Regulating is escalating: what to know about the ACCC Digital Platform Services Inquiry as we end 2020
Australia’s competition regulator, the ACCC, has joined other regulators around the world to reign in Google and Facebook. Here is ADMA’s summary of the latest reports and research released by the ACCC Digital Platforms Inquiry.
Global tech behemoths Google and Facebook are extensively tracking Australians online activities, says Australia’s competition regulator - the ACCC - who will spend the next five years undertaking its Digital Platform Services Inquiry and likely ushering in new regulations.
The inquiry - which began under direction from the federal government - is one for data-driven marketers to watch, as it could lead to a swathe of regulatory changes which will impact the advertising and marketing technology industry.
“As large platforms continue to collect vast amounts of consumer information, they are also expanding into new sectors, growing their ‘ecosystems’ and with it, their market power and ability to draw in, and lock in, consumers,” ACCC chair Rod Sims said in a press release summarising the latest Digital Platform Services Inquiry investigation into online messaging.
In other words, Google and Facebook will no longer be able to ‘beg forgiveness’ from governments and consumers, but increasingly need to ‘seek permission’ - as well as better inform consumers about how they use data - in Australia and other regulated countries around the globe.
The ACCC has signalled it is working co-operatively with other countries to regulate Google and Facebook, and it’s likely that new or reformed Australian legislation, codes and ombudsman systems will arise from the Digital Platform Services Inquiry.
US, European and Australian regulators are going after big tech
The United States has filed a restrictive suit against Google’s Android services. The scrutiny, while the case predominantly focus’ on search, as this is the most straightforward path for the government, it does reflect how Google has become a dominant player in communications, commerce and media over the last two decades.
Over in Europe there are plans to enact its Digital Services Act before the end of 2020, which may forbid technology companies using personal data for their own profits unless they also make it available to business users. These international developments are just two indications that the dominant platforms have regulators worldwide doing what they can to reign in the behemoth powers of these tech giants.
- How privacy laws work in Australia – The Attorney-Generals office is calling for submissions (by 29 November) to comment on a new issues paper
- How the news media is funded, with a new News Media Bargaining Code intended to be introduced before the end of the year;
- How advertising technology services - particularly programmatic - work, potentially upending how and what marketers pay to reach audiences through ad technology
- How transparent and honest big technology platforms like Google, Facebook and Apple need to be about algorithms, artificial intelligence and tracking its users
- The laws that regulate complaints against “digital platforms”, which includes only Google and Facebook for now
Even Facebook’s chief Mark Zuckerberg acknowledges that large digital platforms need regulation. Two years ago, he told the US Senate: “I think the real question as the internet becomes more important in people’s lives is what is the right regulation, not whether there should be or not.”
(And, yes, that statement came during the same Senate investigation that asked Zuckerberg questions like “How do you sustain a business model when users don’t pay for your services?” Answer: “Senator, we run ads”.)
News media changes the next big thing to watch
European and American eyes are set firmly on Australia’s News Media Bargaining Code - which is one part of the Digital Platforms Inquiry - and threatens to make Google and Facebook pay news publishers for content as well as make their ranking algorithms public.
The share of advertising dollars that goes to big tech rather than media publishers has also grown during 2020, leaving news media less than 20 per cent of the overall digital advertising pie in Australia.
We are expecting more detail on the advertising sector when the ACCC publishes its interim report on advertising technology and advertising services on or before 31 December 2020.
Essentially, this report is examining why a (significant) delta of digital advertising dollars are not landing in the hand of publishers, and could have major implications for what marketers pay and need to do to continue to reach consumers through the programmatic industry.
The online messaging investigation
The newest Digital Platform Services Inquiry report into online messaging services - which includes everything from WhatsApp to Facetime - delves into a broad range of other issues that hint at where the ACCC will aim its regulatory fire, including:
- Facebook and Google advertising reach has grown, giving them extensive market power.
The report outlines that in Australia during 2019, a typical AU$100 spent by advertisers on online advertising had $53 going to Google, $28 to Facebook and $19 to all other websites and ad tech. This is an increase to both Google and Facebook from $49 and $24 respectively in 2018.
- Sponsored search advertising results are not great for consumers or businesses
The report outlines that the rise of mobile usage compared to desktop could be making Google misuse its market power to:
- Make organic search results less visible on mobile devices compared to desktop
- Force businesses to pay more to have their ad display to relevant consumers (and also create unfair terms and conditions for advertisers)
“A higher proportion of sponsored results on these devices can reduce the ability of consumers to obtain information through search that best suits their needs,” the report says.
“It also increases the need for businesses to use Google’s search advertising tools to reach consumers (rather than relying on clicks to organic links).”
- Large platforms are tracking consumers, and it’s likely to grow
The big platforms use their advertising technology to extensively track people who use search engines, social media and messaging apps on a smartphone. This is likely to grow as voice search, augmented reality and virtual reality expand their technology reach to consumers.
The ACCC’s website analysis found Google and Facebook had the largest presence in online tracking, with Google and Facebook’s third-party scripts present on over 80 per cent and 40 per cent respectively of 1000 popular websites in Australia. Amazon and Microsoft tracking were present on nearly 30 per cent and almost 20 per cent of websites respectively.
“The types of user data observed being collected and transmitted by apps varied, ranging from user advertising identifiers and location information, to accessing sensitive user information, such as audio recordings, access to a user’s camera as well as health data,” the report says.
- Australian consumers don’t understand data practices and view third party use as misuse
The ACCC says its research shows that less than 10 per cent of people understand how their personal information is used once they give consent.
“More than four in five consider it to be a misuse for an organisation to ask for information that is not relevant to the purpose of the transaction or to monitor and record their online activities without their knowledge,” the report says.
- Digital Platforms must address the rising problem of scams
The ACCC says Australians lost $87million to scams played out through search, social media and online messaging apps between 2018 and 2020.
“The ACCC considers that all platforms should do more to remove scam activity on their services and provide redress to consumers,” the report says, hinting that a better complaints and redress system is likely to be on the table.
The Digital Platform Services Inquiry Interim Report only further strengthens the ACCCs rationalisation that there is a need for new or updated laws around privacy, user consent and other areas of the digital economy. Such changes will impact the data-driven marketing industry. Regulation developments need to be both fit for purpose and able to adapt to change appropriately as the industry continues to evolve. ADMA will continue to monitor, represent and update members on developments in this space and provide education programs that help marketers implement responsible marketing best practice.