Give people control of their data

ACCC chairman Rod Simms in his Sydney office. Picture: John Feder.

What Australian Competition & Consumer Commission chairman Rod Sims presented yesterday will not have Google and Facebook shaking in their boots, but the regulator stresses he is at the start of his battle against the digital behemoths.

Google’s local boss Mel Silva had her team working through the report yesterday, but so far tough words are short of anything that will cause any major concerns.

Maybe they should worry but that will depend on whether the actions to follow match the impressive words.

A new ACCC division will be created to, at the very least, annoy the behemoths, and a more holistic government attack through revamped privacy laws will have Australia placed to join the global revolt against the firms.

The fact is globally the wheel has turned and the digital platforms are on notice they are on the nose and, slowly but surely, will be regulated, perhaps, to the detriment of their hefty profit margins.

To put Google ($1.1 trillion) and Facebook ($824 billion) into context, the two companies are almost as big as the combined market value of the Australian stockmarket ($2.1 trillion).

Treasurer Josh Frydenberg didn’t use the word behemoth when releasing the report but that is what they are, as shown by this week’s Facebook acceptance without blinking of a $7 billion fine by the US Federal Trade Commission for privacy breaches.

Sims has drawn an impressive line in the sand with his comprehensive 600-page report detailing the impact of the market power the two now enjoy and their invasion of privacy, often without consumers even knowing they have a choice.

This, Sims argues, is the first holistic review of the impact of that power.

His conclusion: “The issues we have uncovered during this inquiry are too important to be left to the companies themselves.”

The promise is the regulators and the government will intervene to protect consumer choice over their data.

Sims wants to spend more time exploring the impact of their 85 per cent share on the ad-tech market.

The market studies are used as a base for future litigation and Sims promises to also call on government help to advance his cause.

He has four consumer protection cases and one competition case in the works, in which he will be using his new section 46 abuse of market power. It is rumoured to be centred on last year’s failed start-up, Unlockd.

The company essentially tried to pre-empt Google by offering free phone calls in return for your data but went into liquidation last October after Google refused to carry its app, claiming breach of company policy.

The government promises a formal response to the report by year’s end but, thankfully, past reforms have put the ACCC in a good position to prosecute the behemoths.

Amendments to section 46 removed the phrase “take advantage”, which removes a defence that if a small company could undertake the same practices it excuses the behemoth.

The ACCC has yet to test its new powers and, ironically, while the big supermarkets irrationally attacked the changes, it will be Google and Facebook that are first to be hit. The other change is the inclusion of so-called concerted practices, which is an anti-competitive act even though there was no specific agreement.

If robots from different companies do something in concert that would arguably be caught within the law.

Suffice it to say, the next 12 weeks of government considerations opens the door for Google and Facebook to launch a lobbying blitz to remove the negatives.  Sims made clear his concerns for traditional media, saying: “There is not yet any indication of a business model that can ­effectively replace the advertiser model, which has historically funded the production of these types of journalism in Australia.

“The problems for business users of advertising via digital platforms are magnified by the black box nature of online advertising products and services.

“The automated or ‘programmatic’ advertising supply chain is particularly opaque,” the report added.

The question is whether an Australian Communications and Media Authority-controlled code will have any impact on the bargaining power of the two sides.

Sims has made some welcome recommended changes to the privacy laws, including to ask “whether the objectives of the Privacy Act should place greater emphasis on privacy protections for consumers including protection against misuse of data and empowering consumers to make informed choices; and whether the Privacy Act should offer protections for inferred information, particularly where inferred information includes sensitive information about an individual’s health, religious beliefs, political affiliations”.

He noted that “the ACCC’s view is that few consumers are fully informed of, fully understand, or effectively control, the scope of data collected and the bargain they are entering into with digital platforms when they sign up for, or use, their services”.

The ACCC noted that each month approximately 19.2 million Australians use Google Search, 17.3 million access Facebook, 17.6 million watch YouTube (which is owned by Google) and 11.2 million access Instagram (which is owned by Facebook).

Given Australia’s current population of 25 million, with 21 million over the age of 13, it is clear that a large majority of the population are regular users of these platforms.

Sims said: “Policymakers should consider the extent to which important decisions about the dissemination of information, the collection of personal data and business’ interaction with consumers online, should be left to the discretion of certain large digital platforms, given their substantial market power, pervasiveness and inherent profit motive (including their need for very strong profit growth).”

The answer is “no” but the question left unanswered is after a 19-month study are the ACCC and the government prepared to act to make an impact.