AUSTRALIA | Without sufficient laws in place, Australian consumers and businesses continue to encounter harmful practices across a range of digital platform services.
The ACCC’s tenth and final report on the Digital Platform Services Inquiry has concluded the ACCC’s five-year inquiry, reiterating its support for measures including an economy-wide prohibition on unfair trading practices, an external dispute resolution body for digital platform services, and a new digital competition regime.
“Digital platform services are critically important to Australian consumers and businesses and are major drivers of productivity growth in our economy,” ACCC Chair Gina Cass-Gottlieb said.
“While these services have brought many benefits, they have also created harms that our current competition and consumer laws cannot adequately address. This is why we continue to recommend that targeted regulation of digital platform services is needed to increase competition and innovation, and protect consumers in digital markets.”
Continued risk of widespread harms to Australian consumers and small businesses
The ACCC’s final report found that there continues to be a significant risk of consumer and competition harms on digital platforms.
Consumers continue to face unfair trading practices in digital markets, including manipulative design practices, such as user interfaces that direct consumers to more expensive subscriptions or purchase options.
72 percent of Australian consumers surveyed by the ACCC reported that they had encountered potentially unfair practices when shopping online, such as accidental subscriptions or hidden fees.
“An unfair trading practices prohibition is required to protect consumers from these kinds of tactics, both online and offline.”
The consumer survey also found 82 percent of respondents agree that there should be a specialised independent external dispute resolution body for users of digital platform services to escalate complaints which cannot be resolved with the platforms directly.
“An external dispute resolution body would also help Australian small businesses who rely on digital platforms to reach their customers – for example, when a fake review is made about their business on a search engine or marketplace, or when they have an account deactivated and lose their means of accessing their customers on social media.”
A new digital competition regime will bring benefits to Australians
Throughout the course of this five-year Inquiry, the ACCC has also observed conduct by the most powerful digital platforms that is distorting the competitive process. This conduct includes denying interoperability, self-preferencing, tying, exclusivity agreements, impeding switching, and withholding access to essential hardware, software, and data inputs.
“A lack of competition in digital markets can lead to higher prices, less choice, lower quality or even greater harvesting of personal data, ultimately impacting everyday users. There is broad international recognition that anti-competitive conduct exists in digital markets that needs to be addressed.”
Several jurisdictions have already introduced regulations to improve competition in digital markets, including the European Union, the United Kingdom, Germany and Japan.
“It is timely to progress a new digital competition regime in Australia, which will increase contestability, benefit both local and foreign companies that rely on access to these platforms to conduct business in Australia, and support a growing economy.”
Emerging services and technology need continued scrutiny
The final report has also outlined how rapidly evolving digital markets and emerging technologies, such as cloud computing and generative AI, may exacerbate existing risks to competition and consumers in Australia or give rise to new ones.
For example, cloud computing is continuing to grow both globally and in Australia, providing significant benefits for businesses and consumers. However, the ACCC’s report identified a range of potential competition risks in this sector.
ACCC found that the major providers of cloud computing in Australia – Amazon, Microsoft and Google – are vast, incumbent digital platforms that are vertically integrated across the cloud technology stack.
“Vertically-integrated cloud providers may be incentivised to engage in conduct that could harm their competitors – for example, anti-competitively bundling their own services across different layers of the cloud stack.”
The report also found that generative AI developers and deployers generally require access to significant cloud computing power to train and deploy their products. However, cloud providers may be incentivised to anti-competitively bundle, tie or self-prefer their own generative AI products above those of competitors.
“Harms to competition in the generative AI sector could hamper innovation, result in lower quality products and services, and force Australian businesses and consumers to pay more than they otherwise would to utilise this technology,” added Cass-Gottlieb.
“To protect against these kinds of risks, it is critical that the proposed digital competition regime enable the ACCC to continue monitoring changes to services it has previously examined, as well as new technologies that emerge over time.”
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