ACCC Digital Platforms Inquiry Final Report Released

Friday 9 August 2019 @ 2.07 p.m. | Corporate & Regulatory | IP & Media | Trade & Commerce

The final report of the Australian Competition and Consumer Commission ("the ACCC") in what is known as the "Digital Platforms Inquiry", was released on 26 July 2019. The ACCC’s long-awaited report is some 600 pages long and makes a large number of recommendations covering the practices of the media, advertising, journalism and marketing.

The ACCC's final report has a total of 23 recommendations. These are focused primarily around a number of key concerns about the "market dominance" of digital platforms by a few major players.  Some of the areas the final report's recommendations cover include:

  • the impact digital platforms have on the dispersion of and access to Australian media and news;
  • the concomitant effects of Google and Facebook’s ubiquity on consumer choice and competition;
  • information privacy and the public’s general knowledge of how personal information is used by advertisers and digital platforms; and
  • how digital platforms are monitored and scrutinised by government and the arms of government.

About the ACCC's Inquiry and Its Final Report

The ACCC's inquiry into digital platforms began on 4 December 2017. The then Treasurer, now Prime Minister, the Hon Scott Morrison MP, directed the ACCC to conduct an inquiry into digital platforms to look at the effect that digital search engines, social media platforms and other digital content aggregation platforms had on competition in media and advertising services markets. In particular, the inquiry was to look at the impact of digital platforms on the supply of news and journalistic content and the implications of this for media content creators, advertisers and consumers.
The terms of reference were issued on 4 December 2017, followed by an issues paper released on 26 February 2018. Submissions were opened to the public on 3 May 2018, with a Preliminary Report released on 10 December 2018.  This was followed by forums and key meetings from 1 March 2019 and Preliminary Report submissions from 4 March 2019. The ACCC then commissioned more research prior to releasing its Final Report and Executive Summary on 26 July 2019.

For details see our previous articles:
ACCC Digital Platform Inquiry: Preliminary Report Released

ACCC to Commence Inquiry Into Digital Platforms

ACCC Publishes Submissions into Digital Platforms Inquiry

ACCC Release Issues Paper for News and Digital Platforms Inquiry

Overview and Summary of the Recommendations

Chapter 2 of the final report examines the extent to which the two largest digital platforms, namely, Google and Facebook, hold substantial market power, and identifies the markets relevant to the Inquiry where market power is held. Recommendations coming from Chapter 2 of the report are:

  • Recommendation 1: that there should be changes to the merger laws. That section 50(3) of the Competition and Consumer Act 2010 (Cth) (the CCA) be amended to incorporate the following additional merger factors:

(j) the likelihood that the acquisition would result in the removal from the market of a potential competitor;
(k) the nature and significance of assets, including data and technology, being acquired directly or through the body corporate.

  • Recommendation 2: that there should be advanced notice of acquisitions by way of the large digital platforms agreeing to a notification protocol that provides advance notice to the ACCC of any proposed acquisitions potentially impacting competition in Australia. The details of the notification protocol will be agreed between the ACCC and each large digital platform, and would specify, the types of acquisitions requiring notification (including any applicable minimum transaction value), and the minimum advance notification period prior to completion of the proposed transaction to enable the ACCC to assess the proposed acquisition.

If such a commitment were not forthcoming from the large digital platforms, the ACCC will make further recommendations to the Government that address this issue.

  • Recommendation 3: that there should be changes to search engine and internet browser defaults similar to those currently existing in Europe.

Chapter 3 of the final report explores the relationships between the two largest digital platforms and advertisers and considers the consequences of Google and Facebook’s market power in relevant advertising markets and issues related to their presence at multiple levels of the advertising supply chain.

The two recommendations coming from Chapter 3 are:

  • Recommendation 4: which calls for the proactive investigation, monitoring and enforcement of issues in markets in which digital platforms operate; and
  • Recommendation 5: that the specialist digital platforms branch (proposed by Recommendation 4) be directed to hold an inquiry into competition for the supply of "ad tech services" and the supply of online advertising services by advertising and media agencies.

Chapter 4 considers the extent of the regulatory imbalance in media, communications and advertising regulations applicable to media businesses and digital platforms, and proposes

  • Recommendation 6: the development of a process to implement a harmonised media regulatory framework, a new platform-neutral regulatory framework to ensure effective and consistent regulatory oversight of all entities involved in content production or delivery in Australia, including media businesses, publishers, broadcasters and digital platforms. The aim being to create ". . . a level playing field that promotes competition in Australian media and advertising markets".

Chapter 5 considers the commercial relationships between digital platforms and media businesses focusing on the bargaining power imbalance between major digital platforms and media businesses and the impact of copyright regulation on media businesses’ ability to generate revenue from copyright-protected content and in

  • Recommendation 7: recommends that designated digital platforms provide codes of conduct governing relationships between digital platforms and media businesses to the ACMA.

Also coming out of Chapter 5 is

  • Recommendation 8: which calls for a mandatory ACMA take-down code to assist copyright enforcement on digital platforms.

Chapter 6 looks at the impact of digital platforms on the choice and quality of news and journalism supplied to consumers and assessed the potential harms that reductions to choice and quality might pose. Recommendations in this chapter were:

  • Recommendation 9: Stable and adequate funding for the public broadcasters;
  • Recommendation 10: Grants for local journalism;
  • Recommendation 11: Tax settings to encourage philanthropic support for journalism;
  • Recommendation 12: Improving digital media literacy in the community;
  • Recommendation 13: Teaching digital media literacy in schools;
  • Recommendation 14: Monitoring efforts of digital platforms to implement credibility signalling; and
  • Recommendation 15: Creation of a "Digital Platforms Code" to counter disinformation.

Chapter 7 focuses on the key questions relevant to consumer protection, namely, are consumers well informed and can consumers make informed and free choices about how digital platforms collect, use and disclose their personal information and user data? Recommendations in this chapter were:

  • Recommendation 16: Provide for strengthened protections in the Privacy Act 1988 (Cth).
  • Recommendation 17: Provide for a broader reform of Australian privacy regime to ensure it continues to effectively protect consumers’ personal information in light of the increasing volume and scope of data collection in the digital economy.
  • Recommendation 18: An enforceable privacy code of practice developed by the Office of the Australian Information Commissioner (OAIC), in consultation with industry stakeholders, to enable proactive and targeted regulation of digital platforms’ data practices (a "DP Privacy Code"). The code should apply to all digital platforms supplying online search, social media, and content aggregation services to Australian consumers and which meet an objective threshold regarding the collection of Australian consumers’ personal information.
  • Recommendation 19: Introduces "a statutory cause of action" for serious invasions of privacy, as recommended by the Australian Law Reform Commission (ALRC) - such a cause of action would provide protection for individuals against serious invasions of privacy that may not be captured within the scope of the Privacy Act 1988 (Cth).
  • Recommendation 20:  Provides for a prohibition against unfair contract terms, that is, amend the Competition and Consumer Act 2010 (Cth) so that unfair contract terms are prohibited (not just voidable). This would mean that civil pecuniary penalties apply to the use of unfair contract terms in any standard form consumer or small business contract.
  • Recommendation 21: The provision of a prohibition against certain unfair trading practices by amending the Competition and Consumer Act 2010 (Cth) to include the said prohibition - the scope of such a prohibition should be carefully developed such that it is sufficiently defined and targeted, with appropriate legal safeguards and guidance.

Chapter 8 of the Final Report explores the harmful effect of technology-facilitated scams and outlined emerging technological and market-driven trends that may shape the relationships between digital platforms, advertising, and news media. Recommendations in this chapter were:

  • Recommendation 22: The development of minimum internal dispute resolution standards by the ACMA to apply to digital platforms. The standards should, among other things, set out requirements for the visibility, accessibility, responsiveness, objectivity, confidentiality and collection of information of digital platforms internal dispute resolution processes. They should also set out the processes for continual improvement, accountability, charges and resources.
  • Recommendation 23: The establishment of an ombudsman scheme to resolve complaints and disputes with digital platform providers.

The Government's Response to the Report

In a media release on 26 July 2019 the Treasurer, Josh Frydenberg, esponded to the delivery of the ACCC's Final Report saying that the Government recognised that news and journalism were an important public good and that with Digital Platforms collecting and using large volumes of personal information, consumers needed to be properly informed about the data collected, how it is being used and by who. As result the Government:

". . . therefore accepts the ACCC’s overriding conclusion that there is a need for reform - to better protect consumers, improve transparency, recognise power imbalances and ensure that substantial market power is not used to lessen competition in media and advertising services markets."

Further the Treasurer indicated that the Government also accepted that there was a need to develop a "harmonised media regulatory framework". In this respect he indicated that:

"The precise form of the reforms and a detailed Government response to the report’s recommendations will be informed by a public consultation process, led by Treasury and involving the Department of Communications and the Arts as well as the Attorney-General’s Department."

According to the Treasurer the consultation process is to run for 12 weeks and will also "enable all interested stakeholders" to provide their feedback on the report and its implementation. After these consultations, the Government, the Treasurer said, ". . . intends to finalise its response to the report by the end of the year [2019]".

Some General Responses

One point made made by several commentators is that the Final Report is merely the beginning of a longer process that will eventually lead to increased regulation and scrutiny as following indicates:

"Despite being two years in the making, we explore below why the DPI Final Report is only the beginning of the journey when it comes to increased regulation and scrutiny for digital businesses operating in Australia."

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.


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