Key points

Consistent with international examples, ACCC recommends ex ante regulation of:

  • “Designated Digital Platforms” based on quantitative and qualitative criteria intended to reflect the significance of the platform
  • Mandatory service-specific codes for Search, App Store, AdTech, Mobile OS and Intermediary Platform services
  • Targeted obligations to address specific issues including self-preferencing, interoperability, transparency exclusivity, data barriers to competition, unfair dealings, impediments to consumer switching and price parity clauses
  • Consumer protection measures to prevent and remove scams, harmful apps and fake reviews, with dispute resolution and complaint escalation processes

The highly anticipated fifth instalment of the ACCC’s Digital Platform Services Inquiry (DPSI 5) was released on 11 November 2022. DPSI 5 makes a series of recommendations for legislative reform to address issues relating to digital platforms that ACCC has previously identified could potentially harm consumers, small businesses and competition in general.

The report found that Australia’s competition and consumer protection laws on their own are not sufficient to address its identified concerns relating to digital platform services. In particular, the ACCC considers that there are challenges with existing laws and enforcement action to address concerns in fast-moving digital markets because of the length of time required to litigate under an ex-post regime. Specifically, the ACCC called out concerns relating to scams, harmful apps and fake reviews, inadequate dispute resolution, increased market concentration and instances of anti-competitive conduct. Accordingly, the ACCC recommends law reform to implement an ex ante regulatory framework for digital platforms that reflects similar principles to those of other frameworks, particularly the UK Competition and Markets Authority’s proposed framework and EU’s Digital Markets Act.

Despite these concerns, the ACCC recognises that digital platforms offer many valuable services to consumers and businesses, facilitating significant positive changes in our society including changing the way we work, study, communicate and do business. Nonetheless, the ACCC is concerned that the widespread use of digital platforms can create opportunities for potential misuse of the platforms in a way that could harm consumers, competition and the Australian economy.

The ACCC has sought to balance these competing notions in its thoughtful and measured report, which arguably reflects the evidence and principled-based approach to regulation taken by its new Chair, Ms. Gina Cass-Gottlieb. 

DPSI 5 shows that the ACCC is alive to the burden that increased regulation places on digital platforms and proposes measures that are intended to minimise this burden, where practical. This perspective is manifested through its call for targeted ex-ante regulations to address identified competition and consumer harms limited only to specific services, urging for coherence with other Australian regulatory frameworks and emerging international competition reforms.

In terms of Australia’s regulatory landscape, the Federal Government is already considering a range of further regulatory and policy initiatives to address overlapping issues and harms in the digital platform space. These initiatives include: the review of the Privacy Act and the Online Privacy Code, changes to the Australian Payments System, reviews to the State and Territory defamation laws, and the implementation of the Basic Online Safety Expectations by the Office of the eSafety Commissioner. Coherence between these initiatives and changes to competition and consumer laws will be vital.

The Australian Government has also been laying the groundwork for a unified approach to digital platform regulation. The Digital Platform Regulators Forum (DP-Reg) was formed in June 2022 to support a streamlined and cohesive approach to the regulation of digital platforms, DP-Reg brings together the ACMA, the ACCC, the OAIC and the Office of the eSafety Commissioner. The forum allows the regulators to share information and collaborate on how competition, consumer protection, privacy online safety and data issues intersect.

DPSI 5 is also focused on alignment with emerging international competition reforms for digital platforms. The ACCC identifies that international coherence could help reduce the regulatory burden for affected digital platforms that operate across jurisdictions and provide greater certainty to digital platforms and related firms. In turn international coherence may also help ensure Australian consumers and businesses benefit from law reform implemented globally.

Importantly, the ACCC does not see ex ante regulation as a complete solution supplanting ex post enforcement, considering enforcement of the competition and consumer protection laws as complementary, appropriate where particular conduct gives rise to specific breaches.

Now, we take a deep dive into the recommendations themselves and what they may mean for digital platforms, consumers and companies that interact with them and the broader Australia economy. 

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