Mergers, Scams and ‘Harmful’ Apps: The ACCC Has Put Big Tech on Notice

Mergers, Scams and ‘Harmful’ Apps: The ACCC Has Put Big Tech on Notice
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Digital platforms are back in the ACCC’s crosshairs, this time, however, the watchdog is looking into antitrust issues, focusing on existing laws (such as those around mergers and acquisitions) to determine if they’re sufficient in addressing competition and consumer harms.

What does that mean exactly? Well, the Australian Competition and Consumer Commission (ACCC) is concerned that the big tech giants are swallowing up the competition (the smaller players in the space, such as startups) thus reducing, well, competition and gaining a monopoly on a particular product/service by default.

The competition watchdog has had tech giants in its sights for years. It ramped up action in July 2019 when it published its whopping 623-page Digital Platforms Inquiry report.

The inquiry has already seen so much action follow, including that time Facebook pulled news from Australia because legislation didn’t quite understand technology and politicians were determined to have tech giants pay “their fair share”. And now, nearly exactly a year since the ACCC went toe-to-toe with the tech giants on the media bargaining code, it’s published a new paper, this time centred on competition law.

The discussion paper asks if Australia’s current competition and consumer protection laws, including merger laws, are sufficient to address the competition and consumer harms identified in relation to digital platform services or whether change is needed. The paper presents some possible approaches for the structure and content of any reform (it’s 122 pages, so it’s a chunky read).

But while discussing the approaches the ACCC might be able to take to revamping Australian law, it highlighted a few mergers made by big tech that has it concerned, mostly under the banner of ‘market power’.

ACCC on mergers and acquisitions

The ACCC has previously declared that certain large digital platforms, such as Google, Meta and Apple, have significant market power in relation to a number of digital platform services. Google in the supply of general search engine services and search advertising, the supply of mobile operating systems, as well as likely significant market power in relation to mobile app distribution and dominance in the ad tech supply chain. Apple similarly in the supply of mobile operating systems and likely significant market power in relation to mobile app distribution.

But while it has previously highlighted Meta (when it was Facebook) as having a dominance in the supply of social media services and in the supply of display advertising, the ACCC is now concerned about this whole metaverse thing. And just like the ACCC raised concerns with Google acquiring Fitbit, it is now concerned Meta is scooping up the competition in the metaverse space.

“Acquisitions of firms in adjacent, emerging areas like artificial intelligence and virtual reality may enable dominant digital platforms of today to position themselves to control new and emerging technology,” the ACCC wrote.

“This may be problematic where this enables dominant platforms to expand their ecosystems and erect barriers to entry or otherwise control access to key inputs (such as data) required for effective competition in services across those ecosystems.”

Meta, for example, has completed acquisitions of VR/AR tech, such as Oculus, Big Box VR, Beat Games and most recently, it announced plans to acquire VR startup Within. As we all know, the Mark Zuckerberg company is really going HAM with its whole metaverse thing.

The ACCC used these acquisitions as a segue into saying that a side effect of this behaviour is that the acquirer acts as a gateway or ‘gatekeeper’ between businesses and consumers. It also brings with it the concern that there is a risk that digital platforms with market power may use this to give preferential treatment to their own products or services (self-preferencing) and is considering what it can do to spark competition, not limit it. This, of course, has raised the debate over data portability that the ACCC has raised before.

Similar to how the Consumer Data Right works, this option could allow consumers to ask their data be provided to their new platform of choice.

A tonne of potential for consumer harm

The ACCC is also concerned that a lack of transparency about what data is being collected and how it is being used, as well as an absence of effective consumer control over that data, allows user data to be used in ways you might not actually want (or even know about). The ACCC pointed to online tracking for targeted advertising and third-party data-sharing – the ACCC wants to also put a wall between these two things, that is, block the ability for Google (for example) to use its Maps data for advertising (it says it doesn’t do this, but the ACCC is considering making this law).

But these concerns with data practices also extend to mobile apps. The watchdog is questioning just how sufficient the steps that Google and Apple (via their respective app stores) take in ensuring user privacy when an app is downloaded. This would expand the scope to harms arising from products and services provided by, or distributed on, digital platforms. Potential regulation, it said, would address specific harms from scams, malicious apps and fake reviews.

On scams, the ACCC says it’s alarmed by the ease with which third party scammers use digital platforms to conduct scams and distribute advertisements containing false representations, and the sophisticated nature of these scams (it has a lot to do with this through its Scamwatch arm).

Lastly, on ‘harmful apps’ (which the ACCC considers apps found on Apple’s App Store and Google’s Play Store that include ‘real prize’ scams, malware, apps facilitating fake product or service scams, apps with bait and switch features, as well as subscription traps), the paper says such apps can result in considerable consumer detriment. Australian consumers reported over $36 million lost to scammers using mobile apps in 2021, it adds.

These are just some of the issues the ACCC raised. The final report on whether existing laws are sufficient is due in September, where the ACCC will likely lay out its recommendations to the government on what changes need to be made to ensure the consumer is the one benefiting in all of this.