Google and Facebook to face ACCC watchdog investigation


A key concern is the way the technologies gather information about consumers and use it to target them with personalised ads, raising questions about who can gain access to the data and how it is secured.

The new effort follows the release of the ACCC’s Digital Platforms Inquiry last July and the government’s response in December, which led to the creation of a new branch within the regulator to address privacy concerns, media regulation and online market power.

Treasurer Josh Frydenberg says regulations are needed online to ensure the market operates properly.Credit:AAP

Mr Frydenberg said the digital platforms had “fundamentally changed” the media business and required regulations to keep pace with the changes.

“The government recognises that there is a need for reform to better protect consumers, improve transparency, address power imbalances and ensure that substantial market power is not used to lessen competition in media and advertising services markets,” he said.

“The government’s role is not to protect domestic businesses from digital competition, but rather to ensure the proper functioning of markets and a fair approach to regulation that ensures the rules of the physical world apply equally to the digital world.”

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An interim report will go to the Treasurer at the end of this year and the final report will be done by August 31 next year, under a timetable that sets the debate over future regulation before the federal election due in the first half of 2022.

The latest move suggests Mr Frydenberg is putting a priority on reform in the digital economy at a time when Australian companies are scrambling to deal with far-reaching shifts that can weaken profits and force job losses.

The ACCC found that 98 per cent of online searches on mobile devices used Google and that Facebook had about 17 million Australian users spending an average of 30 minutes every day on its site.

“Given this incredible level of market concentration, it is critical that these companies continue to be closely monitored,” Mr Frydenberg said.

The new inquiry will have the scope to investigate and monitor companies, the power to compel the production of documents and data and the ability to advise the government on further policy decisions.

Consulting firm PwC Australia estimates spending on internet advertising across the country more than doubled to $9.5 billion over the five years to 2019 and will reach $10.8 billion this year.

“While the digital media ecosystem is made up of hundreds of players, there are only a vital few major players that advertisers need to use to reach every Australian: Google, Facebook, YouTube and Amazon,” the consulting firm said in its latest market report.

“Despite the strong growth of internet advertising as a category, beyond Google and Facebook, the rest of the online advertising market is in decline.”

The government action last December required the ACCC to work with the industry to develop voluntary codes to address the market power concerns, with a progress report due by May.

The code could check the power of Google and Facebook over media companies including Rupert Murdoch’s News Corp, Kerry Stokes’ Seven West Media and Nine Entertainment, the owner of this newspaper.

If a voluntary code is not agreed by November, the government has reserved the right to draft a mandatory code over the power of the biggest online players.

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