Australian consumer watchdog calls for new laws to stop online fraud and curb anti-competitive behavior | Australian Competition and Consumer Commission (ACCC)

Australia’s competition regulator has run out of patience with digital platforms like Google and Facebook and is recommending new laws to crack down on scams, address consumer complaints and curb anti-competitive behaviour.

The Australian Competition and Consumer Commission (ACCC) has released its fifth progress report on digital platforms since it began investigating in 2017, and has called for industry-specific legislation, saying it has identified “harms” to consumers and competition as “widespread, rooted and systemic”.

It also wanted digital platforms to be required to provide easy-to-use fraud alert processes, noting that losses reported by Scamwatch from schemes on social media and mobile apps nearly doubled to $92 million in 2021.

Google and Facebook have tried to address competition concerns held by Australian media companies, who have objected to tech giants using their production without paying for it. The agreements led to millions returning to local newsrooms.

But there are still other competition concerns, including the way digital platforms prefer their services (particularly in advertising), the use of data they collect and the connection of customers to their services.

It comes as Twitter, which was bought by billionaire Elon Musk, said it would lay off half of its employees, including Australian ones, many of whom are engaging in moderation.

In its most recent semi-annual report, the Competition and Competition Commission (ACCC) said it had “identified consumer and competition harms across a range of pervasive, entrenched, and systemic digital platform services.”

“The critical positions that digital platforms occupy, as ‘gatekeepers’ or ‘intermediaries’ between businesses and consumers, means they have a wide-ranging impact across the economy, making the reforms we are recommending critical and necessary for all Australians,” Gina, Chair of the ACC said Gottlieb.

The report called for legislation that would require digital platforms to provide easy-to-use processes for reporting scams, malicious apps and fake reviews, and establish an appropriate dispute resolution process.

It said losses reported to Scamwatch from mobile and social media fraud nearly doubled to $92 million in 2021.

“This shows that digital platforms need to do more to prevent their users from being deceived,” Kass-Gottlib said.

“We also need more action on fake comments from platforms whose services feature ratings and reviews, including those that appear in search, social media, app stores, and online marketplaces,” she said.

The watchdog said consumers routinely report difficulties in resolving disputes with digital platform companies, with few avenues to contact and follow up on problems.

It also recommended an ombudsman system for the new digital platform and wants a verification system for some business users. Another proposed requirement is that digital platforms publish their audit checks.

The ACCC noted that similar reforms were taking place abroad and that the reform in Australia would be in line with the global shift towards placing a greater burden on digital platforms to be more responsible and responsive.

The report also suggested mandatory codes of conduct for certain platforms noting that the development of only two or three major players led to a range of anti-competitive behaviour.

“We advocate a service-specific code of conduct that applies to certain digital platforms,” Cass-Gottlieb said.

The ACCC said it has observed a range of behaviors by the most powerful digital platforms, including subjective preference, exclusivity agreements, blocking switching and blocking access to critical hardware, software, and data inputs.

“We are also concerned about the lack of transparency and the ability of digital platforms with market power to degrade the quality of the services they provide, including the terms of service for business users,” she added.

“The need to prevent and deter such behavior as it reduces competition is the main focus of this report.”

He also noted hundreds of acquisitions by platforms such as Google, Meta, Apple, Microsoft and Amazon, many of which include emerging or potential competitors.

Digital platforms were also asked to develop a separate code to deal with fake news under the auspices of the Australian Communications and Media Authority. It has also been criticized for being too restrictive.

Treasurer Jim Chalmers said the government is studying the latest recommendations of the US Coordinating Committee, and will consult publicly to ensure Australia has the right regulations in place to be a leading digital economy.

“The Albanian government is already working to strengthen consumer protection, including through recently introduced legislation to ban unfair contract terms and increase penalties for anti-competitive behaviour, and has committed to creating a new national anti-fraud centre,” he said.