Australian Competition Authority Recommends Regulation Of Google And Facebook

Google and Facebook must be subject to a “greater level of regulatory oversight” because of their strong market position which is “at risk of creating competitive or consumer harm” and damaging news media publishers, a preliminary report from the Australian Competition and Consumer Commission has found.

The report contains 11 preliminary recommendations – including a proposal for a regulatory authority to be given the task of investigating how large digital platforms rank and display advertisements and news content – and eight areas for further analysis as the ACCC’s inquiry into Google, Facebook and Australian news and advertising continues.

The ACCC said Google and Facebook are now the dominant gateways between news media businesses and audiences and this can reduce the brand value and recognition of media businesses.

Traditional media businesses and in particular, traditional print media businesses, have lost advertising revenue to digital platforms. This has threatened the viability of business models of the print media and their ability to monetise journalism, the ACCC said.

ACCC chair Rod Sims said: “Digital platforms are also unavoidable business partners for many Australian businesses. Google and Facebook perform a critical role in enabling businesses, including online news media businesses, to reach consumers. However, the operation of these platforms’ key algorithms determining the order in which content appears is not at all clear.”

“News and journalism perform a critical role in society. The downturn in advertising revenue has led to a cut in the number of journalists over the past decade. This has implications across society because of the important role the media plays in exposing corruption and holding governments, companies, powerful individuals and institutions to account.”

Speaking to The Australian, News Media Association deputy chief executive Lynne Anderson said other regulators should take note of the ACCC’s report. “It recognises the stranglehold that Google and Facebook have over the supply and funding of news and the acute damage this is causing to journalism and society at large.

“We hope the report will lead to effective remedies, including proper regulatory oversight as well as greater competition for digital advertising revenues, allowing news media companies to monetise the content they produce rather than search engines and social media platforms reaping the rewards simply for distributing it.” 

“Newspapers in print and online are by far the biggest investors in news and original journalism, which is then shared across social media and other media platforms. Unless the content creators are fairly rewarded for their investment, the future of public interest journalism, which underpins democracy, will be in doubt.” 

David Chavern, chief executive of US-based News Media Alliance, said: “Many governments are wrestling with the role of the major tech platforms in our societies but few have been willing or able to think about the full range of issues — from privacy to antitrust to the future of journalism. The ACCC appears to be miles ahead of US governmental bodies in its understanding and approach to tech platform policy.” 

Separately, an EU competition law analysis of online display advertising in the programmatic age published this week by Euclid Law found that while the ad tech sector comprises a wide variety of intermediaries, its main segments are dominated by Google, with “concerns being expressed that it may engage in both exploitative and exclusionary strategies.”

The report said: “Because of its vital importance to advertisers and publishers, healthy competition in the advertising ecosystem is desirable. Yet, despite the spectacular growth of online display advertising, the picture is not entirely rosy.

“In the ‘programmatic’ era, where ad inventory is sold through computerized decision-making processes managed by “ad tech” intermediaries, the online display advertising sector is characterized by a high degree of opacity, and publishers and advertisers have expressed concerns about the so-called ‘ad tech tax’, ie the large and opaque fees applied by various intermediaries.” 

The ACCC report outlines concerns regarding the market power held by these key platforms, including their impact on Australian businesses and, in particular, the ability of media businesses to monetise their content and the extent to which consumers’ data is collected and used to enable targeted advertising.

The inquiry has also considered important questions about the range and reliability of news available via Google and Facebook. The ACCC’s preliminary view is that consumers face a potential risk of filter bubbles, or echo chambers, and less reliable news on digital platforms which requires close scrutiny.

The ACCC said it was “further concerned” with the large amount and variety of data which digital platforms such as Google and Facebook collect on Australian consumers, which go beyond the data which users actively provide when using the digital platform.

Research commissioned as part of the inquiry indicates consumers are concerned about the extent and range of information collected by digital platforms. The ACCC is in particular concerned about the length, complexity and ambiguity of online terms of service and privacy policies, including click-wrap agreements with take-it-or-leave-it terms.

Without adequate information and with limited choice, consumers are unable to make informed decisions, which can both harm consumers and impede competition, the ACCC said.

The preliminary recommendations and the areas for further analysis identified in the preliminary report have been put forward as potential options to address the actual and potential negative impacts of digital platforms and contribute to the debate about the appropriate level of government oversight.

The report found that key digital platforms, Google and Facebook, had both the ability and incentive to favour related businesses or those businesses with which they may have an existing commercial relationship. The platforms’ algorithms rank and display advertising and news content in a way that lacks transparency to advertisers and news organisations.

Mr Sims said: “Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content.

Yet, digital platforms face less regulation than many media businesses,” Mr Sims said. “The ACCC considers that the strong market position of digital platforms like Google and Facebook justifies a greater level of regulatory oversight.” 

“Australian law does not prohibit a business from possessing significant market power or using its efficiencies or skills to ‘out compete’ its rivals. But when their dominant position is at risk of creating competitive or consumer harm, governments should stay ahead of the game and act to protect consumers and businesses through regulation.”

The report makes preliminary recommendations aiming to address Google and Facebook’s market power and promote increased consumer choice, including a proposal that would prevent Google’s internet browser (Chrome) being installed as a default browser on mobile devices, computers and tables and Google’s search engine being installed as a default search engine on internet browsers.

The ACCC also proposes that a new or existing regulatory authority be given the task of investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content. Other preliminary recommendations suggest ways to strengthen merger laws, look at copyright, andtake-down orders, and the review of existing, disparate media regulations.

The ACCC also notes that consumers will be better off if they can make informed and genuine choices as to how digital platforms collect and use their data, and proposes changes to the Privacy Act to enable consumers to make informed decisions. The ACCC is also considering a recommendation for a specific code of practice for digital platforms’ data collection to better inform consumers and improve their bargaining power.

“The inquiry has also uncovered some concerns that certain digital platforms have breached competition or consumer laws, and the ACCC is currently investigating five such allegations to determine if enforcement action is warranted,” Mr Sims said.

The ACCC is seeking feedback on its preliminary recommendations, and the eight proposed areas for further analysis and assessment.

These eight areas for further analysis include the proposed ‘badging’ by digital platforms of media content, produced by an accountable media business, as well as options to fund the production of news and journalism, such as tax deductions or subsidies, a digital platforms ombudsman to investigate complaints and provide a timely and cost effective means to resolve disputes, and a proposal for digital platforms to allow consumers to opt out of targeted advertising.