This article is more than 1 year old

This article is more than 1 year old

Facebook and Google face new regulation of their advertising products and the algorithm that determines what appears in users’ news feeds and in search results.

The final report from the Australian Competition and Consumer Commission on its 18-month inquiry into the impact of Google, Facebook and other platforms in Australia was released by the treasurer, Josh Frydenberg, and the communications minister, Paul Fletcher, on Friday.

The report makes 23 recommendations to force more regulation on Google and Facebook, and to improve media competition.

A new digital platforms division of the ACCC would have responsibility to “lift the veil” on the advertising markets and algorithms used by Facebook and Google, Frydenberg said.

The division would be able to hold public inquiries covering five years and to compel companies to provide relevant information, the report said.

ACCC chair Rod Sims told Guardian Australia the regulator was already well equipped to take on the work.

“We’ve got a tonne of expertise,” he said. “You don’t need PhDs in information technology, we recruit graduates from all fields and they have the ability to get right stuck into this.

“If we need specialist help, we’ll go get it.”

Facebook and Google likely to face new regulators for news and ads Read more

The inquiries would look at the supply of ad services, whether there is sufficient transparency over the prices charged, and whether there is enough competition in the market.

The platforms will also be required to develop a code of conduct to ensure news businesses are treated fairly and transparently, and given early notifications about changes to news ranking. The code should also cover negotiations between the platforms and news businesses on the sharing of revenue from advertising, the ACCC said.

The report said 19.2 million Australians used Google every month, 17.6 million used YouTube (owned by Google), 17.3 million Facebook and 11.2 million Instagram (owned by Facebook). For every $100 spent in online advertising, $47 went to Google, $24 to Facebook and $29 to the rest.

The ACCC also recommended that digital platforms be required to implement a code of conduct to govern how they handled complaints about the spread of inaccurate information, which would be registered and enforced by an independent regulator such as the Australian Communications and Media Authority.

The Privacy Act should be updated to give users greater control over their personal information, the ability to move the data from one company to another, to have the data destroyed, and to require greater levels of consent from users before personal information is collected, the report recommended.

“There is no option other than to put in place the right regulatory and legislative regime to protect the public’s privacy,” Frydenberg said on Friday. “What this report finds is that so much personal data is being collected without informed consent.”

Facebook was fined US$5bn ($7.2bn) this week for deceiving users over their ability to keep their data private, after the Cambridge Analytica scandal.

The report also recommended the government implement the recommendations of the Australian Law Reform Commission and introduce a statutory tort for serious invasions of privacy.

Other recommendations include taxpayer funding for local journalism and media literacy organisations, and making donations to not-for-profit organisations engaging in public-interest journalism tax-deductible.

The report did not call for the big tech companies to be broken up, but did recommend changes to merger law to force the companies to inform the ACCC about the impact future mergers would have on competition.

Sims said this was to ensure that focus would be on meaningful changes in the immediate future.

“If your dominant recommendation is break-up then all the focus is on that break-up. We want the focus to be on all the harms we have identified,” he said.

“We believe that can work and be much more effective, than putting them off to the never-never while you wait five years for a break-up.”

He said even if, for example, Instagram and WhatsApp were broken up from Facebook, that there was no guarantee that those companies wouldn’t then dominate their own markets.

Sims said, however, that the report was the “start of a journey” and divestment could not be ruled out in the future.

Frydenberg said on Friday the government accepted the “overriding conclusion” of the report that reform was needed “to better protect consumers, improve transparency, recognise power imbalances and ensure that substantial market power is not used to lessen competition in media and advertising services markets”.

He said the companies would have 12 weeks to respond to the report before the government did so.

Google and Facebook’s digital industry association has called for the recommendations to be run against an “innovation test” to see how it would affect investment in technology and digital industry in Australia.

“We’re closely reviewing these recommendations to ensure they don’t bring unintended consequences to all digital businesses and the choice of digital products available to Australian consumers,” Digi managing director Sunita Bose said.

“A thriving technology sector means having large and small, local and global companies all alongside each other, creating an ecosystem where the calibre of employees, business opportunities and the choice of digital services available to Australians all increase.”

Sims said in response that innovation was not the dominant goal of the ACCC’s report.

“If your starting position is it is innovation first and all other considerations second, you are going to end up with a hell of a mess.

“Our judgement is if consumer privacy is getting invaded, then that is ultimately going to undermine innovation because consumers will withdraw from this world.”

The government plans to respond to the report in full by the end of this year.

In the meantime, the ACCC plans to pursue Google and Facebook for potential breaches under Australian consumer and competition laws using its existing powers, Sims said.

“We’ve got five active investigations underway, which we will be pursuing.”

This could include cases brought against the tech giants by companies working within the Facebook or Google ecosystem that the platforms have taken action against. One of the cases the ACCC is currently investigating is the collapse of Australian startup Unlockd after Google threatened to remove the company from its app store for violating its terms of use.



While a court injunction was granted to prevent the company being kicked off at the time, the news of the fight with Google made it difficult for the company to raise capital from investors, which the company claims led to its demise.

The ACCC did not intervene in that court case at the time, but Sims said the ACCC would “absolutely” consider joining onto similar court cases in the future.