The likes of Facebook and Google must face extra government scrutiny due to their “significant market power”, according to Australia’s competition watchdog.

The Australian Competition and Consumer Commission (ACCC) has released its preliminary report for the Digital Platform Inquiry, which outlines the implications of these powerful digital platforms.

“Digital platforms have significantly transformed our lives, the way we communicate with each other and access news and information,” ACCC Chair Rod Sims said.

“We appreciate that many of these changes have been positive for consumers in relation to the way they access news and information and how they interact with each other and with businesses.

“However, the operation of these platforms’ key algorithms, in determining the order in which content appears, is not at all clear.”

The inquiry also delves into ideas of ‘fake news’ and media businesses, with Sims calling on digital platforms to be held to account.

“News and journalism perform a critical role in society. The downturn in advertising revenue has led to a cut in the number of journalists over the past decade,” he said.

“Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content.

“Yet, digital platforms face less regulation than many media businesses.”

Market power requires greater regulation

The dominance of Facebook and Google must be tempered with a string of new anti-monopoly methods, according to the report.

A string of proposals around default browsers and search engines could prove to be the most controversial of the report’s initial 11 recommendations.

The fact Google is the default search engine on both Chrome and Safari – which together account for 80% of the Australian market for browsers – is a cause of concern according to the ACCC.

In a bid to address this “default bias” the report proposes:

“(a) suppliers of operating systems for mobile devices, computers and tablets be required to provide consumers with options for internet browsers (rather than providing a default browser), and

“(b) suppliers of internet browsers be required to provide consumers with options for search engines (rather than providing a default search engine)

“The ACCC considers that where options for internet browsers and search engines are presented, no option should be pre-selected.”

If such a move is to be endorsed by the Australian government, one would expect Apple and Google to dispute the decision.

Another source of concern for the ACCC is Facebook’s power when it comes to display advertising.

The report found that Facebook currently has a display advertising market share of 46% in Australia, while no other firm has a market share of more than 5%.

Similarly, Google and Facebook account for more than 50% of traffic to news media websites, resulting in consumers potentially entering into “filter bubbles” or “echo chambers”.

Media outlets stand set to lose if they do not have access to Google’s referral service, the report states.

The problem with the media

When it comes to the delivery of journalistic content on such platforms, the report proposes a separate review.

Such a review would form the basis of a new regulatory framework for all delivery of content in Australia.

The review should focus on the underlying principles of content production and delivery, the extent of regulation, content rules and enforcement, says the ACCC.

“The implementation of a unified, platform-neutral framework will affect and simplify existing regulations across different media, communications, and telecommunications industries,” details the report.

“The ACCC would intend to contribute its knowledge and expertise to such a review.”

The process of media convergence has now diluted the regulatory power of sector-specific bodies such as the Australian Communications and Media Authority (ACMA).

In response to this, a “unified and platform-neutral legal framework that covers both online and offline delivery of media content” could benefit Australian consumers.