Aussie Watchdog Calls for New Laws to Combat Online Scams and Anti-Competitive Behaviour

A record 2.7 million online scams were taken down last year by the UK's National Cyber Security Centre (Dominic Lipinski/PA)

Australia’s consumer watchdog is calling for new digital platform laws to be passed that would protect consumers against scams, fake reviews, redress consumer complaints and anti-competitive conduct.

In its fifth interim report (pdf) on digital platforms that was released on Nov. 11, the Australian Competition and Consumer Commission (ACCC) said that the country’s current competition and consumer laws are not “well-suited” to address such issues.

The commission added that while the enforcement of existing laws are important, current laws have been insufficient in remedying issues in a timely manner, thereby increasing the risk and magnitude of harm.

“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 in a media release.

“Our analysis has identified concerning consumer and competition harms across a range of digital platform services that are widespread, entrenched, and systemic.”

The commission’s report identified significant consumer and competition harm across a range of digital platform services that include: financial loss to scams and unresolved disputes, reduced choice and an inability to make informed choices, reduced innovation and quality, and higher (monetary and non-monetary) prices.

Scams via social networking and mobile apps nearly doubled between 2020 and 2021, with $92 million recorded in 2021 compared to $49 million in 2020.

“This shows that digital platforms need to do more to stop their users from being scammed,” Cass-Gottlieb said.

Additionally, the report found that scammers’ use of digital platforms provided effective avenues for accessing consumers, particularly those experiencing vulnerability, as more people spend time online.

“Inadequate verification of digital platform users and content, combined with some other channels becoming subject to greater scrutiny and protection, means that digital platforms are an increasingly common and effective means for scammers to target and access their victims,” the report read.

Cass-Gottlieb said more action was needed to tackle fake reviews on platforms that feature ratings and reviews, including those on search, social media, app stores, and online marketplaces.

Moreover, Cass-Gottlieb said the problem was made worse by the lack of avenues available for affected consumers and small businesses who give up seeking redress due to platforms not giving proper consideration to the problem.

Dominant Players in the Market

Meanwhile, dominant players such as Google and Apple were found to face “limited competitive constraints” from actual or potential rivals.

“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,” Cass-Gottlieb said.

The report found that digital platform markets have a tendency to “tip,”—meaning that one or two firms end up dominating the market. These firms also have high barriers to entry and expansion.

“This means that dominant digital platform firms have a particularly strong ability and incentive to protect their market power, including through exclusionary conduct and acquiring potential rivals,” the report read.

Such conduct includes: self-preferencing, tying, exclusivity agreements, impeding switching, denying interoperability, and withholding access to important hardware, software, and data inputs.

“We are also concerned about lack of transparency and the ability of digital platforms with market power to degrade the quality of the services they offer, including in the terms on which services are provided to business users.”

The report also said that companies such as Google, Meta, Apple, Microsoft and Amazon made “hundreds of acquisitions,” of which many involved the purchase of “nascent or potential competitors.”

“[T]he ACCC notes that any future economy-wide reforms to Australia’s merger laws should consider the challenges involved in adequately addressing the competition effects of serial strategic acquisitions, including by digital platforms.”

ACCC’s Recommendations

The ACCC has called for “service-specific codes of conduct” to be applied to designated digital platforms.

Such codes of conduct include obligations to prevent anti-competitive self-preferencing, tying and exclusive pre-installation arrangements, address data advantages, ensure fair treatment of business users, and improve switching, interoperability and transparency.

“This would ensure the obligations are appropriately targeted to particular competition issues present in specified digital platform services, allow consultation with stakeholders, and provide the flexibility to address emerging and new forms of harmful conduct,” Cass-Gottlieb said.

The watchdog said the new regulatory framework would work alongside Australia’s current competition laws that would address anti-competitive conduct, unfair treatment of business users and barriers to entry and expansion by potential rivals.

This follows from the passing of Australia’s “world first” “media bargaining code”, which would see Google and Facebook pay media outlets for their news content.

Australia’s Treasurer Jim Chalmers said the Albanese government welcomed the ACCC’s recent report.

“The Government is considering the ACCC’s recommendations and will consult publicly to seek the views of stakeholders as part of its efforts to ensure Australia has the right regulations in place to be a leading digital economy,” Chalmers said.

“The Albanese Government is already strengthening consumer protections, including through recently introduced legislation to prohibit unfair contract terms and increase penalties for anti-competitive behaviour, and has committed to establish a new National Anti-Scam Centre.”

The ACCC has been providing interim reports on digital platforms every six months since 2017. The final report is due to the Treasurer on March 31, 2025.