Australian Competition and Consumer Commission chair Rod Sims says there are currently five active investigations arising from the ACCC’s scrutiny of the market power of Google and Facebook.
The ACCC this morning released the preliminary report of its digital platforms inquiry, which concluded that both companies possess “substantial market power” in a number of areas.
Some of the resulting investigations relate to allegations “that could sit under competition law which would go to issues of misuse of market power” while some relate to “issues of consumer law,” Sims told a press conference.
“Under competition regulation and law, when you get to a certain stage and you get market power — which Google and Facebook have — with that comes special responsibilities, and that means also additional scrutiny,” Sims said.
“In the preliminary report that we’ve released today we’ve formed the view that the digital platforms have got market power; we’ve formed the view in addition that they have significantly disrupted media and journalism and their business models.”
The ACCC head said that the two companies have developed that power through being the “unavoidable business partners” for Australian media businesses, with “around 50 per cent of the traffic to all media websites coming from Google and Facebook.”
While the content produced by media outlets is “very valuable” to the two companies, Google and Facebook “are much more valuable to the media companies than any particular major news media outlet is to Google and Facebook themselves”.
The digital platforms act as “gateways” to media sites through services such as Google’s search engine. “Google is in effect a gateway between consumers and news and this intermediation reduces the differentiation between online news and devalues media brands,” Sims said.
He added that media businesses are “fierce competitors” for exclusive content and are concerned that digital platforms don’t necessarily recognise original content and the original source of a piece of content.
Around 94 per cent of online searches in Australia use Google, the ACCC’s preliminary report says. This flows through to substantial power when it comes to online search advertising, as well as the referral of traffic to news sites.
Facebook and Facebook-owned Instagram “have, by a significant margin, the largest audience in Australia of any social media platform,” the ACCC found. Together the two sites have approximately 46 per cent of Australian display advertising revenue; no other website or application has more than 5 per cent market share.
The ACCC released 11 preliminary recommendations, including that “large digital platforms” give it advance notice of any business with activities in Australia — giving the ACCC time to review the impact.
Another major recommendation would see Google forced to end the use of Chrome and Google Search as default apps on the Android mobile platform.
“The preliminary report examines important topics in relation to Australia’s changing media and advertising industry and we welcome the opportunity to contribute to the ACCC inquiry” a Google spokesperson said in an emailed statement.
“As we put forward in our submission [PDF], we develop innovative products to the benefit of consumers, businesses and the economy, and we work closely with advertisers and publishers across Australia. We will continue to engage with the ACCC between now and the final report next year.”
A Facebook Australia spokesperson said that the company had received the preliminary report today and is reviewing the ACCC’s “analysis and recommendations in more detail.”
“As we have done over the past 12 months, we remain committed to working with the commission as they review the contribution of all digital platforms in Australia,” the spokesperson said.
A new regulator should be established to monitor whether large digital platforms are favouring their own business interests as well as monitor the “ranking of news and journalistic content by digital platforms and the provision of referral services to news media businesses,” states another ACCC preliminary recommendation.
The Australian Communications and Media Authority should create a take-down standard for content that infringes copyright, the ACCC said.
Another group of preliminary recommendations relate to privacy and the use of personal information. Among them is the recommendation that the government introduce a statutory cause of action for serious invasions of privacy — a recommendation made in 2014 by the Australian Law Reform Commission.
The ACCC is seeking additional submissions to its inquiry, ahead of providing a final report to the government in mid-2019. The ACCC’s preliminary report is available online (PDF).
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.