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.

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. Picture: AFP / Chris Delmas

The federal government will formally back the competition regulator’s request for new powers to regulate digital platforms such as 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 on 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 browser after a US Federal Court found the company guilty of monopoly practices in internet searching.

The Australian Competition & Consumer Commission is working on a separate major case against Google that is expected to be 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.

“The minister will have the power to designate platforms, based on advice from ACCC, that pose the greatest risk of competition harms to Australian consumers and businesses,” Mr Jones will say, according to an extract of a speech he is expected to deliver on Monday evening.

“Upon designation, a platform must then comply with obligations for that service.

“There will be general obligations on any designated platform, complemented by service-specific obligations.

“This will provide flexibility to tailor the rules for the diversity and pace of change within the digital economy.”

He will say that the power’s first focus would be on app marketplaces – like Apple’s App Store or the Google Play Store – and advertising technology services for cases in which those platforms prioritise their offering rather than competitors’.

The powers could also tackle situations where developers were prevented from offering consumers alternative payment methods. This has come up as an area of major contention in the past few years: for example, Epic Games – the company behind popular game Fortnite – has been pursuing Apple in multiple jurisdictions for incentivising in-app purchases through Apple’s own payments method instead of an external one.

Mr Jones will say the powers would extend to platforms preventing consumers from deleting unwanted apps, tying the use of a service to the purchase of another product, and barriers to consumers seeking alternative services or products. “The ACCC will oversee compliance with the new framework, with penalties up to $50m where necessary or 30 per cent of a company’s turnover,” the extract reads.

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 were often narrowly focused 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 that 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.

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.”

Ms 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 .