Regulation of digital platform services in Australia: tracking the European Union

Angela Flannery

Quay Law Partners, Sydney

angela@quaylaw.com

Introduction

Australia’s competition and consumer protection regulator, the Australian Competition & Consumer Commission (ACCC), has investigated the practices of the largest digital platforms, such as Google and Meta, over a number of years, starting from its ground-breaking Digital Platforms Inquiry, which was completed in 2019, and continuing with its ongoing 5-Year Digital Platform Services Inquiry ('5-Year Inquiry').

The ACCC’s work has already led to numerous legislative reforms, such as the introduction of the Mandatory News Media Bargaining Code, which resulted in Google and Meta agreeing, in a world first, to pay news media organisations for use of their content. This article looks at the state of play in Australia, including potential regulatory reforms equivalent to the European Union’s Digital Markets Act (DMA) and Digital Services Act (DSA).

Australia’s digital platform specific regulation

In November 2022, the ACCC released a report (the 'Regulatory Reform Report'), prepared as part of the 5-Year Inquiry, outlining a range of ambitious regulatory reforms for the digital platform services sector. At the time of the release of the Regulatory Reform Report, the ACCC Chair noted that while digital platform services provide many benefits, the expansion of these services has created risks and harms that existing competition and consumer protection laws are not well placed to address.

The ACCC was particularly concerned that enforcement action under the Competition and Consumer Act 2010 (Cth) is not effective in this sector. Enforcement action takes a long time and it is expensive. Enforcement action, with its focus on specific identified conduct, may also not act as a sufficient deterrent to anti-competitive conduct more broadly in this sector.

The reforms that the ACCC proposed in its Regulatory Reform Report may be categorised as follows:

1. Competition reforms applying to specific digital platform services, in the form of mandatory codes. Those codes would address conduct such as anti-competitive self-preferencing and tying and bundling arrangements, as well as issues such as data advantages and transparency.
2. Consumer protection reforms, such as regulation of scam advertising that is prevalent on digital platform services, particularly social media, and the establishment of a consumer and small business ombuds scheme.
3. Economy wide reforms. The ACCC recommended expanding Australia’s unfair contract terms regime, which voids unfair terms in standard form contracts used for products and services provided to consumers and small business, as well as the introduction of a prohibition on unfair trading practices. In the ACCC’s view, this final category of reforms should be applied economy wide as the issues the ACCC had identified in digital platform services markets are prevalent across the economy.

The competition and consumer protection reforms are intended to achieve many of the same outcomes as the DMA and the DSA, respectively. However, the way that Australia aims to achieve the competition related outcomes differs markedly. While both the DMA and the Australian proposals require the designation of specific platforms to which the new regulation will apply, unlike the position that applies under the DMA, Australia is proposing to implement platform specific codes that address the anti-competitive behaviour of individual platforms. In this sense, the Australian reforms are closer to the UK model, where the Competition and Markets Authority’s Digital Markets Unit will have the ability to subject firms with ‘strategic market status’ to specific regulatory obligations.

In the case of the proposed consumer protection reforms, as applies under the DSA, these will be directly incorporated into legislation. Some parts of the DSA are already incorporated in Australian law, for example, under Australia’s Online Safety Act 2021.

The Australian government commenced consultation on proposals in the Regulatory Reform Report in late December 2022. There is no stated timeframe for the implementation of any reforms following the completion of that consultation, but it is expected that a reform package will be proposed by the Australian government based on the ACCC’s recommendations before the end of calendar year 2023. Whatever regulation is ultimately adopted, the Australian government (and the ACCC) will closely monitor the implementation of the EU’s approach to determine which model is more effective.

Ongoing digital platform investigations

The 5-Year Inquiry is continuing. The ACCC’s most recent report under the 5-Year Inquiry, which was publicly released in April 2023, addressed competition and consumer protection issues in the provision of social media services, looking at both scams and misleading or deceptive conduct. The ACCC concluded that, notwithstanding the entrance of new competitors such as TikTok to the market for social media services, Meta remains the most dominant social media services provider. The ACCC also found that social media services are not doing enough to combat scams and misleading and deceptive conduct such as fake reviews. In releasing its report, the ACCC Chair commented that the ACCC’s findings reinforced the need for the reforms outlined above.

The ACCC is currently investigating digital platform ecosystems and will release its findings from that inquiry later this year. Although other areas of investigation for the remaining term of the 5-Year Inquiry have not yet been announced, the ACCC has a wide remit to consider a broad range of competition and consumer issues in the sector and it would be expected that, up until the time its final report is issued to the Treasurer on 31 March 2025, the ACCC will have identified a range of other concerns, including in new emerging areas such as the use of chatbots powered by large language models (LLMs) and the use of artificial intelligence in search services, as recently introduced by Microsoft and Google.

Litigation against global platforms

In 2022, the ACCC had a mixed scorecard in its enforcement proceedings against the largest digital platforms. In August 2022, the Federal Court ordered Google to pay fines of AUD $60m following a finding in 2021 that Google had misled and deceived consumers regarding its data collection practices. However, in December 2022, the Federal Court dismissed the ACCC’s separate misleading and deceptive conduct case alleging that Google misled consumers in relation to changes made to its privacy policy and data collection practices, when in 2016 Google commenced combining personal information collected through its consumer facing services with personal information collected through its advertising technology services.

In another key enforcement case, in 2022 the ACCC was successful in proceedings for misleading and deceptive conduct against Uber relating to statements Uber made about cancellation fees and Uber Taxi fares.

The ACCC has ongoing proceedings against Meta, again in relation to consumer protection. These relate to misleading and deceptive conduct regarding the now defunct app, Onavo Protect, and the ongoing concerning problems with scam celebrity cryptocurrency advertising allowed by Meta on its Facebook platform.

While it is important that enforcement action is taken by the ACCC in the area of consumer protection, equally as important would be proceedings related to the anti-competitive behaviours the ACCC has identified through its various inquiries in the different digital platform services markets. In announcing her compliance and enforcement priorities for 2022/23, the ACCC Chair did not indicate that such competition proceedings might be on the horizon. Perhaps it will be necessary to wait for the proposed ex ante digital platform services sector specific regulation to be enacted before the ACCC takes such action.

Work with the Digital Platform Regulators Forum

The ACCC has joined forces with other Australian regulators that have a role in policing the internet, namely the Australian Communications and Media Authority, the Office of the Australian Information Commissioner and the eSafety Commissioner. These regulators collaborate through the Digital Platform Regulators Forum, which is an avenue for the regulators to share information about, and to collaborate on, cross-cutting issues and activities related to, digital platforms regulation.

The priorities of the Forum for 2022/23 include a focus on algorithms, increased transparency regarding the activities of the platforms, and collaboration on protecting consumers from harm online.[1] As at early June 2023, the regulators had not issued any details on the outcomes of their work; however, given the importance of these issues, such work will be useful in guiding the actions of all four regulators in these areas.

Concluding comments

The ACCC has taken a very active regulatory role in the area of digital platform services over several years. Every indication is that this focus will continue over the next financial year and beyond, with the likelihood that Australia’s regulatory approach will converge to that adopted in other jurisdictions, such as the EU.