Despite the popularity of TikTok, Meta still has the market power: ACCC

TikTok and BeReal may be growing in popularity but Meta still has significant market power in social media services according to a new report from the ACCC.

The Digital Platforms Services Inquiry noted that Australians continue to spend more time on Facebook and Instagram combined than any other social media platform, and Meta’s services have the most Australian users and advertisers.

The report examined competition between social media services in Australia and how consumers and businesses interact with social media services.

Gina Cass-Gottlieb, chair at the ACCC said social media services are an essential part of our daily lives but concern is growing over the level of influence social media platforms hold over users.

She said, “Limited competition in these services can lead to poorer outcomes for consumers and small businesses. This report reinforces the need for reform, including specific mandatory processes for consumers and businesses to report and social media platforms to remove scams, harmful apps and fake reviews, and establishing an external Digital Ombuds Scheme.”

Australians reported losses of over $80 million to scams initiated on social media alone. This is up from reported losses of $56 million in 2021 and $27 million in 2020.

Cass-Gottlieb said, “Advertisers have raised concerns about being unable to choose the best services to suit their needs because of the lack of transparency and accuracy of advertising performance data provided to them by social media platforms."

Impact on SMBs

The inquiry also highlighted a range of harms to consumers and small businesses occurring across social media services, including excessive data collection practices, lack of effective dispute resolution options, prevalence of scams, lack of transparency for advertisers and inadequate disclosure of sponsored content by influencers and brands.

The ACCC considers that Meta’s competitors are not a significant competitive constraint as they are differentiated in their features, how they are used, and in their size and demographics of their user base.

Barriers to entry also remain high, and Meta’s users can face high switching costs as Meta’s platforms (particularly Facebook) have attracted and retained many users for a significant period of time who have invested in uploading material and building a large network of social contacts.

While younger Australians are more likely to use multiple social media services, including new platforms like TikTok and BeReal, older Australians use fewer platforms and still rely heavily on Facebook and Instagram.

Limited competition

The ACCC considers that limited competition among social media platforms means users are more likely to accept conditions they otherwise would reject if there was greater choice.

Cass-Gottlieb said where there are few comparable alternatives available, consumers feel compelled to use a service because their social, family or work networks are on them.

She said, “This creates a ‘take-it-or-leave-it' situation which can result in consumers accepting unwanted collection and use of their data. Markets can be less dynamic and the quality of services lower due to market power. Consumers can also ‘pay more’, where the price they pay is exposure to higher levels of advertising and data collection.”

In its Digital Platforms Regulatory Reform Report, released in November 2022, the ACCC made a range of recommendations to address harms to Australian consumers, small businesses, and competition.

Cass-Gottlieb said this report builds on the ACCC’s previous work in relation to digital platforms by identifying competition and consumer harms in relation to social media services.

“We continue to support reforms to address the harms we’ve observed, including an economy-wide prohibition against unfair trading practices, targeted consumer protections and service specific codes of conduct that would apply to designated digital platforms,” she said.

“Globally, similar reforms continue to be progressed. For example, the European Digital Markets Act obligations due to apply in March 2024, and the UK Digital Markets, Competition and Consumers Bill being recently introduced to parliament.”