Australia: A blueprint for re-regulating the tech sector: ACCC Digital Platforms Inquiry Final Report released

The Australian Competition and Consumer Commission's (ACCC) Digital Platforms Inquiry (DPI) Final Report has been released with a wave of excited media coverage.

The DPI recommendations are not a surprise per se – the majority were canvassed in a preliminary report issued in December last year. However, the extraordinary breadth of policy areas covered in the 619-page Final Report suggests a view within the ACCC that regulation has not kept pace with advances in technology and commercial practice, and more controversially, that an extended period of re-regulation and enforcement is needed – notwithstanding that the Final Report makes few specific findings of problematic or unlawful conduct by digital platforms.

When the DPI was announced, it was trumpeted by the ACCC as a world-first. However, in some respects, events in other jurisdictions have overtaken it, with several reports covering similar territory released in the interim, including the UK's Cairncross and Furman reviews, the European Commission Report on Competition Policy for the Digital Era and US Federal Trade Commission hearings into Competition and Consumer Protection in the 21st Century.

Despite being two years in the making, we explore below why the DPI Final Report is only the beginning of the journey when it comes to increased regulation and scrutiny for digital businesses operating in Australia.

A sweeping, but fairly conventional, policy prescription

While the original terms of reference for the DPI focused squarely on the production of journalistic content and provision of advertising services, the ACCC has conducted a root-and-branch examination of the functioning of the digital economy with a particular focus on standards of consent and communication around privacy issues.

The Final Report traverses competition and consumer law, data privacy and media regulation, as well as making recommendations on issues as diverse as direct subsidies for public interest journalism and changes to the school curriculum to address digital literacy.

The ACCC's key recommendations include:

  • a new ACCC digital platforms branch to conduct proactive investigation, monitoring and enforcement;
  • amendments to the merger provisions of the Competition and Consumer Act 2010 (CCA) and a framework for digital platforms to provide advance notice of proposed acquisitions;
  • harmonisation of media regulation across delivery technologies;
  • at least six new codes, standards and protocols with oversight by various regulators;
  • significant data privacy reforms – to apply generally, as well as specific obligations for digital platforms;
  • the establishment of an ombudsman scheme to handle complaints from consumers and businesses in relation to digital platforms;
  • strengthening the Australian Consumer Law's provisions regarding unfair contract terms;
  • a further inquiry into the adtech supply chain; and
  • tax incentives for philanthropic support of journalism and public funding for local journalism and public broadcasters.

Some of the most significant aspects of the Final Report are arguably the ACCC's recommendations in relation to data privacy, consent requirements and communications with consumers about how data is handled. These recommendations have potential implications for all businesses operating in Australia – not only digital platforms.

In contrast, many of the ACCC's recommendations may have only a marginal impact in relation to what could be viewed as the 'core' issue for the DPI – that is, the ways in which the advent of social media, search and aggregation platforms has challenged traditional media business models. Much of the work in formulating concrete measures in key policy areas has also been deferred, with the ACCC proposing a series of codes, standards and protocols still to be developed, on issues such as copyright protections and the ability to monetise digital news content.

While the scope of the ACCC's recommendations is ambitious, the ACCC has also avoided some of the more radical regulatory options it could have adopted, such as:

  • the creation of an algorithm regulator (proposed in the preliminary report);
  • structural separation of digital platforms (advocated by News Limited);
  • using consumer data right legislation to mandate data access; or
  • requiring platform inter-operability.

In several instances, the ACCC has flagged a willingness to revisit and continue examining these options. Time will tell how real that threat is, but having passed on more unorthodox policy prescriptions in the DPI, it seems unlikely they will be adopted or implemented within the next decade. As such, if major global platforms confront existential threats to their business models, they will likely come from US or European legislators.

Where to from here?

The Federal Government has indicated that it 'accepts the ACCC's overriding conclusion that there is a need for reform'. However, it is not expected to release its formal response to the DPI Final Report until the end of the year.

Before responding, the Government will conduct a further 12-week period of consultation on the ACCC's recommendations. The sheer breadth of the recommendations and the lack of guidance from the Government about which measures it realistically expects to implement will make genuine engagement by stakeholders challenging.

There is also a real risk of 'consultation fatigue' with this consultation following recent consumer law and privacy reviews and several rounds of extensive consultation by the ACCC as part of the DPI.

The ACCC acknowledges the regulatory compliance costs that would be imposed by its proposals. However, it 'does not consider that the costs of compliance should be extensive for businesses that do not place personal information at the centre of their business models'. A significant question that goes unanswered in this context is: are there likely to be many businesses in the Australian economy for which data is not a key strategic asset over the medium term – especially as the Internet of Things becomes ubiquitous?

What is clear, however, is that the creation of a new digital platforms branch within the ACCC, with powers to hold an extended public inquiry and compel the production of information (under Part VIIA of the CCA), is likely to result in intense scrutiny and serial enforcement actions. Experience in grocery, fuel and other sectors suggests digital platforms and a range of other stakeholders will need to devote significant resources to regulator engagement over the next five to ten years. An increase in class actions and other private litigation is also likely if reforms such as the recommended introduction of a statutory tort for serious invasions of privacy are implemented.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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