Competition boss Rod Sims’s groundbreaking case against Google is the first to target its location data collection ability and, in the process, open the door to the adtech market that the digital platforms dominate. The case is aimed in part at informing consumers about just what Google does with its data and highlights the reality that Google is a data-collection company.
The data is used for its advertising dominance, which enabled Google to earn $US79.4bn ($116bn) in 2017, more than three times its nearest competitor, Facebook, at $US26.9bn.
The two dominate the digital advertising landscape.
In this case, Sims said “no one really knows what Google does with the data it collects. We know it is provided to advertisers but we don’t know for how much money.”
Over the years, the search engine has stayed virtually the same but Google’s prowess in collecting data has improved extraordinarily so that it gets more from it than the consumers.
Oracle said: “The amount of data it collects vastly exceeds the value of the free services offered in return.”
The ACCC is also seeking penalties and undertakings from Google, which said it would defend the action — a global first. Google uses data for its advertising, which it dominates through its ownership of Android phones, DoubleClick and other tools, which have turned the mobile internet into a proprietary medium.
The company itself admits “we don’t have better algorithms than everyone else; we just have more data”.
Former boss Eric Schmidt said in 2017 that “big data is so powerful that nation states will fight over how much data matters”.
That is the world the ACCC is attacking after the likes of Oracle told it in its platform inquiry that Google’s disclosure policy had no relation to quantity or quality — “it is all or nothing”.
If consumers don’t know what the data is used for, they may not care, which is why the court case is so important because it will show how the data is used.
Google collects data from 4.5 billion searches on its search engines, 1 billion active Gmail users, 2 billion Android phones, 1 billion hours of YouTube and services like DoubleClick, which means if you log on to the ACCC website you fall into its net.
The case alleges misleading representation because consumers may think if they turn off their device, they turn off the location sensor, which is not necessarily the case.
A range of computer apps and internet pages, thanks to the spread of Google’s control, have turned the mobile internet into its own virtual walled garden.
This is the first of a series of actions promised by the ACCC and comes as the federal government is formulating its response to the digital platforms report. The response is due by the end of the year.
News Corp and other media groups have called for a 12-month inquiry into the adtech market to lift the lid on how it operates. News Corp is the publisher of The Australian.
The ACCC also wants to create a permanent unit following the platform sector with an opening inquiry into the adtech market.
Google dominates the sector because it collects the data that it sells to advertisers and then controls the auction for the advertisements and the placement of the advertisements.
The ACCC case comes after Facebook’s recent move to test the payment of content to publishers for news published on its platform. This is the first time the behemoth has looked at paying publishers for their content and is a welcome foot in the door even if it is a while off creating new policy.
Google can sell that information to advertisers who can target you precisely and, in the process, give Google a stranglehold on digital advertising.
This makes it extremely hard for outsiders like the media companies to compete with Google.
The case launched by the ACCC follows through on Sims’s campaign to give consumers power over their data.
The action also follows Google’s power in the internet browser market, where things like logging into the ACCC website automatically taps you into the Google network. The same goes with a range of apps and internet pages, thanks to the spread of Google’s control.
Looking for cover
Amid the regulatory crackdown on corporate Australia, company directors are growing increasingly concerned at the rising costs and restricted availability of directors and officers indemnity insurance.
Costs have risen by as much as six times in the past year and, worse, some of the big players such as Lloyd’s and AIG are winding back coverage, which means big companies have to wear more of the liability. Chubb has also wound back its coverage.
It’s not just the big financial companies that have been hit with higher premiums and larger enforced excesses, but the reasons for their increased liability are obvious following the royal commission.
The cost of directors and officers insurance — or D&O insurance — runs to tens of millions of dollars for big corporates and no surprise for guessing some people are baulking at joining boards.
The big increases are in what are called side C claims, for claims against class actions that are running thick and fast after the royal commission, but side A (past and present directors) and side B (company indemnities) are also increasing.
The issue has been on the table for 18 months or more but the insurance company demands and cutbacks are increasing and the issue is now a major talking point around board tables.
Insurance runs on supply and demand so the issue in part reflects the fact D&O insurance has not been profitable for some time, in part because of increased claims as directors are caught on the wrong side of court cases.
Increased class actions are an obvious reason for the increased premiums and the product withdrawals.
Coles unconvincing
In the fourth quarter of last year dry grocery inflation at Coles fell by 0.9 per cent after excluding fresh food and tobacco, and after falling by an average 1.2 per cent in the prior nine months.
In the first quarter of this year prices magically rose by 0.2 per cent and, lo and behold, Steven Cain managed to report a positive comparable store sales number of 0.1 per cent.
This was heralded as being a stunning success, given the year-ago quarter saw sales grow by 5.1 per cent in John Durkan’s farewell quarter at the height of the Little Shop promotions and a wind-back on the plastic bag bans.
But the concern is Cain is increasing prices to boost revenues as a short-term measure, which may not be sustainable.
Former Woolworths boss Grant O’Brien did the same from 2011 to 2014 and customers were not impressed at the higher prices used to help fund the failed Masters rollout.
The RBA would love to see signs of inflation as evidence of a growing economy but, alas, Coles is certainly not exhibit A.
The market seemed untroubled, with Coles stock price up 2.8 per cent at $14.97 a share, but the warnings bells are ringing.
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