The Australian Competition and Consumer Commission (ACCC) has recommended a range of new measures to address harms from digital platforms to Australian consumers, small businesses and competition.
Covering a variety of industry verticals, the fifth report of the ACCC’s five-year Digital Platform Services Inquiry has proposed that platforms be subject to mandatory dispute resolution processes and stronger requirements for combating scams, harmful apps and fake reviews, among other measures.
The Report has also proposed mandatory codes of conduct for certain platforms and services to protect and promote competition.
“We know that the expansion of digital platforms in Australia has brought many benefits to Australian consumers and businesses,” ACCC Chair Gina Cass-Gottlieb said. “This expansion of digital platform services has also created risks and harms that our current consumer and competition laws are not always able to address.
“Our analysis has identified concerning consumer and competition harms across a range of digital platform services that are widespread, entrenched, and systemic.
“The critical positions that digital platforms hold, as ‘gatekeepers’ or ‘intermediaries’ between businesses and consumers, mean they have a broad influence across the economy, making the reforms we are recommending crucial and necessary for all Australians.”
In addition to consumer and competition specific recommendations for digital platforms, the report also reiterates the ACCC’s support for a new economy-wide unfair trading practices prohibition.
Consumer issues and recommendations
The ACCC and other agencies have observed a significant and sustained increase in scams on digital platforms targeting consumers, including those experiencing vulnerability.
In addition, consumers have experienced harms from inappropriate and fraudulent apps made available on app stores, as well as from fake reviews and review manipulation.
The ACCC’s report recommends new laws that require digital platforms to:
- provide user-friendly processes for reporting scams, harmful apps, and fake reviews, and to respond to such reports
- reduce the risk of scams by verifying certain business users such as advertisers, app developers and merchants
- publish review verification processes to provide important information to readers of online reviews to help them assess the reliability of reviews on the platform
- report on scams, harmful apps and fake reviews on their services, and the measures taken to address them
- ensure consumers and small businesses can access appropriate dispute resolution, supported by the establishment of a new digital platform ombuds scheme.
Competition issues and recommendations
Without effective regulation large digital platforms have the ability and incentive to engage in conduct that is harmful to competition. This can include preferencing their own services, or imposing tying arrangements where users of a digital product or service are pushed or compelled to use another service or product, such as smart phones pre-loaded with a certain bundle of apps. These poor competition outcomes harm consumers and business users.
The ACCC recommends a new regulatory regime to work alongside Australia’s existing competition laws that would address anti-competitive conduct, unfair treatment of business users and barriers to entry and expansion by potential rivals.
Service-specific codes of conduct could include targeted obligations to:
- prevent anti-competitive self-preferencing, tying and exclusive pre-installation arrangements
- address data advantages
- ensure fair treatment of business users
- improve switching, interoperability and transparency.
Free TV Welcomes ACCC Recommendations
Industry body Free TV Australia welcomed the release of the ACCC’s Digital Platform Service Inquiry Regulatory Reform Report with chief executive Bridget Fair saying, “We have consistently argued that the right approach to addressing the anti-competitive conduct of the digital platforms is through targeted mandatory codes of conduct.
“We are pleased that the ACCC has accepted this position and has now formally recommended to Government that binding codes be established to prohibit anti-competitive conduct.
In particular, Free TV says it welcomes the recommendations for codes of conduct that would address: Self-preferencing; Bundling and tying; Data-related barriers to entry and expansion; Interoperability restrictions; and the imposition of unfair contract terms.
According to Ms Fair, “This report puts Australia in step with international developments, such as in the EU, where legislation has already been introduced to modernise competition and consumer law in the face of the power and dominance of big tech platforms like Google, Meta and Apple.
“The fact is that the longer we take to get the necessary legislation in place to enact the ACCC’s recommendations, the harder reform will become as the tentacles of the dominant platforms continue to expand across the economy.
“We strongly support the findings of the ACCC that we cannot rely on our existing laws to promote competition and protect consumers in the see of digital platforms of the size, scale and complexity that we face today.
“We urge the Albanese Government to quickly move to implement the ACCC’s recommendations, through the development of the necessary legislation, to be followed quickly by the implementation of the required codes,” Ms Fair said.
Seven West Media also welcomed the range of new measures recommended by the Australian Competition and Consumer Commission.
Seven West Media Managing Director and Chief Executive Officer, James Warburton, said: “The ACCC’s ongoing research and analysis of market conduct by digital platforms is among the most advanced in the world.
“The recommendations in this report are considered and appropriate and Seven West Media urges the Government to act swiftly on the ACCC’s recommendation, particularly the codes that address the competition harms caused by these very powerful gatekeepers and intermediaries.”
The full report can be found at: https://www.accc.gov.au/focus-areas/inquiries-ongoing/digital-platform-services-inquiry-2020-25/september-2022-interim-report