Digital Platforms Inquiry - Australian Government Responds

The Australian Government has just published its eagerly awaited response to the ACCC's Digital Platforms Inquiry – Final Report. The Digital Platforms Inquiry was undertaken by the ACCC in order to consider the impact of digital platforms (such as Google and Facebook) on competition in the media and advertising services markets.  

The Australian Government's response to the Digital Platforms Inquiry represents a significant step toward the development of a modernised regulatory landscape in Australia dealing with the emergence of digital platforms.

In its Final Report, the Australian Competition and Consumer Commission (ACCC) flagged various concerns about the market power of digital platforms and the perceived detriments flowing from an inequality of bargaining power between the digital platforms and Australian media and advertising companies, as well as a variety of other issues affecting consumers and the broader economy such as the accuracy in online content, data privacy and online copyright infringement. 

By committing to implement most of the ACCC's key structural recommendations, the Australian Government has affirmed the importance of the role that competition, privacy and content laws will play in shaping the regulatory settings for digital platforms.

The key initiatives that the Government has committed to are: 

1.    Establishing a new Digital Platforms Branch

The Government has committed to provide $27 million over four years in order to establish a Digital Platforms Branch within the ACCC. This Branch will monitor and report on the conduct of digital platforms in the areas of competition and consumer protection and undertake enforcement activity as required. It will also be responsible for conducting inquiries directed to be undertaken by the Treasurer, including an inquiry into the online advertising and ad-tech services supply chain in 2020 (announced as part of the Government's response).  While falling short of the new 'algorithm regulator' proposed in ACCC's draft report, the Government's response aligns with the more pragmatic proposal in the ACCC's final report.

2.    Developing a new industry code

The ACCC has been directed to oversee the development of a new 'voluntary' code of conduct which will govern the relationships between digital platforms and news media businesses. The code, which will be binding on both platforms and businesses who sign up to it, will aim to address issues which affect the level of fairness and transparency in the dealings between digital platforms and Australian media companies. The ACCC is required to provide a progress report to the Government on the status of the code negotiations by May 2020, with a view to finalising the code later in the year – i.e. by no later than November 2020.  This is one of the more controversial recommendations in the ACCC's final report and one that the digital platforms have vocally opposed.

3.    Reviewing Australia's merger laws

The Government has also committed to commence a consultation process on the amendments to Australia's merger laws proposed by the ACCC in its Final Report. The ACCC's recommendation was that section 50(3) of the Competition and Consumer Act 2010 (Cth), which forms part of Australia's merger control regime (and sets out the matters that must be taken into account in determining whether an acquisition is likely to lessen competition), expressly refer to: (a) the likelihood of the acquisition resulting in the removal from the market of a potential competitor; and (b) the nature and significance of the assets, including data and technology, being acquired. This is expected to take place in 2020 and may form part of broader reforms to Australia's merger laws depending on the final outcome of current federal Court proceedings between Vodafone, TPG and the ACCC.

4.    Reviewing Australia's media regulation

The Government has committed to commence a staged process to reform media regulation, with the ultimate aim of platform-neutral regulatory framework that would apply across the media landscape.  Recommendation 6 was largely intended to address inconsistencies in media regulation and level the playing field as between digital platforms which are lightly regulated on one hand, and traditional media businesses such as television broadcasters which are the subject of extensive regulation on the other hand. The ACCC had recommended a staged approach, which the Government has adopted. Commencing in 2020, the Government will focus on developing uniform classification frameworks across media platforms, reviewing content obligations on free-to-air television broadcasters (drama and children's content) to consider whether such obligations should apply to SVOD services, and other reforms to support Australian content. 

5.    Reviewing Australia's privacy laws

Privacy will be reviewed and reformed in a staged process extending to 2021.  The Government has indicated that the first changes are increases to penalties and introduction of a digital platforms privacy code.  These are already underway.  The government has indicated that it will immediately commence the consultation process in relation to a second tranche of privacy reform proposals relating to inclusion of technical information such as IP addresses in "personal information", consents and default positions, and direct rights of action for individuals.  During the course of 2020, a third tranche of reform proposals will be reviewed.  They relate to a right of erasure in relation to personal information and a proposed privacy tort as well as a broader review of the Privacy Act.  The privacy review is expected to be completed in 2021. 

6.    Addressing disinformation

The Government will ask major platforms to develop a voluntary code, or codes of conduct to ensure news quality and address disinformation, which will be informed by international precedents such as the EU Code of Practice on Disinformation (EU Code). The ACMA will have oversight and will report to the Government on the adequacy of platform's measures and the broader impacts of disinformation. The EU Code is a non-binding, voluntary code, setting out a list of commitments and principles that signatories (such as Google, Facebook and Twitter) commit to take part in "contributing to solutions to the challenged posed by disinformation". The ACCC proposed differing thresholds to those set out in the EU Code. For example, it proposed that the code would only apply to complaints about content that has the potential to cause 'serious public detriment', and that the Australian the codes be registered with the ACMA.  

The Government is not currently supporting several of the other significant reforms foreshadowed in the Final Report, including:

1. The mandatory ACMA take-down code. The Government intends to review options for preventing online copyright infringement at the end of 2020, but does not currently support Recommendation 8 of the Final Report.
   
   
2. Tax settings to encourage philanthropic support for journalism.