News & Analysis

The Australian government is cracking down on Facebook and Google

- December 12, 2019 4 MIN READ

Image: Jurassic World, Universal Pictures/Amblin Entertainment

  • The Morrison government’s response to the ACCC’s concerns about the market power of Google and Facebook include $27m to the competition watchdog to boost monitoring and enforcement against the tech giants
  • A voluntary code of practice, overseen by the ACCC, to address bargaining power imbalances between the tech companies and local media is be developed over the next 12 months or the government may step in with a mandatory code
  • Treasurer Josh Frydenberg has ordered an inquiry into online advertising and ad‑tech
  • Local content rules will be reviewed to create a level playing field between local TV and digital platforms
The Morrison government will give competition watchdog the Australian Competition and Consumer Commission (ACCC) greater powers to tackle the market power of  digital behomeths such as Facebook and Google, and increase regulation over them in a bid to create a more level digital playing field.

Announcing its response to the ACCC’s Digital Platforms Inquiry, Prime Minister Scott Morrison said: “I have a simple rule: the rules that apply in the real world should apply in the digital world”.

The PM said he wants Australia “to be the model jurisdiction in the world for how we are dealing with digital platforms, social media platforms”.

The ACCC inquiry spent nearly two years investigating world’s biggest and most powerful tech companies and in July released a scathing 620-page assessment of the rise of Google and Facebook and how they assert their market power

The Digital Platforms Inquiry report contained 23 recommendations to address competition, consumer protection, media regulation, advertising and privacy in the digital age.

After subsequent industry consultation, the federal government said that both the ACCC Inquiry and the feedback from the consultation emphasised that there is a need for reform to better protect consumers, improve transparency, address power imbalances and ensure that substantial market power is not used to lessen competition in media and advertising services markets.

“Through our response, the Government will deliver a regulatory framework that is fit for purpose and better protects and informs Australian consumers, addresses bargaining power imbalances between digital platforms and media companies, and ensures privacy settings remain appropriate in the digital age,” the PM’s statement said.

The Government’s immediate response includes:

  • $26.9 million for a new ACCC unit to monitor and report on the state of competition and consumer protection in digital platform markets, with enforcement powers. It will undertake inquiries as directed by Treasurer Josh Frydenberg, beginning with an investigation into the supply of online advertising and ad‑tech services.
  • Media regulation reforms to create a platform-neutral regulatory framework covering both online and offline delivery of media content.
  • A voluntary code of practice, overseen by the ACCC, to address bargaining power imbalances between digital platforms and news media businesses. If a code can’t be hammered out by November 2020, the government will look at introducing a mandatory code.
  • A review of the Privacy Act to “empower consumers, protect their data and best serve the Australian economy”.

Media regulation reforms will begin early next year, focusing on Australian content commitments for free-to-air TV and whether those rules should also apply to subscription video-on-demand services, and developing a uniform classification framework across all media platforms as traditional local media services grapple with the influx of new media companies from overseas.

An options paper, co-authored by Screen Australia and the Australian Communications and Media Authority, will be released by the government in early 2020, looking at how to best support Australian stories in the new digital era.

“The Government’s role is not to protect domestic businesses from digital competition, but rather to ensure the proper functioning of markets and a fair approach to regulation that ensures the rules of the physical world apply equally to the digital world,” Prime Minister Scott Morrison said in a statement.

Treasurer John Frydenberg said the companies involved are on notice that “the government is not messing around. We will not hesitate to act.”

He said the government’s intent was to both minimise harm and maximise opportunities in the Australian economy.

ACCC boss ‘delighted’

In response to today’s announcement, ACCC chairman Rod Sims said he was delighted that the Government has recognised the significance of the ACCC’s findings” into the impact of digital platforms on competition, consumer, privacy, media and advertising markets.

“Google and Facebook have grown to have almost unfettered market power with significant impacts on consumers that must be addressed,” he said.

Sims singled out the “inherent power imbalance” between the international companies and local media and its impact on local journalism.

“The impact of digitalisation and digital platforms on the Australian media and, in particular, vitally important local and regional news and journalism has been stark and extremely concerning,” he said.

“We are pleased that this is being addressed by the Government, along with the regulatory imbalance between the platforms and media businesses.”

The competition boss added that he was pleased to see progress on making unfair contract terms illegal, along with unfair trading prohibitions.

“The world is waking up to the very real harms that stem from the power the digital platforms hold in our society and for our economy,” Sims said.

“The good news is it is not too late to ensure Australian businesses, consumers and society can benefit from the advances offered by digital platforms, while ensuring appropriate safeguards are in place to address the negative impacts.”

The Government’s full response to the Digital Platforms Inquiry is available here

 

 

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