Australia mulls new laws to tackle tech giants Google and Apple

The ‘metaverse’ is shaping up as a new battleground for digital privacy and security.

The ACCC, which introduced world-first media bargaining code last year under outgoing chair Rod Sims, is now mulling a possible new regulatory framework. Picture: Gary Ramage/NCA NewsWire

Tech giants Google and Apple are facing potential new laws to curb the power of their app store monopolies – and their potential dominance in the metaverse – with Australia’s consumer watchdog flagging reforms as momentum to rein in the digital platforms builds globally.

The ACCC, which successfully introduced world-first media bargaining code last year under outgoing chair Rod Sims, is now mulling a possible new regulatory framework it says would promote competition and reduce consumer harms from the tech giants.

The watchdog is halfway through its five-year digital platforms inquiry.

“These companies are profit making companies, and there’s nothing wrong with that, but you can’t rely on them to look after our welfare, as we’ve seen with Cambridge Analytica and other issues. Governments and society have got to get ahead on these issues, they are fundamental to our future,” Mr Sims said in an interview.

On the table are new rules that would force Apple and Google to allow third-party payments on their App Stores, limit the fees that tech giants can collect from sellers and allow users to change default apps on their devices.

Citing Facebook’s multi-billion dollar acquisitions of WhatsApp and Instagram, the ACCC said that large digital platforms have been able to extend their market power through aggressive acquisition strategies, and consumers have likely suffered as a result.

Tech giants including Meta, Google and Apple have collectively made hundreds of acquisitions over the last five years.

“These acquisitions have helped large platforms entrench the market power of their core services, raised barriers to entry for rivals, and enabled the platforms to expand their ecosystems, potentially hampering the emergence of vigorous competition in related markets,” the ACCC said in its discussion paper.

“Consumers, who increasingly rely on using digital platforms, may suffer where they lack oversight and control of their data – in particular, where platforms’ terms and conditions allow personal user data to be misused or used in ways that are inconsistent with consumers’ preferences.”

The so-called metaverse is also shaping up as a new battleground for digital privacy and security.

“New services and products, such as augmented and virtual reality, raise new concerns and may exacerbate existing harms,” the report reads.

Australia is shaping as a key battleground for the tech giants‘ control over their app stores, with Apple’s battle royale against Fortnite maker Epic set for a six-week High Court hearing in November. Picture: Neilson Barnard/Getty Images via AFP

“These services facilitate greater personal data collection and provide greater opportunities for consumers to be manipulated via dark patterns, which encourage them to make particular decisions about options or features that may not be in their best interests.”

Mr Sims, who is stepping down next month, said that he’s looking at the EU, the UK, the US and other Asia-Pacific jurisdictions for inspiration.

“There is momentum building internationally, with authorities and politicians around the world taking action to address the competition and consumer harms arising on digital platforms,” he said.

“It is clear that large digital platforms are often protected by high barriers to entry and expansion, and in some cases, they have become ‘gatekeepers’, acting as critical intermediaries between businesses and consumers, and controlling access to consumers.

“We are looking at whether we need additional laws or reform to make the online environment fairer for businesses and safer for consumers.“

Australia is shaping as a key battleground for the tech giants’ control over their app stores, with Apple’s battle royale against Fortnite maker Epic set for a six-week hearing in November, and a Google suit against Google also ongoing.

The court actions date back to 2020, when Fortnite – one of the most popular video games globally – was kicked off Apple and Google’s app stores for circumventing their payment systems and in-app purchase commissions. Epic then filed antitrust suits in the US and Australia, alleging that the lack of competition in app distribution and payments is an abuse of market power. Gamers have been left unable to download Fortnite on their iPhones or Android smartphones through official app stores for 18 months.

Momentum for change is building globally; South Korea recently amended its Telecommunication Business Act forcing operators of app stores to allow third-party payments. Meanwhile the Dutch competition authority said last week it would fine Apple €5m ($7.8m) per week up to a maximum of €50m until it complies with rules there forcing it to allow developers for dating apps access to third-party payment mechanisms. Apple has so far been fined five times, adding up to a total of €25m.

“Apple and Google act as the gatekeepers of mobile app marketplaces and are harming developers and consumers in Australia and around the world,” Epic Games VP of Public Policy Corie Wright said.
“They are abusing their market power to reduce competition and increase prices for smartphone users, while stifling developers’ ability to innovate. Epic Games welcomes the next phase of the ACCC’s Digital Platform Inquiry, and we will continue to advocate for clear and effective rules that stop anticompetitive app marketplace behaviours in Australia.”

Submissions are due by April 1, with the ACCC set to report to the government in September.

“We’ve been working with the ACCC and other key stakeholders throughout the Digital Platforms Services Inquiry and welcome the opportunity to engage with the ACCC in this consultation process,” a Google spokesman said.

Apple was contacted for comment.