The competition watchdog’s ground-breaking report into digital platforms is truly a world first. These companies are among the most powerful and valuable in the world and they need to be held to account and their activities made more transparent.
For every $100 spent by advertisers on online advertising, excluding classifieds, $47 goes to Google, $24 to Facebook, and $29 to other participants.
This market is worth nearly $9 billion annually in Australia and has increased more than eightfold since 2005.
The Australian Competition and Consumer Commission finds that over 98 per cent of online searches on mobile devices are with Google, while Facebook has approximately 17 million Australian users who spend on average half an hour each day on this platform.
This is an incredible level of market concentration, which has grown rapidly.
Both Google and Facebook have made multiple strategic acquisitions which have entrenched their market power and knocked out potential competitors. Facebook owns Instagram and Whatsapp, while Google owns YouTube.
The nature of the services offered by both Google and Facebook allow them to collect an unprecedented amount of personal data, which is then monetised by providing advertisers with highly targeted opportunities. The world has never before seen so much personal and commercially sensitive data collected, let alone aggregated and held by just two companies.
Our legislative and regulatory framework did not and could not anticipate such a new paradigm. It now poses a real challenge to regulatory authorities the world over.
Confronted with this new reality, the ACCC has made 23 recommendations that fall into three categories.
The first: consumer outcomes. A new unfair practices provision for Australian Consumer Law is recommended, designed to capture behaviour that causes significant damage to consumers but is not covered by other laws. An example includes the collection of personal data without informed consent.
Second: competition. The ACCC recommends that merger laws be updated to take into account other factors such as the removal of a potential competitor from the market and the impact the increased accumulation of data would have on competition.
Third: media. In the words of the ACCC, there is ‘‘an imbalance of bargaining power between Google and media businesses, and between Facebook and media businesses”. Whether it be print, radio or TV, content generated by journalists and owned by media companies is being displayed on social media and search engines often without a negotiated agreement covering how content is monetised and data is shared.
The ACCC recommends new codes of conduct to govern the relationship between Google and Facebook and media businesses. These codes would require the regulator’s sign-off, and ‘‘provide media businesses with access to platforms on a fair, consistent, and transparent basis”.
At the heart of this timely report is a focus on delivering better consumer and commercial outcomes while ensuring a viable media landscape where news and journalism are valued as essential public goods.
Australians require a regulatory framework that is fit for purpose and better protects and informs them.
The government accepts there is a need for reform and the 12-week consultation period which will follow is designed to achieve this very end.
Josh Frydenberg is the federal Treasurer.