content creators, mainstream media outlets and smaller media operators, platform providers, advertisers, journalists, consumers and small business interest groups, . . .”.

Some Interesting Considerations

The inquiry's scope will include not only social media platforms like Facebook, Twitter and Instagram but also digital search engines like Google, and digital content aggregators like Google's News Service. The investigation may even consider the role of organisations like the ABC, according to ACCC Chairman Rod Sims. This will mean the inquiry could be quite far ranging and provide for some interesting outcomes.

Because the inquiry was formally initiated by the government and not by the ACCC, the ACCC has the ability to use compulsory information gathering powers and hold hearings. These powers may be necessary as many of the companies who could be involved predominantly operate overseas and getting information from them could prove contentious, even difficult, although the ACCC's Chairman is on the record as saying, he ". . . didn't anticipate a legal fight".

The ABC News reports that this type of inquiry has been done in a few other countries. One example occurred in Spain where the outcome was the imposition of an intellectual property law that charged news aggregators for re-publishing headlines or showing snippets of news stories. This had the result of causing Google to axe its service in Spain and massively reduced online traffic to Spanish News sites.

What Could Result from the Inquiry

If the inquiry reveals a problem which is not one that can be dealt with as a breach of the Competition and Consumer Act 2010 (Cth), the ACCC will be able to make recommendations to the Government which the Government could then legislate for, should it so choose. If the problem is one that is a breach of the Competition and Consumer Act 2010 (Cth) the ACCC can look to its new post-Harper powers with respect to the misuse of market power, as well as looking at whether there is any misleading and deceptive conduct, and related breaches.

Submission and Reporting

Given its scope, the inquiry will take place over an extended period. The ACCC has indicated it expects to produce a preliminary report in early December 2018, with a final report due in early June 2019. Further information on the inquiry can be found here

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