Australia plans tighter rules for Facebook and Google

Australia’s government said on Friday that it plans to tighten regulation of Facebook and Google to address the harm that it said large digital platforms are causing to businesses, consumers and the media. 

Among the measures under consideration is the creation of a new digital markets division within the competition regulator to scrutinise algorithms used by both companies, as well as a major overhaul of competition, consumer and privacy legislation. 

“Make no mistake, these companies are among the most powerful and valuable in the world,” said Josh Frydenberg, Australia’s treasurer, at the launch of a government commissioned report on the dominance of digital platforms. “They need to be held to account and their activities need to be more transparent.”

Canberra has set a 12-week consultation period with industry and plans to begin preparing legislation by the end of the year.

The Digital Platforms Inquiry by the Australian Competition and Consumer Commission found Facebook and Google have substantial market power, which has distorted the ability of businesses to compete on their merits in advertising, media and a range of other markets. 

Consumers are not adequately informed about how their data are collected and have little control over how it is used to generate revenue, the inquiry concluded. Disinformation and a rising mistrust of news due to the rise of digital platforms has had an impact on society, according to the 620-page report. 

Publication of the report comes amid increasing global scrutiny of technology giants, with US regulators fining Facebook a record $5bn over privacy violations and EU regulators fining Google €4.3bn for abusing the dominance of its Android mobile phone operating system.

The ACCC inquiry is one of the world’s most comprehensive studies of the impact that Facebook and Google have on advertising, news media and other sectors.

It pinpoints the dominance of the two biggest digital platforms in Australia, noting that for every A$100 spent by advertisers on online advertising, Google captures A$47, Facebook A$24 and just A$29 goes to other participants in the market. The inquiry also highlights the precipitous decline in classified advertising revenues generated by commercial media, which fell to A$225m in 2016 from A$3.7bn in 2001, when adjusted for inflation.

The report makes 23 recommendations to the government, including forcing Google to unbundle its Chrome internet browser from mobile phones and other devices, to curtailing the company’s near-monopoly position in internet search. It also calls for a new digital platform code of conduct to cover privacy, disinformation, relationships with advertisers and news business.

Rod Sims, the ACCC chairman, said the inquiry team had been shocked at some of the practices uncovered, including a chronic lack of transparency in the advertising technology market, the ineffectiveness of privacy policies and the way customer data are used.

ACCC is continuing to investigate Google and Facebook over five alleged misuses of market power, which could result in enforcement action. It stopped short of recommending the digital giants be broken up to protect consumers, although this could become a focus of future work if there is no change in behaviour.

“At this stage we want to deal with the harms we see,” said Mr Sims. “But if on this journey that I’m talking it turns out that that’s not working and divestiture is a better approach then that can always be recommended down the track.”

Digi, a lobby group that counts Facebook and Google among its members, said it was closely reviewing the recommendations to ensure they do not bring unintended consequences to all digital businesses.