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ACCC Digital Platforms Inquiry Assessment

World first inquiry into the effect of digital platforms
on the media sector delivers report

Background

On Friday 30 July 2019, The Australian Government released the Australian Competition and Consumer Commission (ACCC) Digital Platforms Inquiry final report. This move followed the release of the ACCC’s preliminary report on 10 December 2018.

The inquiry, which ran over 18 months, came about in response to recent dramatic technological changes that have impacted the media and advertising sectors, disrupted the business model of commercial news media and raised market power issues and concerns about the quality and accuracy of news and journalistic content.

In releasing the final report, the Australian Treasurer has accepted “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. The Government also accepts there is a need to develop a harmonised media regulatory framework”.

In principle, the AANA is fully supportive of this reform agenda and the ACCC’s key findings and recommendations, which are detailed below.

Changes to competition law

To address these power imbalances, particularly with Google and Facebook, the ACCC is recommending changes to merger law, mandated advance notice of intended acquisitions and investigation into further data portability so that the data, or the routes to the data, held by the major digital platforms are opened up to “assist competitive innovation in future markets”.

While the ACCC acknowledges that existing tools and goals of competition and consumer law frameworks apply to new digital markets, their particular opacity and complexity means that they should be supplemented with additional proactive investigation, monitoring and enforcement powers. It now proposes that the a new branch of the Commission (rather than a new agency, which was tabled as an option in the Preliminary Report) be created and given regulatory authority to focus on digital platforms. The AANA believes setting up a branch to develop specific expertise in this space is a sensible decision, providing it doesn’t lead to additional, unnecessary regulation.

The Commission aims to ensure that Google’s internet browser (Chrome) is not installed as a default browser on mobile devices, computers and tablets and Google’s search engine is not installed as a default search engine on internet browsers. It wants changes to Android devices currently being offered in Europe, which will provide consumers with choice in search engine and internet browsers, implemented in Australia too.

One task of this new ACCC branch would be investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content, and making policy recommendations to Government.

Matters impacting consumer privacy

The ACCC concluded that consumers benefit from the many services offered by digital platforms and have at least some understanding that certain user data and personal information are collected and used for advertising in return for the use of these services.

However, the ACCC are of the view most consumers do not sufficiently understand the scope of the personal data collected or the nature of the bargain and that the Privacy Act needs reform “in order to ensure consumers are adequately informed, empowered and protected, as to how their data is being used and collected.”

The ACCC is of the view that the key barriers to informed choices are:

• “The information asymmetry between digital platforms and consumers…Consumers are not generally aware of the extent of data that is collected nor how it is collected, used and shared by digital platforms. This is influenced by the length, complexity and ambiguity of online terms of service and privacy policies. Digital platforms also tend to understate to consumers the extent of their data collection policies while overstating the level of customer control over their personal user data…

• “(there is) considerable imbalance in bargaining power between digital platforms and consumers. Many digital platforms use standard-form click-wrap agreements with take-it-or-leave-it terms and bundled consents, which limit the ability of consumers to provide well-informed and freely given consent to digital platforms’ collection, use and disclosure of their valuable data.”

Following the ACCC’s preliminary report, in March of this year the Government announced tougher penalties to address online privacy, including significantly increased fines for repeat offenders; new infringement notice powers for the Office of the Australian Information Commissioner (OAIC); a requirement for online platforms to cease using personal information upon request and specific rules to protect particularly vulnerable groups e.g. children.

The ACCC is asking now for further legislative changes to include:
• Updating the definition of personal information to cope with current and anticipated technological advances and capture any technical data relating to an identifiable individual.

• Strengthening notification requirements of personal information collections in a way that is clear to consumers.

• Require that consent is freely, specifically and unambiguously given and that any default settings for additional data collection are set to ‘off’.

• Requiring platforms to erase personal data upon request, without unreasonable delay.

• Direct rights for individuals to bring actions or class actions for compensation for privacy breaches.

• An enforceable Privacy Code of Practice to be developed by the OAIC to apply specifically to digital platforms to be enforced by the OAIC accompanied by the same penalties as are applicable under the Privacy Act.

Much of the proposed consumer protections echo reforms in other jurisdictions, including in Europe, via GDPR. Additionally, the ACCC has foreshadowed that broader reform of the Australian privacy regime may be necessary and is recommending a review of its current objectives and scope.

It should also be noted by advertisers that the ACCC states that many of the reforms above need to be applied economy-wide, pointing out, for example, that many businesses seek consent to data practices using click-wrap agreements, bundled consents, and take-it-or leave-it terms that inhibit informed consent.

Matters directly impacting advertisers’ commercial relationships

As with consumers, the ACCC has concluded that advertisers have largely benefited from the rise of the digital platforms, largely through cheaper and more targeted ways of reaching consumers.

However, it has concluded that the advertising supply chain is too complex and opaque and that advertisers are unable to determine whether the services they buy from them offer ‘value for money’.

The ACCC says that its experience in conducting the inquiry “suggests that advertisers and others may be unwilling to publicly identify their concerns.’

In order to consider these issues more fully and to comprehensively assess whether the ad tech supply chain is acting efficiently, the ACCC recommends that a specific inquiry into ad tech services and advertising and media agencies be held. “Such an inquiry would assist in increasing the transparency in the operation of the ad tech supply chain and the operation of advertising and media agencies and in determining whether any competition or efficiency concerns exist.”

Matters to be taken into account include:

• whether a lack of transparency is impacting the efficient operation of these markets;

• the prices charged by suppliers of these services and the share of advertising revenue they retain (including whether any potential excessive margins are obtained);

• how these services are bought and sold, including any auction or bidding processes;

• the relationship between suppliers and customers of these services, including the extent to which company structures or contractual arrangements limit effective competition; and

• the impact of consolidation of services on competition.

Since the publication of its preliminary report, the Commission has concluded that advertisers are able to adequately verify whether advertisements on digital platforms are served to their intended audience but nevertheless will potentially consider the topic as part of the forthcoming inquiry.

The ACCC is asking that the inquiry “should be empowered by Ministerial direction, have the ability to compel relevant information, and be completed over a period of 18 months”.

The impact on news media, risks to local news delivery and the rise of ‘fake’ news

The ACCC is recommending an overhaul of media laws to reflect that digital platforms are, in some cases, publishers of news. The overall aim is to achieve ‘platform neutrality’ by overhauling anachronistic media laws e.g. different laws for different outlets currently apply for political advertising black-outs in the lead-up to polling day.

The ACCC is particularly concerned with the impact of the digital platforms on regional media, which do not have the larger potential audiences of metro and national titles to offer advertisers. It notes a reduction in local government and court reporting and the increased potential for corruption to go unreported (Australia-wide) to the detriment of the functioning of the democratic process, and notes that there is, as yet, no evident replacement business model, particularly at a local and regional level.

To this end, the ACCC suggests that the most ‘at risk’ public interest journalism be given government assistance. It recommends stable and adequate funding for public broadcasters, grants for local journalism and tax settings to encourage philanthropic support for journalism as priorities for consideration.

While noting that the major social media platforms are taking measures to address deliberately misleading and harmful news stories, it is recommending additional measures including that the digital platforms establish an industry code to govern the handling of complaints about disinformation and that this be registered with, monitored and enforced by an appropriately resourced authority e.g. the Australian Communications and Media Authority (ACMA).

Other measures include Terms of Reference for review of the Australian Curriculum (due in 2020) to potentially include digital media literacy in Australian schools.

Next steps

The precise form of the reforms and a detailed Government response will follow a public consultation process, led by Treasury and including the Department of Communications and Attorney General. The process is intended to run for 12 weeks and the Government’s response should be delivered by the year end. The AANA will again input into this process and participate and engage closely in the development of the ACCC’s proposed investigations into the advertising supply chain.

The Final report is available here: https://www.accc.gov.au/focus-areas/inquiries/digital-platforms-inquiry/final-report.

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