What the ACCC’s Digital Platforms Inquiry Means for Your Business

It is no secret that in today’s society there are a few companies that reign supreme when it comes to how we view digital content. Regulatorily speaking – erhem – keeping up with the evolution of technology is a never-ending game of fat cat and mouse. Australian Competition and Consumer Commission’s (“the ACCC”) recent inquiry into Digital Platforms (“the Inquiry”) has given us insight into how these large corporations collect, use and share our data – often without us even realising that it is happening. But the impact of the Inquiry is not limited to just those few large foreign companies, such as Facebook and Google, the findings and the resulting policy and law-making changes will no doubt have far reaching consequences that will affect small and large business alike.[1]

Generally, the outcome of the Inquiry is that, in the field of “data collection,” there needs to be in place measures that will better protect smaller players in the market, namely by:

  • improving transparency of how data is collected, used and shared;
  • addressing the power imbalances – whether between consumer and company, or between different companies; and
  • finding ways to ensure that where large corporations do have substantial market power it is not used to lessen competition in the media and advertising services markets. [2]

The Government Response to the Inquiry

On 12 December 2019 the Government released ‘Regulating in the Digital Age’ – their response to how they plan to tackle issues unearthed by the Inquiry. The Government’s immediate response to the report includes investing $26.9 million in a new branch of the ACCC to monitor and report on competition and consumer protection in digital platform; its first order of business: to investigate the supply chain of online advertising and ad technology. [3]

The opaque nature of the ad-tech supply chain means that businesses who use these services are never sure if they are getting bang for their buck, as the sum of prices charged by ad tech suppliers and the share of advertising expenditure they retain are unknown to consumers.[4] This lack of clarity is exacerbated by Google and Facebook obscuring how they rank and display their advertising. The Government’s decision to immediately allocate funds and investigate the online advertisement supply chain bodes well for smaller Australian businesses who rely on online advertisements, as they may be better placed to make more informed decisions on how to strategically enhance their online marketing strategy.

Notably, the Government’s response to the Inquiry has remained silent on its first recommendation regarding mergers and acquisitions of digital platforms.[5] Despite the Government’s silence, the ACCC will take a tougher stance on any merger in the digital platform space that threatens potential competition.[6] This may place a spanner in the works for both tech behemoths and small digital start-ups whose aim is to be bought out by big tech companies. This could have adverse effects on small scale digital innovation, as it may make it harder to appeal to potential investors. Ultimately, this heightened regulatory scrutiny may benefit consumers through enhancing competition, as big companies may be prevented from gaining an even larger market share.

What this Means for Your Business

Although it is premature at this stage to gauge the full impact of the Inquiry on Australian business, it marks the dawning of a new era of regulation in the Wild West of digital platforms. Digital monoliths may face closer scrutiny when buying out their rivals and when developing their advertising services, while smaller businesses and advertisers who use these platforms stand to benefit from greater transparency around the digital advertisement supply chain. However, all digital platforms, regardless of size, will have increased obligations to protect consumers’ privacy and data if the recommendations of the Inquiry are implemented.

Written by Anna Phillips with the assistance of Claudia Weatherall.

[1] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 1 – 3.

[2] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 3.

[3] Department of Prime Minister and Cabinet, ‘Response to Digital Platforms Inquiry,’ (Media Release, 12 December 2019) < https://www.pm.gov.au/media/response-digital-platforms-inquiry>.

[4] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 12.

[5] Department of Prime Minister and Cabinet, ‘Response to Digital Platforms Inquiry,’ (Media Release, 12 December 2019) < https://www.pm.gov.au/media/response-digital-platforms-inquiry>.

[6] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 10.