Key ACCC report sets the stage for tougher digital platform regulation

In its fifth interim report, the ACCC recommended new competition and consumer protections in the digital platforms services sector. On 2 December 2024, the Albanese Government announced that it is proposing a new digital competition regime to protect consumers and bolster innovation and competition. The proposed regime is set to:

• impose rules on large digital platforms that meet specified criteria for periods of five-years at a time to address issues experienced by Australian consumers and businesses using these platforms; and
• empower the ACCC to enforce the regime, investigate potential breaches and enforce penalties of up to $50 million, or 30% of turnover, for non-compliance.

To support the rollout of the regime, the ACCC makes two further recommendations. 

• Recommendation 1: The ACCC continue to have a monitoring function for emerging digital technologies under the proposed digital competition regime.
• Recommendation 2: The Australian Government should adopt a whole-government approach to digital platform regulation and endorse the Digital Platform Regulators Forum (DP-REG) as a permanent forum, with enough resources to collaborate and share information between themselves.

Throughout the Inquiry, the ACCC identified a number of practices in the digital platform sector that may be unfair – but do not currently breach the Australian Consumer Law. These include: 

• subscription service providers making it difficult for consumers and small businesses to end their subscriptions;
• failure to implement reasonable security measures to protect their customers from instances of fraud carried out by third parties; and
• failure to disclose changes to a product in circumstances that a consumer would reasonably expect to be informed of the change.

Following a period of consultation on approaches to addressing unfair trading practices in the second half of 2023, the Government announced that it would address a range of unfair trading practices via reforms to the Australian Consumer Law. The ACCC continues to support this initiative

The ACCC continues to draw on international efforts to regulate digital competition in the Report and throughout the Inquiry more broadly. Particular attention has been given to the:

• European Union Digital Markets Act,
• United Kingdom Digital Markets, Competition and Consumer Act,
• German GWB Digitalisation Act. 

All of these pieces of legislation share similarities with the proposed regime, in that they set out rules and obligations that apply to large digital platforms that meet certain criteria or thresholds. 

The ACCC has identified key digital platform categories they believe requires monitoring: 

• Online private messaging platforms: Not a priority under the proposed regime, but the report states that trends in the functionality and consumer usage of these platforms may impact competition and consumers in the future.
• App marketplaces: the ACCC views app marketplaces as crucial services, providing a critical gateway for innovation to reach consumers. The ACCC is concerned that there are only two dominant mobile operating systems and app marketplaces in Australia (Apple and Google Android) and considers that a service-specified code for app marketplaces and mobile operating systems is a priority under the Proposed Regime.
• General online retail marketplaces: Although no single entity dominates the online marketplace in Australia these platforms require high capital investments and strong economies of scale which can limit new entries and entrench established players. Accordingly, the ACCC deems it critical that the proposed regime enables the ACCC to monitor competition issues in general online retail marketplaces (eg Amazon, eBay, Kogan, Temu, Shein etc).
• Ad tech services: the ACCC identifies that the competition for ad tech services is currently ineffective in Australia, given Google’s dominance of the supply chain. Accordingly, the ACCC considers that ad tech services should be a priority service for designation under the proposed regime.

The Report also identifies the following categories where no action is recommended yet, but future monitoring may be warranted. 

• Cloud computing: the ACCC is concerned that there may be high barriers to entry in the provision of cloud services and that the vertical integration some large cloud providers currently rely on may give rise to anti-competitive practices such as self-preferencing, bundling or tying to their own products.
• Generative AI: generative AI uses algorithms trained on data to generate new content in response to user prompts, offering businesses and consumer improved and entirely new products and services. However, the ACCC notes that while generative AI promises substantial benefits, it also raises competition and consumer concerns around market concentration, data use consent, and the environmental inefficiencies of large-scale model training.
• Online gaming: online gaming is popular form of entertainment and social connectivity in Australia which can be monetised in several ways, including one-off purchases, subscription fees, in-game advertising and in-game purchases. The ACCC aims to promote greater transparency regarding licensing limitations and subscription traps, loot boxes, and manipulative practices leading to accidental or unwanted purchases.