The Australian Competition and Consumer Commission (ACCC) has put its spotlight on Google and Facebook, determining that the substantial market power of the two companies calls into question the validity of information that is available and shared on their respective platforms.
Speaking during a press conference following the release of the Digital Platforms Inquiry Preliminary Report [PDF] on Monday, ACCC Chair Rod Sims said the world now finds itself in a position where such market power is held by a handful of entities, and that they need to be held accountable and placed under the microscope for additional scrutiny.
"They have significantly disrupted media and journalism and their business models in a number of ways ... they are the unavoidable business partners for Australian media businesses with around 50 percent of the traffic toward media websites coming from Google and Facebook," Sims explained.
He said Google and Facebook are more valuable to news and content producers than the other way around -- 19 million Australians use the Google search engine each month to source news.
"It is quite interesting that companies that have traditionally not wanted to take responsibility for content are so influential now in what content Australians see," Sims continued.
The ACCC believes that in the case of the advertising markets, a lack of transparency on the algorithms used for serving up content compounds concerns that Google or Facebook may be favouring either their own related businesses, or those businesses with which they have a particular commercial relationship.
As a result, a preliminary recommendation made by the ACCC is calling for a regulatory authority to be tasked with monitoring, investigating, and reporting on the criteria, commercial arrangements, or other factors used by digital platforms in displaying content.
"Digital platforms have the incentive and the opportunity to favour their own businesses," Sims said, pointing to the findings made against Google by the EU Commission. "There's allegations left, right, and centre about what is actually going on, but not much information, not much ability to shed light on what's actually happening."
The idea of the regulator role then, Sims explained, will be do just that. The regulator could also refer matters to other government agencies for investigation where relevant.
The ACCC also wants the regulatory authority to ensure these platforms are not engaging in discriminatory conduct by favouring their own business objectives. These functions could apply to digital platforms which generate more than AU$100 million per annum from digital advertising in Australia, the ACCC added.
"Companies with market power and often sensitive data are in a strong position to decide what to do with it and who to share it with. Questions obviously arise around the role government should play and what fundamental rights exist in relation to privacy and data," Sims said.
"It's important that government and regulators globally are alive to these issues to make sure regulations remain appropriate for the digital age."
Similarly, under another recommendation, the ACCC considers that the regulatory authority could also monitor, investigate, and report on the ranking of news and journalistic content by digital platforms as well as the provision of referral services to news media businesses.
A way to avoid potentially uncompetitive behaviour or untrustworthy news items, the ACCC believes, could be to have a new regulatory framework that publishers, broadcasters, other media businesses, or digital platforms follow, whereby the distribution of news and journalistic content is monitored.
Sims, during the press conference, held firm that the introduction of the one, single regulator covering the above recommendations is not like any previously proposed ombudsman.
He also said, however, the ACCC has not worked out who that regulator would be.
When asked if the ACCC considers Google and Facebook as publishers, Sims said "almost" in the sense that there is a strong overlap between traditional publishers and many of the roles of the digital platforms.
"They do have a large role in what people do and don't see, how they see it, and the order they see it in," he said. "We need to be alive to the fact that entities which have no regulation at all are playing that very large role."
In that vein, by proposing amendments to the Telecommunications Act, the ACCC wants the Australian Communications and Media Authority to have the power to set a mandatory industry standard around copyright infringing content, giving ACMA the right to enforce the removal of content that doesn't comply.
Sims said that Google and Facebook have become the source of much of the information consumed in Australia at seemingly no cost to consumers. However, as the cost is retrieved through the monetisation of data, the ACCC is also probing the use and collection of personal information by digital platforms.
With the Cambridge Analytica scandal still plaguing Facebook, the ACCC wants amendments to Australia's 30 year-old Privacy Act to better enable consumers to make informed decisions in relation to, and have greater control over, privacy and the collection of personal information.
"The whole issue of data is not unique to Google and Facebook but this issue has come upon us so quickly that I think we really need to have a look at these privacy issues very closely," Sims said.
"You just cannot look at the digital platforms as we have done without bumping up against privacy issues."
Each month, approximately 19 million Australians use Google; 17 million access Facebook; 17 million watch Google-owned YouTube; and 11 million access Facebook-owned Instagram.
"The data collected on people using these platforms extends significantly beyond the data that users actively provide when using the services," Sims said, saying consumers are concerned about the data collected about them across these social media and digital platforms.
"There seems an understatement to consumers of the extent of data collection ... and an overstatement to consumers of the level of control they have over their personal data use," Sims continued.
"This imbalance of power manifests in clickwrap agreements with take it or leave it terms, which limits freely given consent, which is troubling given the market power of Facebook and Google.
"Consumers are unable to make informed decisions."
Specifically, the ACCC wants notification of data collection to be provided in a transparent manner to the individual whose data it is; for consent to be given before any data is collected or shared, accompanied by an "off switch" that the individual can toggle at their discretion; the ability for all data collected to be deleted at the individual's request; the introduction of an independent third-party certification scheme requiring organisations keen on data collection and use to undergo external audits to monitor and publicly demonstrate compliance with privacy regulations; input from the Office of the Australian Information Commissioner; and expensive penalties for failing to comply.
"We want to bring about a situation where consumers are clearly informed about what data is being collected on them and consumers have the ability to decide what they want done with it," Sims said.
A code of practice would also allow for regulation over data collection and use, the watchdog said.
The ACCC also wants the government to adopt the Australian Law Reform Commission's recommendation of introducing a statutory cause of action for serious invasions of privacy; this is to increase the accountability of businesses for their data practices to ensure that consumers have greater control over their personal information.
In the report, the ACCC made a total of 11 preliminary recommendations, including asking that suppliers of internet-facing devices provide consumers with options for internet browsers, rather than defaulting to Google.
Focusing specifically on mergers and acquisitions, the ACCC has also asked large digital platforms to provide advanced notice of the acquisition of any business with activities in Australia.
It also wants Australian merger laws to be amended to include the requirement of an assessment determining the likelihood that an acquisition would result in the removal of a potential competitor, and the amount and nature of data which the acquirer would likely have access to as a result of the acquisition.
"We have five investigations underway arising from this report," Sims explained. "Some of them are allegations that could sit under competition law which could go to issues of the misuse of market power, some of them relate to issues of consumer law -- they're things we're looking at ... out of this inquiry has come issues where there's potential for breaches and we'll be investigating those as quickly as we can."
Submissions to the report close February 15, 2019, and a final report should arrive in June 2019.
"Some of these recommendations stand alone, but some of them could be a bit more powerful if we were to engage with our international counterparts," Sims said.
"It's a fertile ground in which we can plant some seeds here."