The Australian Competition and Consumer Commission (ACCC) has today released its most scathing assessment of how American tech giants are impacting the Australian market, particularly the news and advertising sectors.
The regulator released a preliminary report containing 11 preliminary recommendations and eight areas for further analysis as part of its inquiry into the impact Facebook and Google have on competition in media and advertising service markets.
The recommendations and condemnations revolve around the uncontrolled disturbance Facebook and Google have had on news organisations, with the ACCC blaming the companies for effectively slashing the revenue generated by local Australian publications.
The report also outlines concerns regarding the extent to which consumers' data is collected and used to enable targeted advertising.
ACCC chair Rod Sims acknowledges that whilst the two platforms have ushered in a new era of communication, they also wreak havoc on newsrooms and advertisers around Australia.
"Digital platforms have significantly transformed our lives, the way we communicate with each other and access news and information. We appreciate that many of these changes have been positive for consumers in relation to the way they access news and information and how they interact with each other and with businesses," says Sims.
"But digital platforms are also unavoidable business partners for many Australian businesses. Google and Facebook perform a critical role in enabling businesses, including online news media businesses, to reach consumers. However, the operation of these platforms' key algorithms, in determining the order in which content appears, is not at all clear."
Sims says that the dominance Facebook and Google have over the media in Australia, in particular their new role as key gateways to content, has resulted in media businesses losing significant advertising revenue to these digital platforms.
"News and journalism perform a critical role in society. The downturn in advertising revenue has led to a cut in the number of journalists over the past decade. This has implications across society because of the important role the media plays in exposing corruption and holding governments, companies, powerful individuals and institutions to account," Mr Sims said.
"Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content. Yet, digital platforms face less regulation than many media businesses."
"The ACCC considers that the strong market position of digital platforms like Google and Facebook justifies a greater level of regulatory oversight."
"Australian law does not prohibit a business from possessing significant market power or using its efficiencies or skills to 'out compete' its rivals. But when their dominant position is at risk of creating competitive or consumer harm, governments should stay ahead of the game and act to protect consumers and businesses through regulation."
The watchdog has also been particularly interested in how the platforms have been intentionally or unintentionally creating filter bubbles on digital platforms, resulting in less reliable news on digital platforms being prioritised over trusted sources.
"While the evidence of filter bubbles arising on digital platforms in Australia is not yet strong, the importance of this issue means it requires close scrutiny," says the ACCC in a media release.
The ACCC's investigation also pursued the concerns held by many Australians about the ways their data is harvested and how it is used by these platforms.
"Research commissioned as part of the inquiry indicates consumers are concerned about the extent and range of information collected by digital platforms. The ACCC is in particular concerned about the length, complexity and ambiguity of online terms of service and privacy policies, including click-wrap agreements with take-it-or-leave-it terms," says the ACCC.
"Without adequate information and with limited choice, consumers are unable to make informed decisions, which can both harm consumers and impede competition."
The report makes preliminary recommendations aiming to address Google and Facebook's market power and promote increased consumer choice, including a proposal that would prevent Google's internet browser (Chrome) being installed as a default browser on mobile devices, computers and tables and Google's search engine being installed as a default search engine on internet browsers.
The ACCC also proposes that a new or existing regulatory authority be given the task of investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content. Other preliminary recommendations suggest ways to strengthen merger laws.
Additional preliminary recommendations deal with copyright, and take-down orders, and the review of existing, disparate media regulations.
"The inquiry has also uncovered some concerns that certain digital platforms have breached competition or consumer laws, and the ACCC is currently investigating five such allegations to determine if enforcement action is warranted," says Sims.
The ACCC is seeking feedback on its preliminary recommendations, and the eight proposed areas for further analysis and assessment.
The watchdog's preliminary report comes after a significant crackdown on Facebook for failing to address a number of scam advertisements appearing constantly on its platform.
At the time, the ACCC warned Australians about scam ads which continue to appear on Facebook, as well as trusted news sites and content providers like Google, the SBS, The Daily Telegraph, The Australian, and The Sydney Morning Herald.
Both Google and Facebook claim to have taken action in the past against malicious third-party advertisers.
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