Australia said on Thursday that Facebook and Google will be among the tech giants put under watch to ensure they are not abusing their market power to unfairly dominate the country’s advertising market.
The announcement comes in response to what the Australian government hailed as a “world-leading inquiry” by the competition watchdog, the Australian Competition and Consumer Commission (ACCC), which was directed in December 2017 to inquire into the impact of digital platforms such as Google and Facebook on competition in the media and advertising sectors in Australia, focusing in particular on the impact on news and journalism.
“I want us to be the model jurisdiction in the world for how we are dealing with digital platforms, social media platforms, and I have a simple rule and that the rules that exist in the real world need to exist in the digital world. If it’s a wrong thing to do in the real world, then it’s a wrong thing to do in the digital world,” Australian Prime Minister Scott Morrison told reporters in Melbourne on Thursday.
In the ACCC’s Digital Platforms Inquiry report, released in July, Google and Facebook were identified as the two largest digital platforms in Australia. The ACCC found that the two tech giants, which generate most of their revenue by using consumer attention and data to sell advertising, “have become unavoidable business partners for media companies to both access an audience for their content and secure advertising revenue,” the Australian government noted in its response.
The ACCC’s report goes on to note that the risk that Google or Facebook will give themselves advantages by favoring their own products will increase as they expand into other markets.
The Australian government said it “accepted the overriding conclusion was that there is a need for reform—to better protect consumers, improve transparency, recognize power imbalances, and ensure that substantial market power is not used to lessen competition in media and advertising services markets.” The government agreed to support or support in principle 17 of the 23 recommendations made by the ACCC.
“The government’s role is not to protect domestic businesses from digital competition, but rather to ensure the proper functioning of markets and a fair approach to regulation that ensures the rules of the physical world apply equally to the digital world,” it added.
New Rules, Or Else
The Australian government will direct the ACCC to consult with Google, Facebook, and other digital platforms, to develop a voluntary code to address concerns over the digital platforms’ stronghold on advertising, which is the main income generator of local news media businesses.
The voluntary codes should be finalized by November 2020, but if negotiations are not successful, the government may impose a mandatory code.
“This code will cover such things as how revenue is shared, how content is accessed and presented, as well as getting forewarning about changes to algorithms that go to how the content is ranked online,” Treasurer Josh Frydenberg told reporters on Thursday. “So the companies are on notice. The Government is not messing around. We will not hesitate to act.”
The government will also invest AU$26.9 million over four years for a new special unit in the ACCC to monitor the markets where digital platforms operate, and report on the state of competition and consumer protection in such markets.
Traditional news media businesses and digital media platforms are set to operate on a more equal regulatory footing, starting early next year, the government also announced.
Privacy laws will also be reviewed to make sure personal data is protected online, the government announced, as the ACCC takes Google to court for allegedly deliberately misleading customers about data it was collecting.
ACCC Chair Rod Sims said that the group is “proud that Australia will be one of the first countries in the world with a comprehensive roadmap to reforms around digital platforms.”
“We are delighted that the government has recognized the significance of the ACCC’s findings on the impact of the leading digital platforms on competition, consumer, privacy, media, and advertising markets,” he said. “Google and Facebook have grown to have almost unfettered market power with significant impacts on consumers that must be addressed.”
Google and Facebook both said they support greater market competition and will work closely with the ACCC.
“We support a sustainable news ecosystem, which is why we work with publishers to help them reach new audiences and invest significantly in tools to provide transparency over the content people and publishers see on our services,” said Mia Garlick, Director of Policy, Australia and New Zealand at Facebook, AAP reported.
Paul Anderson, chief executive of Australia’s Network 10, told Reuters, “It’s great the government is making a serious attempt to address the deep-rooted dominance of the online tech and streaming giants.”
Australia has for months signaled it would get tough on the tech giants. In July, Australia became the first in the world to establish a special branch within the ACCC, tasking it with scrutinizing how the companies used algorithms to match advertisements with viewers, giving them a stronghold on the main income generator of media operators.
In April, Australia passed new rules that could fine social media and web hosting companies up to 10 percent of their annual global turnover and imprison executives for up to three years if violent content is not removed “expeditiously.”
The Australian Associated Press and Reuters contributed to this report.