ACCC digital platforms response: government delay as tech giants move on

Scott Morrison, Josh Frydenberg and Paul Fletcher announce the government’s response to the ACCC inquiry. Picture: David Geraghty

The good news is that Prime Minister Scott Morrison has taken a personal stake in delivering digital reform in Australia.

The bad news is it is taking forever to see the outcomes.

At Thursday’s press conference to unveil the response to the Australian Competition and Consumer Commission’s digital platform inquiry, Treasurer Josh Frydenberg said the government believes in “evidence-based policy”.

READ MORE: Government releases response | Tech titans won’t be shaking in their boots |

Google and Facebook want to rule your world

It is over two years since Morrison commissioned the ACCC report on digital platforms and it was completed six months ago.

The key decisions are to delay implementation for at least another 12 months.

Just how much evidence does Frydenberg need?

For starters, he and Morrison can drop the claim about being world leaders in this field. They were two years ago when the ACCC report was commissioned, but since then the rest of the world has moved on, matching and pulling ahead of Australian policy.

Google and Facebook have continued to gobble up more adjacent enterprises like Fitbit and innovation stopped some time ago.

What has happened since is that Google and Facebook have entrenched their market power which, in the words of the ACCC, is now “unfettered” with “significant impact” on consumers that must be addressed.

The best response is litigation and thankfully the ACCC has commenced its campaign with a location data case against Google, to be followed by action against the giant over Unlockd.

The government has agreed to invest $27 million in a special platforms unit in the ACCC which, depending on what it does, is good news. It has also agreed to an ACCC inquiry into ad tech, which is also good, but this will not report until 2021.

You get the feeling the increased transparency flowing from the inquiry will be potentially undone by the fact that while the “evidence” is being gathered, the tech titans’ market power will become even more entrenched.

There will be a draft report out by the end of next year and a final report sometime in 2021.

A commitment to a voluntary code of conduct, with the threat of a mandatory code, is frankly a joke.

If the government was serious about some equalisation in bargaining power it would move directly to the mandatory code today, because the chances of Google and Facebook agreeing to media terms would appear limited.

Government insiders say that view is too pessimistic.

Facebook, it will be noted, has agreed to look at a system whereby if someone clicks on a Facebook headline they go to the newspaper website and potentially pay for the content.

The process of negotiating a voluntary code gives the ACCC a ringside seat into the arguments so that if a mandatory code is needed it knows how to frame it.

A voluntary code is only as good as its content, but once you sign it you are effectively bound and liable if you withdraw,

Taking a more optimistic view, the government has delivered what the ACCC wanted in every respect except copyright.

This said, decisions are yet to be enacted on things like beefing up unfair contracts clauses, changes to the merger laws on future impact of competition, and stronger privacy laws.

In its consideration the ACCC will consider the impact of data control in mergers and take a forward-looking view, but the ACCC wants the law changed to send a clear message to courts.

Morrison has said he is favourably disposed to the changes, but they are not yet law and the pace of change is not fast.