The head of Australia’s competition watchdog has launched a rare intervention, warning the Albanese government it cannot afford to “vacate the space” in regulating tech giants such as Google, Amazon and Meta. She said the government must act urgently on recommendations from a 2022 report that has been largely ignored since being handed to the government.
Australian Competition and Consumer Commission chair Gina Cass-Gottlieb had been in the job for only six months when the significant fifth interim report for the digital platform services inquiry was delivered to the new federal government, recommending a dramatic shake-up of big tech regulation, starting with new laws and “significant financial penalties” to deter the most harmful conduct.
Since then, the government has gone shy. It released an official response in December but only accepted the report’s recommendations “in principle”, with a promise to consult for the second time on outcomes.
Cass-Gottlieb is impatient as the world moves on without Australia.
“What we think is really important for policymakers to focus on is that the world is going to be divided into the jurisdictions that don’t regulate, where these major gatekeepers have the absolute discretion to adapt their business model, to keep adapting it,” she tells The Saturday Paper.
“So that will be the world in which there will be no intervention, and these gatekeepers will have absolute discretion to the harm of the local businesses and local consumers. On the other hand, there will be the jurisdictions which are regulating, and those jurisdictions currently include Europe, the UK government, Japan, South Korea, Brazil and India.”
While News Corp and other publishers wage war against Facebook’s parent company, Meta, for decommissioning Facebook’s news tab in Australia, ostensibly to avoid having to pay publishers tens of millions of dollars for their journalism, Cass-Gottlieb warns the problem is much bigger than the news industry.
As scams run rampant on digital platforms and the big companies hoover up any competition, the effect of their market power is both personally and economically stifling. One of Australia’s richest men, Andrew “Twiggy” Forrest, is spending a small fortune to sue Facebook in the United States over a series of cryptocurrency ads that feature his name and likeness, which have led to Australians losing hundreds of thousands of dollars.
“You take money from people to run ads and some of those ads are telling lies,” Greens Senator Sarah Hanson-Young told Meta Australia’s regional director of policy, Mia Garlick, during a parliamentary inquiry on June 28.
“At what point do you take responsibility for platforming and making profits off lies?”
The tense and often prickly hearing, which featured witnesses from Meta, Google and TikTok, was an exemplar of the assured power wielded by the corporations. Garlick denied it was selling lies by scammers.
“Well, it’s working. They’re getting to them,” Hanson-Young responded. “They’re using your technology, they’re using your platform, and you’re making buckets of money off it, aren’t you?”
Garlick responded: “No, we’re not.”
Hanson-Young said she thought that was “a dishonest answer to this committee, a very dishonest answer”.
The ACCC has estimated Meta’s local revenue in Australia to be $5.1 billion each year yet, at last filing. Garlick said it paid $35.4 million tax on revenue of “$209 million”.
Independent MP Zoe Daniel asked if it was “fair to say that Meta offshores as much of its operation as possible to minimise the appearance of its profits and the amount of tax that it pays in Australia?”
No, Garlick said.
As Cass-Gottlieb notes, one of the last pieces of legislation passed by the UK parliament before Prime Minister Rishi Sunak called a snap election was the Digital Markets, Competition and Consumers Act 2024, which is remarkably similar to the blueprint offered by the ACCC in its 2022 report to government.
The UK will now enact what Cass-Gottlieb wants for Australia: new laws granting regulators the power to build enforceable codes of conduct with strict penalties that allow authorities to move faster in responding to consumer and market threats.
Australia has one such code already, the News Media Bargaining Code, but Cass-Gottlieb is unable to say whether she thinks it is working properly because the ACCC has provided that advice to government.
In practice, the code has never actually applied because no tech platform has been “designated” under it. The ACCC is contemplating actually designating the tech giants under “issue specific” codes with penalties and enforcement approaches that would apply to any wrongdoing. One could target privacy issues; another, practices that punish consumers or businesses wanting to switch platforms; and another could deal with only search engines.
“The ACCC’s view is that significant financial penalties must be available for breaches of new consumer and competition obligations for digital platforms,” the 2022 report says.
“To effectively deter harmful conduct, the quantum of available penalties should reflect the financial strength of the global digital platform firms likely to be subject to the framework.”
Under Australian law, updated in late 2022, companies can be fined the greater of up to 30 per cent of their adjusted yearly turnover or $50 million for breaches of their legal obligations, but this is based only on their domestic revenue. The new UK law and others already in force in the European Union calculate these fines on the global revenue to circumvent firms offshoring revenue and calculating that breaches are an acceptable cost of doing business.
While the ACCC can target scams and fraudulent practices, the big-ticket items on Cass-Gottlieb’s wish list will be reserved for what she calls the digital “gatekeepers”. Similarly, the UK law is aimed at operators that have “strategic market status” because they possess “substantial and entrenched market power”.
Cass-Gottlieb wants the power to force global tech companies back to a more equal playing field. But does the Australian government have the appetite?
A decision over whether to designate Facebook’s Meta after it pulled out of news bargaining deals has been languishing. Doing so would trigger the code. Similarly, the eSafety Commissioner faltered in her attempt to have the site formerly known as Twitter, Elon Musk’s X, take down live-streamed video of a terror attack at a church in Sydney, although the commissioner is still trying via the tribunal system instead of the courts.
Courts, Cass-Gottlieb says, will still be necessary, but they are not a solution.
“So, we have got the ability under our competition law to take action against, for instance, anti-competitive self-preferencing and tying. The problem is, firstly, we need the evidence of it. Secondly, we need to be alerted to it,” she tells The Saturday Paper.
“When you go to court, necessarily, you have to confine what you’re raising to the very specifics of what then becomes past conduct. So, the Epic Games action against Google and Apple that is currently in court, it has taken four years to get to court.
“By the time it concludes and if there are appeals, it will be many years after the initial conduct. So, it’s limited only to what was before the court. It’s in the past and harm continues for the whole period that you’re going through that court process, and at the end of the court process these businesses are always changing their technological model and their business model.
“They are incredibly agile and capable of making change, and do so. They do so in order to respond to what they’re seeing amongst consumers, to perfect the way in which they are developing their technology. They are also buying likely competitors, expanding ecosystems.”
It is no use, Cass-Gottlieb says, throwing up our hands and saying it’s all too much to deal with. Nor is it useful to ask if Australia can solve this issue on its own.
“I think one very important principle is that policymakers can’t vacate the space when you are looking at power and services that are so fundamental and critical as these gatekeepers are,” Cass-Gottlieb says.
“They are intermediaries in every key part of our lives and business. So, we can’t vacate the space. The second point is we get a capacity where we move together with other international jurisdictions, and these are significant jurisdictions … It increases the capacity to have effective and real change and score regulatory success.”
In its response to the ACCC’s 2022 report, the Albanese government took a particular focus on the consumer harms. Launching the National Anti-Scam Centre, or Scamwatch, now hosted by the consumer watchdog, is in a sense an easy win. Similarly, it has launched a complicated political push to ban social media for people under 16 – something that has not been achieved anywhere in the world – in response to media campaigns. Peter Dutton strongly supports this approach.
The Saturday Paper has previously reported the tech platforms view Australia as ground zero for regulation, as other nations attempt to replicate the world-first news bargaining code.
Cass-Gottlieb sees all of this as proof the world will be split into the jurisdictions that bothered to regulate and those that were left behind.
“One of the key reasons we are proposing this change is that we know that we are not able to be as effective as we need to be with the legislative tools, the legal tools that we have currently,” she says.
“That is why we’re proposing this form of additional legal measures and tools to be able to address digital platforms with such a critical position in the Australian economy.”
In December, the government noted it “will task Treasury to commence work on the design and form of a possible legislative framework which could enable the creation of service-specific codes”, as recommended by the ACCC. That model has yet to be developed.
“We are very keen to see it, because this year, 2024, is a critical period in which other jurisdictions internationally are moving, and we want to move and give these benefits to Australian businesses and consumers in the same timeframe as that is occurring overseas,” Cass-Gottlieb says.
Meanwhile, platforms such as Meta continue to play barely disguised games with the parliament.
Asked how many employees were in the Australian operation last month, Meta’s Mia Garlick said it was “more than dozens and less than thousands”.
Transparent to the end.
This article was first published in the print edition of The Saturday Paper on
July 6, 2024 as “Exclusive: ACCC pushes to regulate tech platforms”.
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