Australian law couldn't block Google's YouTube and DoubleClick purchases: ACCC chair

Rod Sims says the economy is too concentrated but the sorts of purchases that Google and Facebook have made in the past 10 years were fine when looked at transaction by transaction.
Written by Chris Duckett, Contributor

Australian Competition and Consumer Commission (ACCC) chair Rod Sims has called on Australia to "rise up" and work out the level of economic concentration it is willing to live with.

Speaking before the House of Representatives Economics Standing Committee on Friday, Sims said competition regulators around the world have faced criticism for allowing Google to consolidate its market position with the past purchases of Android, DoubleClick, and YouTube.

"There's been a lot of criticism of regulators around the world for allowing those acquisitions, but at the time they occurred, certainly our law, I believe, wouldn't have allowed us to stop them," he said.

"I guess what we're trying to get do with the debate is 'Can we just rise up a bit and just think about what regime we want, where we really want to set the dial to make sure that we don't end up with such a concentrated economy, as we clearly have now?'

"Because we agree, the economy is too concentrated -- when you look at it transaction by transaction, it's difficult."

Addressing the case launched by the US Department of Justice (DoJ) this week against Google's alleged illegal monopoly in online search services, Sims said he thought "a bit of competition" would increase innovation, lower profit-seeking behaviour, and ultimately provide a better outcome for Australian consumers.

The ACCC also released the first of its six-monthly interim reports for its five-year Digital Services Inquiry, which focused on over-the-top messaging services.

The report said Facebook Messenger and WhatsApp are free from competitive restraints due to the size of the user base of each service, and the effort involved for users to switch to alternative services. An example of the effort is getting enough contacts onto an alternative service to make it a viable alternative.

The interim report did not consider the likes of Zoom and Microsoft Teams as alternatives, as they appeared to be used alongside the Facebook-owned services.

While iMessage was called out as having a similar impact within the iOS ecosystem, the fact that it is limited to Apple devices has meant the ACCC does not regard it to be a competitive restraint on Facebook.

Much of the report echoed the recommendations of the ACCC's previous Digital Platforms Inquiry, particularly Google and Facebook needing better dispute resolution mechanisms for Australians, and the creation of an independent ombudsman.

The report also used the same language of the DoJ filing, labelling Google as a gatekeeper between "consumers seeking information on goods and services, and businesses offering or advertising those goods and services online".

"In summary, the ACCC considers that Google continues to have substantial market power in the general search and search advertising markets, and that Facebook continues to have market power in social media and the overall supply of display advertising," the report said.

Looking at apps and the libraries they use, the report said Google's SDK was used in 92% of the 1,000 apps examined for the report, and Facebook's SDK was in 61% of apps.

"Almost two-thirds of apps analysed were observed by AppCensus to have the ability to transmit user information to Facebook, regardless of whether those users have Facebook accounts," the ACCC said.

The reach of Google and Facebook also extended to tracking on websites, and even to the extent that terms and conditions from the tech giants were finding their way into other companies' conditions.

"The ACCC's website analysis found Google and Facebook had the largest presence in online tracking, with Google and Facebook's third-party scripts present on over 80% and 40% respectively of 1,000 popular websites in Australia. Amazon and Microsoft tracking were present on nearly 30% and almost 20% of websites respectively," it said.

"A growing number of consumers may be bound by Google's data collection policies as Google's terms and conditions are increasingly being incorporated into the terms of other services, including essential third party products and services. In some cases, there is little or no opportunity to opt out of these terms and conditions."

The final report is due by the end of March 2025.

On another front, the ACCC is locked in battle with Google and Facebook over Australia's proposed News Media Bargaining Code.

The ACCC believes the code is necessary to address the fundamental bargaining power imbalances between Australian news media businesses and major digital platforms. However, Google has stated the code contains an unfair arbitration process that "ignores the real-world value Google provides to news publishers and opens up to enormous and unreasonable demands" and similarly Facebook takes issue with the code, having previously threatened to pull news completely from its Australian platform.

Speaking on Friday, Sims said changes were coming to the code.

"We had extensive consultations, numerous meetings with so many people, but clearly when we've seen the feedback from both the media companies and the platforms, there were some things there where adjustments can be made and will be made," he said.

Sims said that in the end, it would be up to the government to have the final say since the code is a legislative instrument and the consumer watchdog has not prepared for any particular outcome.

"I understand the argument that says 'well, take an approach in Australia because you don't want [a] precedent elsewhere' but I think that the environment overseas is such that that might not be the right approach for them, but they can speak [for] themselves."

Completing its busy Friday morning, the ACCC also announced it would reduce the regulated pricing on the declared domestic transmission capacity service (DTCS), with high capacity services dropping by 60% compared to the previous declaration and low capacity services falling by 35%.

"The downward trend in commercial transmission prices has continued over the past five years, which is reflected in the lower regulated DTCS pricing," Sims said in a statement.

The declaration will expire at the end of March 2025.

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