The Digital Platform Inquiry – a wolf in sheep’s clothing?

14 Dec 2018

  • Privacy and Compliance

Background

The Government, through then Treasurer Scott Morrison, used regulatory powers to require the Australian Competition and Consumer Commission (ACCC) to hold an inquiry in the following terms:

“into the impact of digital search engines, social media platforms and other digital content aggregation platforms, (platform services) on the state of competition in media and advertising services markets, in particular in relation to the supply of news and journalistic content, and the implications of this for media content creators, advertisers and consumers.

Matters to be taken into consideration include, but are not limited to:

i. the extent to which platform service providers are exercising market power in commercial dealings with the creators of journalistic content and advertisers;

ii. the impact of platform service providers on the level of choice and qualify of news and journalistic content to consumers;

iii. the impact of platform service providers on media and advertising markets;

iv. the impact of longer-term trends, including innovation and technological change, on competition in media and advertising markets; and

v. the impact of information asymmetry between platform service providers, advertisers and consider and the effect on competition in media and advertising markets.

This is not to be an inquiry into supply by any particular person or persons, or by a state or territory authority.”

In releasing its issues paper for discussion, the ACCC’s intentions were consistent with the terms of reference indicating that:

“The ACCC is interested in a range of issues including:

  • assessing the market power of digital platforms
  • the implications of digital platforms for media content creators, advertisers and consumers
  • longer term trends in the media and advertising services markets
  • the effectiveness of existing regulation and proposals for change.”

 

The Digital Platforms Inquiry Preliminary Report

Fast forward to 10 December 2018 and the ACCC released its initial findings and recommendations in a preliminary report, together with the research material the ACCC had commissioner to inform its analysis.

To say that the breadth and reach of the 378-page report and its 293 pages of attendant materials were a surprise is something of an understatement.  Media coverage noted variously that aside from the expected consideration of competition and market power issues the report delved into and made recommendations with respect to a plethora of issues, including:

  • discrimination
  • defamation
  • privacy
  • copyright
  • targeted advertising
  • consent
  • notice & transparency
  • unfair contracts
  • unequal bargaining power
  • advertising algorithms
  • consumer awareness & understanding
  • fake news, fake endorsement, fake ads

In releasing the report, the ACCC’s media release focused on the competition and market power issues but did touch on some of the other areas of regulatory reform identified.

The Executive Summary of the report includes a vague nod to the far-reaching recommendations that were to follow, saying:

“The ACCC’s research and analysis to date has provided a valuable understanding of the markets that are the subject of this Inquiry, including information that has not previously been available, and has identified a number of issues that could, or should, be addressed.

Many of these issues are complex. The ACCC has decided that the best way to address these issues in the final report, due 3 June 2019, is to identify preliminary recommendations and areas for further analysis, and to engage with stakeholders on these potential proposals.

Such engagement may result in considerable change from the ACCC’s current views, as expressed in this report.”

We have listed the ACCC’s preliminary recommendations below, they were grouped in the report under the various measures that each recommendation was designed to address.  Those measures are also listed below to provide context. 

The summary of Preliminary Recommendation 8—use and collection of personal information has been reproduced in full.

The summaries for all ACCC preliminary recommendations can be found on pages 9 – 14 of the report.

 

Preliminary recommendations

Measures to address Google and Facebook’s market power

  • Preliminary Recommendation 1—merger law
  • Preliminary Recommendation 2—prior notice of acquisitions
  • Preliminary Recommendation 3—choice of browser and search engine

Measures to monitor digital platforms’ activities and the potential consequences of those activities for news media organisations and advertisers

  • Preliminary Recommendation 4—advertising and related business oversight
  • Preliminary Recommendation 5—news and digital platform regulatory oversight

Measures to address regulatory imbalance

  • Preliminary Recommendation 6—review of media regulatory frameworks

Measure to assist a more effective removal of copyright infringing material

  • Preliminary Recommendation 7—take-down standard

Measures to better inform consumers when dealing with digital platforms and to improve their bargaining power

  • Preliminary Recommendation 8—use and collection of personal information

The ACCC proposes to recommend the following amendments to the Privacy Act to better enable consumers to make informed decisions in relation to, and have greater control over, privacy and the collection of personal information. In particular, recommendations (a) and (b) are aimed at reducing information asymmetries to improve the transparency of digital platforms’ data practices. Recommendations (c) and (d) seek to provide consumers with stronger mandated controls over the collection, use, disclosure and erasure of their personal information to lessen the bargaining power imbalance between consumers and digital platforms. Recommendations (e) to (g) are measures to increase the deterrence effect of the Privacy Act.

(a) Strengthen notification requirements: Introduce an express requirement that the collection of consumers’ personal information directly or by a third party is accompanied by a notification of this collection that is concise, transparent, intelligible and easily accessible, written in clear and plain language (particularly if addressed to a child), and provided free of charge.

(b) Introduce an independent third-party certification scheme: Require certain businesses, which meet identified objective thresholds regarding the collection of Australian consumers’ personal information, to undergo external audits to monitor and publicly demonstrate compliance with these privacy regulations, through the use of a privacy seal or mark. The parties carrying out such audits would first be certified by the OAIC.

(c) Strengthen consent requirements: Amend the definition of consent to require express, opt-in consent and incorporate requirements into the Australian Privacy Principles that consent must be adequately informed (including about the consequences of providing consent), voluntarily given, current and specific. This means that settings that enable data collection must be pre-selected to ‘off’. The consent must also be given by an individual or an individual’s guardian who has the capacity to understand and communicate their consent.

(d) Enable the erasure of personal information: Enable consumers to require erasure of their personal information where they have withdrawn their consent and the personal information is no longer necessary to provide the consumer with a service.

(e) Increase the penalties for breach: Increase penalties for breaches of the Privacy Act to at least mirror the increased penalties for breaches of the Australian Consumer Law.

(f) Introduce direct rights of action for individuals: Give individual consumers a direct right to bring actions for breach of their privacy under the Privacy Act.

(g) Expand resourcing for the OAIC to support further enforcement activities: Provide increased resources to equip the OAIC to deal with increasing volume, significance, and complexity of privacy-related complaints.

  • Preliminary Recommendation 9—OAIC Code of Practice for digital platforms
  • Preliminary Recommendation 10—serious invasions of privacy
  • Preliminary Recommendation 11—unfair contract terms

Proposed areas for further analysis and assessment

The ACCC has identified 9 areas where further analysis and assessment is required. The ACCC is particularly interested in views and analysis on the following issues:

  • Supporting choice and quality of news and journalism
  • Improve news literacy online
  • Improving the ability of news media businesses to fund the production of news and journalism
  • A digital platforms ombudsman
  • Monitoring of intermediary pricing
  • Third party measurement of advertisements served on digital platforms
  • Deletion of user data
  • Opt-in targeted advertising
  • Prohibition against unfair practices

Summaries of the specific matters for further analysis and assessment can be found on pages 14– 17 of the report.

Ongoing investigations

Finally, the ACCC indicated that there are five ongoing investigations under the Competition and Consumer Act 2010 (Cth) (the CCA):

  • investigating whether access restrictions imposed by a digital platform on a third-party app developer may raise issues under section 46 of the CCA
  • investigating whether a particular digital platform’s representations to users regarding the collection of particular types of data may have breached the Australian Consumer Law (the ACL)
  • investigating potential breaches of the ACL relating to changes to a digital platform’s privacy policy that may enable the digital platform to combine different sets of user data
  • investigating whether a particular digital platform may have breached the ACL by failing to adequately disclose changes to its terms and conditions which allowed it to share consumers’ user data with third parties
  • investigating whether digital platforms’ terms of use and privacy policies may contain unfair contract terms under the ACL.

Despite the original terms of reference indicating that the inquiry was not to be into “any particular person or persons” it is clear that both Google and Facebook have been singled out for attention and further investigation.  ADMA has reached out to members Google and Facebook regarding their response. 

At the time of writing, both are understandably in the process of reviewing the report materials and considering their respective positions.  However, Google were able to provide some perspective regarding preliminary recommendations four, five and eight.
Addressing the recommendation for advertising and related business oversight for digital platforms Google pointed out that it serves both users and advertisers and, given that search advertising makes up a large majority of Google’s ad revenues, their business model centres on ensuring search results are as relevant and useful as possible for users to, in turn, attract and provide value to advertisers.

With respect to preliminary recommendation five – news and digital platform regulatory oversight, Google noted that the report highlights a perceived lack of transparency regarding digital platform’s algorithms.  In response to this Google points to the need to balance the interests of users, advertisers and publishers against those who seek to game the system in their own interest.  Google addresses this need through the provision of extensive materials that empower webmasters to manage their search presence. 

Finally, Google responded to preliminary recommendation eight regarding the use and collection of personal information which includes deletion of user data and opt-in targeted advertising.  Google’s privacy policy details what information is collected and Google’s privacy policy explains what information they collect, why it is collected, and how users can update, manage, export, and delete their information.

They also provide users with the ability to adjust their privacy settings to control what
information is collected and how that information is used, including the option to update,
download, delete and transfer data.  In January this year, Google announced a further evolution of the tools provided to users, including options to ‘mute’ ads they no longer wish to see, and controls over reminder/remarketing ads, including the ability to see which advertisers are showing them such ads, and to mute them.

Google’s input came with the caveat that they expect their position to evolve as they work through the report in detail and consult with stakeholders. Their insights are particularly useful as they bring a quick sense of perspective to the voluminous recommendations.

We will continue to liaise with Google and Facebook during the consultation process but ADMA’s concern is that the breadth of potential reform and consequences for many ADMA members is significant.  To that end, we will be announcing a consultation opportunity for ADMA members in the new year, seeking to update everyone by mid-January and gather feedback by late January before the submissions period closes on 15 February. 

At this stage the ACCC has indicated that there may be stakeholder forums following the issue of the preliminary report, we will be monitoring this and seeking to participate in any forums held.

We will provide an update in early January.  In the meantime, we’ve got some more reading to do!

Copyright

Material from ACCC website, including media releases, issues paper and preliminary report reproduced under Creative Commons CC BY 3.0 AU licence (c) Commonwealth of Australia.

Terms of Reference/Ministerial Direction reproduced pursuant to in accordance with Australian Government policy. Source: The Commonwealth of Australia.

ADMA provides regulatory guidance to Members, subscribers and participants.  The information provided is general in nature only; it is not comprehensive and does not constitute legal advice.  You should obtain legal or other professional advice before acting or relying on this information.

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