Big tech’s expansion into other markets sparks ACCC concern

The ACCC has raised concerns over big tech’s expansion into emerging technology and other markets recommending regulatory reform over these companies.

In a recent interim Digital Platform Services Inquiry report, the consumer watchdog named Amazon, Apple, Google, Meta and Microsoft noting their “expanding reach into our daily lives and livelihoods – via multiple interconnected products and services – is exacerbating risks of harms to competition and consumers.”

The report, which is the seventh in the Digital Platform Services Inquiry, uses smart home devices and consumer cloud storage as examples to explore the impacts of the expansion of digital platforms into different products and services.

Gina Cass-Gottlieb, chair of the ACCC said the significant investments made by digital platforms to develop new technologies are having a transformative effect on our society and economy.

“The continued expansion of digital platforms has also increased the risk of those platforms engaging in harmful behaviour, such as invasive data collection practices and consumer lock-in practices that can reduce choice and stifle innovation,” she said.

“Robust competition is critical for markets to function well. As the digital economy evolves and the ecosystems of digital platforms continue to expand, we must be equipped with the appropriate regulatory tools to ensure effective competition in these markets.”

Cass-Gottleib said this report is further evidence supporting the ACCC’s earlier recommendations to update competition and consumer laws to ensure consumers and businesses continue to benefit from the opportunities created by digital platform services.

“Our proposed reforms include a call for targeted consumer protections and service-specific codes to prevent anti-competitive conduct by particular designated digital platforms,” she said.

These digital platforms could bring potential competition harms, the ACCC said.

The consumer watchdog noted that digital platforms with significant market power can use practices like bundling or tying of products, pre-installation and default settings to limit customer choice or deter innovation from competitors.

Consumer cloud storage is commonly embedded within digital platform operating systems, devices and productivity suites and in some cases is no longer available as a standalone product.

Consumers may use a bundled cloud storage service even when there are more innovative or high-quality alternatives available to them.

Coordination decisions, such as among families who use the same services to share files or photos, or lock-in effects arising from the cost and inconvenience of transferring files to a new service, can further deter consumers from switching to a different service.

Cass-Gottlieb said integrated cloud storage services can be convenient for consumers, but they can also discourage consumers from purchasing new products and services outside the ecosystem.

“This makes it harder for competitors who offer standalone services to compete and potentially stifles the development of innovative products,” she said.

When a digital platform holds a crucial ‘gatekeeper’ position between consumers and businesses, it has the opportunity and incentive to harm competition, the ACCC noted.

For example, certain digital platforms can exercise control through self-preferencing - favouring their own products and services over competitors who rely on the platform to reach consumers.

Some digital platforms have expanded into new gatekeeper roles with voice assistant technology incorporated into smart home devices. Voice assistants like Google Assistant, Siri and Alexa may allow Google, Apple and Amazon to encourage users to favour their products and services to the detriment of rivals.

The ACCC recommends new service-specific mandatory codes of conduct for particular ‘designated digital platforms,’ based on principles set out in legislation.

This new regulatory regime would work alongside Australia’s existing competition laws to address anti-competitive conduct, unfair treatment of business users and barriers to entry and expansion by potential rivals.

The ACCC has also proposed new mandatory obligations on all digital platforms to address scams, harmful apps, fake reviews, including notice and action requirements and stronger verification of business users and reviews.