Mid-November, the ACCC released a report on digital services which flew under the radar for some, but could have a massive impact on our digital ecosystem. Here we break down the key recommendations

Fairness is at the heart of the recommendations of the Australian Competition and Consumer Commission’s (ACCC) 5th report into its five year Digital Platform Services Inquiry. The scope of the inquiry is relatively broad, impacting the entire digital marketing ecosystem. 

It is therefore important for marketers and service providers to be on top of what is being discussed and recommended. But reading a 200+ page report probably isn’t at the top of most marketers to-do lists right now, so we’ve broken down here what you need to know. 

Ultimately this report is centred around whether new competition and consumer laws are required to address the harms identified on Digital platform services. Fairness to consumers and protecting competition for all businesses (especially small and emerging) is at the core.

The scope of the report takes in the major technology platforms providers (think Apple, Google, Meta) as well as adtech providers which have dominant market positions in certain areas. That said, many of the recommendations would apply across the sector.

Remember, everything discussed in the paper is just a recommendation at this stage, and it will be up to the government to decide whether to enact legislative changes to the relevant laws. 

Key recommendations:

• Establishing a code of conduct for Designated tech platforms (ie those the government deems influential enough) 

• Recommending changes to consumer laws to better protect users and small businesses

• Creating better ways for consumers and businesses to be able to report harmful and scam activity and seek redress where they are impacted

• New proactive measures to stop anti-competitive behaviour

Let’s dive in and explore a few key areas in more depth.

Code of conduct

Major technology platforms could be required to sign up to codes of conduct which are tailored to them individually. 

The report notes: “These codes would only apply to those digital platform services that meet designation criteria reflecting their importance to Australian consumers, businesses and markets, and their ability and incentive to harm competition.”

In other words - this would be the government mandating certain ways of doing things for the major tech platforms many Aussies use every day. 

These codes of conduct would be broad in scope to take in various areas where the ACCC believes platforms need more incentive to do better by consumers.

Key quote: 

“The reforms proposed in this report are critical to ensuring consumers and businesses using digital platform services can exercise choice and benefit from new, innovative business models and services. Protecting and promoting competition in digital platform markets will also stimulate innovation and investment, with benefits for consumers and business users of these services, and the Australian economy.”

Market Power

The report notes the concentration of power around certain areas of the market which leans to big tech platforms, and highlights a few reasons these may be of concern. 

In particular the ability these companies have to acquire or stifle competitors by blocking access to services, as well as the control they appear to have over their customers (as outlined below). 

It cites practices like self-preferencing (where a platform gives preferential treatment to its own products and services in its ecosystem), tying (making users utilise multiple products from the same business to access a service), pre-installation of products on devices, restricting access to hardware or data, restrictions placed on business users and limiting the information available to users on the platforms.

It stops short of recommending changes to merger laws, although it suggests these should be reviewed. Instead it recommends Consumer laws should be updated, with these codes of conduct enshrined in them.

A big push is to have any new codes of conduct place the onus on the platform before it engages in certain conduct, rather than enforcing them after the fact when the harm is potentially already done to consumers and small businesses alike. 

The report also notes it would be beneficial to align any changes to those already in place in other jurisdictions like the UK and Europe to make them easier to implement for the platforms.

It’s important to note that it is common for markets to coalesce around a couple of leading businesses across different industries, it is also common practice for governments to step in to limit the amount of power and influence these businesses can exert, for the good of the customers and the country.

Key quote: 

“Digital platforms stand to gain substantially from anti-competitive conduct that entrenches their market power, even in a smaller economy such as Australia. Hence, there are incentives for digital platforms to limit any changes to comply with requirements overseas to those jurisdictions where this is legally required. Indeed, there are several examples of multinational digital platforms only implementing competition remedies in the jurisdiction(s) in which those remedies were required.”

Scams

Scams, fake reviews and harmful apps are also under the microscope here, with government urged to legislate more requirements for platforms to police these issues and mitigate them where they can. 

This is the ACCC looking out for consumers and urging consistency across media types, with stricter legislation in place across other areas of our press in what messaging they are allowed to carry. This has pushed more fraudulent behaviour onto tech platforms.

However, the report notes that competition and consumer laws as they stand are inadequate to offer customers protection against these issues, as they are applied in slow and costly dispute actions through the courts, and happen after the fact. 

In particular the report notes power and information disparities between customers and small businesses and the platforms, and how these create an unfair advantage for the latter.

It suggests clearer, legislated, dispute resolution processes be put in place to give these customers and users more of a voice. 

Verification for businesses and key users is also urged from the platforms as a way to create more trust in the ecosystem, as well as easier mechanisms for reporting fraud on the services in the first place.

Key quote: 

“Given the important role these platforms play in the digital economy, such distrust has the potential to dampen the economic benefits of digitalisation. This can be minimised by closing gaps in the existing consumer laws, strengthening consumer protections against scams, harmful apps, and fake reviews, and ensuring adequate dispute resolution processes when issues arise.”

Behavioural hacks

One interesting area for the broader marketing community is a focus on businesses using behavioural hacks to influence consumers. Whilst this is common on tech platforms, it may have knock on effects to other areas of the industry, and will be worth keeping an eye on.

In particular ‘dark patterns’, which are “designed to confuse users, make it difficult for them to express their actual preferences, or manipulate them into taking certain actions” were flagged as a concern.

Unfair or onerous contracts placed on people and businesses, as well as the length of these contracts were also examined as a potential cause of disparity between these groups. 

The report suggests including reference and prohibition of some of these practices under Australian Consumer Law. This highlights the need for advertisers and platforms to look closely at their  conduct and ensure that the experience they extend to consumers is truly   fair. 

Key quote:

“Importantly, these practices can undermine trust in online markets, reducing the economic and other benefits that should flow from the use of digital platform services. During the course of its inquiries, the ACCC has observed distrust and dissatisfaction from many consumers and business users about the role and behaviour of digital platforms.”

Dispute resolution

The ability for people to get access to fair arbitration when they feel wronged by a platform or service also fell under the microscope, with the report noting the existing bodies set up to help (like state fair trading offices or small business commissioners) are not resourced to deal with these complaints. 

Instead it suggests a new approach - creating minimum standards for dispute resolution for platforms and creating an external ombuds to arbitrate these issues if necessary. 

Depending on the requirements put in place these could be potentially costly to implement and run for the platforms required to do so. 

Key quote: 

“The ACCC considers that setting minimum standards for internal dispute resolution processes, and providing the ability to escalate disputes to an independent ombuds scheme, are both essential to improving outcomes for Australian consumers and small business users of digital platforms.” 

As noted above these are just recommendations at this point and need to be looked at and considered by government. But for marketers this should also act as a good guide to the things the government is likely to look at and clamp down on in the coming months and years and therefore the sorts of practices which should be stamped out immediately in your own business.

To keep abreast of what is happening in this rapidly developing space make sure you attend the next ADMA IQ Privacy & Marketing Compliance Course (instructor-led or self-paced) and stay subscribed to ADMA news to stay up to date!