On Friday, Australia's competition regulator, the Australian Competition & Consumer Commission (ACCC), released its final report in the landmark Digital Platforms Inquiry (Inquiry), following a period of consultation on its preliminary report which was published on 10 December 2018.
If the recommendations in the final report are implemented, then they will have a profound impact on the regulation of the media, privacy and platforms in Australia.
The Inquiry was directed by the Australian government to consider the impact of online search engines, social media and digital content aggregators (digital platforms) on competition in the media and advertising services markets, in particular in relation to the supply of news and journalistic content, and the implications of this for media content creators, advertisers and consumers.
Unlike many other global competition regulators, the ACCC’s remit encompasses competition law and consumer law, both of which have the protection of consumer welfare at heart. This enabled the ACCC to take a holistic approach, and go further than other regulators in identifying linkages between critical questions of substantial market power and competitive harm, consumer protection and privacy. Its recommendations are wide-reaching and propose amendments to competition laws, consumer laws, regulation in the media and advertising markets and privacy laws.
Of significance is the finding in this final report that the digital platforms hold market power and are a critical ‘gateway’ for businesses seeking access to Australian consumers. The ACCC also identified the unprecedented speed and extent to which the digital platforms’ have obtained this market power and the absence of a standard of behaviour these platforms are required to meet. What this standard is or should be, and what form (if any) it takes, will be the subject of much debate going forward. However the recommendation for the creation of a specialist digital platforms branch within the ACCC, will go some way to ensuring this debate is informed and that any standard continues to be relevant over time.
The final report recommends that Australia's platform-specific media regulation be replaced by streamlined, platform-neutral laws. There is scope for this to extend to a variety of laws including content rules and advertising restrictions.
It also recommends very significant reforms to Australia's privacy laws, including increases in penalties, the introduction of a statutory tort, introduction of a private right of action for interferences with privacy, and changes to consent and notification rules to make them more like the GDPR rules. The statutory tort is of particular significance to the media, which enjoys an exemption from the Privacy Act in relation to acts in the course of journalism for those media organisations which have publicly committed to privacy standards. It would also have broader significance including in relation to surveillance and a range of other circumstances. Consent and notification rule changes could also have a significant practical impact.
These measures are complemented by a proposed copyright take-down code, and additional codes, which will affect day-to-day operation of relationships between the media and digital platforms.
Whilst the final report is not binding, it contains 23 recommendations which the Australian government will now consider. A formal response from the government is expected by the end of 2019. If the government accepts some or all of the recommendations (which seems quite likely given some of the recent comments from the Treasurer), the next steps will be for it to prepare, and most likely consult stakeholders in relation to, draft legislation.
Key recommendations include:
Competition and Consumer Laws
1. The Competition and Consumer Act 2010 (CCA) be amended to include two additional merger factors: (i) the likelihood that the acquisition would result in the removal from the market of a potential competitor, and (ii) the nature and significance of assets, including data and technology being acquired. The proposed amendments would require the merger parties (and the ultimate decision-maker) to positively address the ‘significance’ of data and technology assets being acquired. The ACCC has also indicated it is considering pursuing legislative change to introduce a rebuttable presumption, so that the starting point for any significant acquisition is that a merger is presumed likely to substantially lessen competition, absent evidence to the contrary.
2. Each of the large digital platforms agree to a bespoke notification protocol, providing advance notice to the ACCC of particular types of acquisitions that have the potential to impact competition in Australia, including where these transactions occur overseas and could impact a market in Australia. These protocols are likely to contain a minimum transaction value. This recommendation is intended to ensure that the ACCC can review transactions concurrently with other regulators.
3. Google should provide Australian Android users the ability to choose their default search engine and default internet browser from a number of options. The purpose of this recommendation is to overcome default bias and to align the Australian position with that being taken by overseas regulators.
4. The creation of a specialist digital platforms branch within the ACCC to develop expertise in digital markets and the use of algorithms. The branch’s purpose is to proactively monitor and investigate instances of potential anti-competitive conduct, take enforcement action and to conduct inquiries and make recommendations to government. The ACCC is seeking Ministerial direction to hold an extended 5 year-long public inquiry and to be given the ability to compel relevant information. This specialist branch is intended to increase the effectiveness of cross-border enforcement, reduce the lag between technological change and policy review and therefore the speed at which regulators and governments can address any deterioration in consumer welfare.
5. Once established, the digital platforms branch be directed to hold an inquiry into competition for the supply of ad tech services and the supply of online advertising services by advertising and media agencies, areas which the ACCC described as "opaque". This would provide the regulator and the government with information concerning the flow of money and processes that would demonstrate whether the digital platforms are providing value for money and if the market is operating efficiently.
7. A new platform-neutral regulatory framework be developed and implemented to ensure effective and consistent regulatory oversight of all entities involved in content production or delivery in Australia, including media businesses, publishers, broadcasters and digital platforms. The purpose of this reform is to create a level playing field that promotes competition in Australian media and advertising markets.
8. Digital platforms designated by the Australian Communications and Media Authority (ACMA) to each implement a code of conduct to govern their relationships with news media businesses. Each platform's code of conduct, to be enforced by the ACMA, should ensure that they treat news media businesses fairly, reasonably and transparently in their dealings with them, and contain prescribed mandatory content.
9. Tax settings should be amended to establish new categories of charitable purpose and deductive gift recipient status for not-for-profit organisations that create, promote or assist the production of public interest journalism.
10. Digital platforms with more than one million monthly active users in Australia should implement an industry code of conduct to govern the handling of complaints about disinformation (fake news) that pose a serious public detriment.
11. A mandatory industry code, enforced by the ACMA, be implemented to ensure the effective and timely removal of copyright-protected content from digital platforms operating in Australia.
12. The Privacy Act to be updated to strengthen its protections including by updating the definition of 'personal information' to capture technical data such as IP addresses and device identifiers, strengthening notification and consent requirements, enabling the erasure of personal information and giving individuals a direct right of action.
13. The Office of the Australian Information Commissioner to develop an enforceable code of practice to enable proactive and targeted regulation of digital platforms' data practices.
14. The introduction of a statutory tort for serious invasions of privacy. The tort proposed is based on the 2014 recommendations of the Australian Law Reform Commission. The tort would apply in respect of intrusions upon seclusion or private affairs as well as in relation to misuse of or disclosure of private information. 5 elements would need to be established to succeed in such a claim. Overseas experience suggests that such a tort could give rise to claims in a variety of circumstances beyond those contemplated in the Australian cases to date. The High Court of Australia has left open the question of whether there is a tort or breach of confidence action in relation to breach of privacy, and case law in lower courts is divided on the question of whether such a cause of action exists
15. Broader reform of the Australian privacy regime which will aim to ensure it continues to effectively protect consumers' personal information in light of the increasing volume and scope of data collection in the digital economy.
16. The establishment of an independent ombudsman scheme to resolve complaints and disputes between consumers and digital platforms, and businesses and digital platforms.
17. The development of minimum internal dispute resolution standards by the ACMA to apply to digital platforms.
Bird & Bird's more detailed analysis of key aspects of these developments will be provided in further alerts.