Labor grants ACCC new powers to crack down on digital platforms

The federal government will formally back the competition regulator’s request for new powers to regulate digital platforms like Apple, Google and Facebook, including service specific codes of conduct.

Assistant Treasurer and Minister for Financial Services, Stephen Jones and Federal Treasurer Jim Chalmers in Parliament

The federal government will formally back the competition regulator’s request for new powers to regulate digital platforms like Apple, Google and Facebook including service specific codes of conduct.

The changes approved in principle in November last year will be formally announced by assistant Treasurer Stephen Jones in a speech Monday night at the McKell Institute entitled “50 years of consumer protection” and enacted next year.

The move follows the government’s landmark bans on under 16s using social media and amid strong US actions including the Department of Justice seeking enforced divestment of Google’s chrome search engine after a US Federal Court found the company guilty of monopoly practices in internet search.

The Australian Competition and Consumer Commission is working on a separate major case against Google which is expected to filed early in the New Year while several class actions against the search engine giant are also being prepared in Australia.

The new rules will cover both consumer enforcement and competition actions.

In a recent interview with the Australian, ACCC chief Gina Cass Gottlieb said the new so called ex ante (before the event) powers were needed because court actions take a long time and are often narrowly focussed when wider remedies were needed.

Under the new powers the ACCC could designate a company requiring it to comply with a specific code of conduct laying down rules of conduct and enforceable dispute resolution.

The new regulations which will go before Parliament next year follow last week’s changes which give the ACCC new merger powers under mandatory notification which means deals cannot proceed without ACCC approval.

Under present rules the regulator must seek court declarations to stop mergers proceeding.

The top five digital platforms have a market value of $US12.6 trillion including Apple ($US3.6 trillion), Microsoft ($US3.2 trillion), Amazon ($US2.2 trillion), Alphabet (Google) ($US2.1 trillion) and Meta ($US1.5 trillion),

By contrast the combined value of all companies listed on the ASX is $1.5 trillion, less than Meta and the value of the top Australian companies, CBA ($268.3bn) and BHP ($204.8bn).

As part of its digital platform enforcement report published in November 2022 the ACCC said: “Australian consumers and small businesses often find it hard to achieve quick and easy resolution of complaints and disputes with digital platforms.”

Cass Gottlieb said “our analysis has identified concerning consumer and competition harms across a range of digital platform services that are widespread, entrenched, and systemic.”

“The critical positions that digital platforms hold, as ‘gatekeepers’ or ‘intermediaries’ between businesses and consumers, mean they have a broad influence across the economy, making the reforms we are recommending crucial and necessary for all Australians,” she added .

Cass Gottlieb said the new powers “ would ensure the obligations are appropriately targeted to particular competition issues present in specified digital platform services, allow consultation with stakeholders, and provide the flexibility to address emerging and new forms of harmful conduct.”

Several other countries are adopting similar measures including the European Union’s Digital Services Act and Digital Markets Act, the United Kingdom’s pro-competition regime for digital markets, and Japan’s Act on Improving Transparency and Fairness of Digital Platforms.

Cass Gottlieb said in her report “the expansion of digital platforms in Australia has brought many benefits to Australian consumers and businesses.”

They have “also created risks and harms that our current consumer and competition laws are not always able to address,” she said.