On Friday, the ACCC published a report into social media, with one sweeping message: the watchdog reckons there’s need for more protections for consumers and small business.
The probe was first announced in August, with the ACCC at the time saying it was concerned there isn’t enough competition in the social media space and that very few companies have the monopoly. But it isn’t just the monopoly of your doomscrolling time the watchdog is worried about, it’s that so much e-commerce now happens within those platforms.
A few months and doomscrolls later, the ACCC put forward four recommendations in its 191-page report for how to fix competition on social media.
Firstly, the ACCC wants to see the introduction of new and expanded economy-wide consumer measures, including an economy-wide prohibition against unfair trading practices.
It also wants to see mandatory processes to prevent and remove scams, harmful apps, and fake reviews including. To make this possible, the ACCC wants all social media sites to be bound by a notice-and-action mechanism, and to verify business users, as well as advertisers of financial services and products. This would trickle down to its work on making sure influencers are disclosing paid content.
Meta is obviously the most significant supplier of social media services in Australia, facilitating Facebook, Instagram, and WhatsApp platforms. Meta’s closest competitors are TikTok, Twitter, and Snapchat.
“The overall time spent on Meta’s social media services is more than double the time spent on TikTok, and among its closest competitors it has retained over 60 per cent of the share of time spent on mobile apps since 2020,” the ACCC wrote.
There are a few others, in particular the Twitter clones that keep popping up, but competition is still quite limited. 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.
“Where there are few comparable alternatives available, consumers feel compelled to use a service because their social, family or work networks are on them,” ACCC chair Gina Cass-Gottlieb 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.”
With that in mind, the ACCC recommends the introduction of additional competition measures to “protect and promote competition in markets for digital platform services”. It wants this to go as far as being enshrined in legislation.
Yep, legislation.
“These should be implemented through a new power to make mandatory codes of conduct for ‘designated’ digital platforms based on principles set out in legislation,” the ACCC wrote.
Each code would be for a single type of digital platform service (i.e., service-specific codes) and contain targeted obligations based on the legislated principles.
Like the Media Bargaining Code, these codes would only apply to ‘designated’ digital platforms that meet criteria relevant to their “incentive and ability to harm competition”.
The ACCC wants these social media codes to address:
- Anti-competitive self-preferencing (an example of self-preferencing is Google returning a ‘smart home’ search with only Google’s own products)
- Anti-competitive tying (remembering Meta owns Instagram, Facebook, AND WhatsApp)
- Exclusive pre-installation and default agreements that hinder competition (such as Microsoft installing Skype on all Windows machines)
- Impediments to consumer switching (not being able to say port your Facebook photo album from 2011 to a new player)
- Impediments to interoperability (why some can’t work with others – looking at you, API-charging Twitter)
- Data-related barriers to entry and expansion, where privacy impacts can be managed
- A lack of transparency
- Unfair dealings with business users (exorbitant rates for advertising as an example), and
- Exclusivity and price parity clauses in contracts with business users.
The next step is for the government to consider what the ACCC has put forward. I’m sure it could work in some form, but if any sort of rules were to come into place, they’d need to be drastically overhauled and have consideration to the fact social media platforms are used globally, not just in Australia.
This article has been updated since it was first published.