A new specialist digital platforms branch is expected to be stood up under the care of the Australian Competition and Consumer Commission (ACCC), with a focus specifically on investigating, monitoring, and performing enforcement activities in markets where digital platforms operate.
The branch will have the task of investigating competition issues relating to digital platforms, having been given the ability to compel information, initially from Facebook and Google.
"The world has never before seen so much commercially sensitive and personal data collected and aggregated in just two companies," Treasurer Josh Frydenberg said during a press conference on Friday.
"Our legislative and regulatory framework could not, and did not, anticipate such a new paradigm, a paradigm which poses real challenges for authorities the world over."
As detailed in the watchdog's Digital Platforms Inquiry: Final Report [PDF], the new branch will "build on and develop expertise in digital markets and the use of algorithms", with the purpose of: Monitoring and investigating instances of potentially anti-competitive conduct and conduct causing consumer harm by digital platforms, which impact consumers, advertisers, or other business users; taking action to enforce competition and consumer laws relating to the conduct of digital platforms; and conducting inquiries and making recommendations to government to address consumer harm and impediments to the efficient and effective operation of the markets in which digital platforms operate, caused by market failure.
The specialist digital platforms branch will also 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.
The public inquiry will cover a period of at least five years, with the branch being empowered by ministerial direction to compel "relevant information" throughout the inquiry process.
"There is no option, other than to put in place the right regulatory and legislative regime to protect the public's privacy, because what this report finds is that so much personal data is being collected without informed consent. It's an extremely serious issue," Frydenberg said.
"And what we've seen play out in the US with Facebook being fined that record amount, over $7 billion, is a reflection of how people's personal data is being used, often without the knowledge."
The report found that over 98% of online searches on mobile devices are performed through Google and that Facebook has approximately 17 million Australian users who spend half an hour on average scrolling the platform.
Frydenberg said it shines a "very bright light" on the use by Facebook and Google of people's personal data, and that Australia's privacy regime and the other legislative and regulatory framework need to be updated to ensure they are fit for purpose.
"One of the purposes behind this new ACCC branch is to actually better understand the use of these algorithms to ensure that they're not being used for misleading or deceptive or anti-competitive conduct," the Treasurer continued.
"This particular branch of the ACCC will be able to be approached by various companies who believe that the algorithms have been misused, and in that particular way, and it is the ACCC itself which will focus on those algorithms and ensure that they are used in a way that is compliant with the law."
The branch will also be charged with monitoring the effectiveness of another recommendation it made in its report, regarding giving Australians a choice of which browser they wish to conduct search engine functions on.
The ACCC has asked that the branch's investigation, monitoring, and enforcement activities be extended to all digital platforms.
"While some of the issues identified stem from various platforms holding significant market power, issues relating to market failure are not dependent on market power," it wrote.
"In practice, the ACCC would focus its investigations on the larger digital platforms, which at the moment are Google and Facebook, because: Where platforms hold substantial market power, it is more likely that issues of concern will arise; [and] larger platforms have more significant effects on the community, consumers, and the economy."
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As the ACCC highlighted, there is no sign that Australians' use and engagement with digital platforms, and in particular with Facebook and Google, is slowing.
"The ACCC's broad calculations indicate that approximately 50-67% of the current share price for Facebook can be attributed to expectations for future growth; [and] 46-64% of the current share price for Google can be attributed to expectations for future growth," the report explained.
"The ACCC does not have concerns with digital platforms pursuing growth and profitability. The pursuit of growth and profits by businesses underpin the effective functioning of a market economy. However, policy makers, and society more generally, must keep in mind that the actions of digital platforms, like all businesses, will be underwritten by a profit motive."
After toying with the idea of setting up a new regulatory body to perform these functions, the ACCC said it considers that it would be appropriate for the ACCC to handle it, rather than a new regulator, as it already possesses skills and expertise in relation to competition and consumer law that could be utilised.
The report made a total of 23 recommendations spanning competition law, consumer protection, media regulation, and privacy law that the ACCC said reflects the intersection of issues arising from the growth of digital platforms.
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