Last week, the ACCC released its final report of the Digital Platforms Inquiry.
The inquiry is a near global first in understanding the changes that the arrival of the digital platforms have made to our society.
These changes have been rapid for both consumers and businesses.
Whilst many of these changes have been positive, there has been long standing deficiencies with regard to online competition, consumer protection, data protection and privacy.
I have been calling for such an inquiry since 2012.
Google’s and Facebook’s business models use consumer attention and data to sell highly-targeted advertising.
They offer services to consumers for free in order to obtain consumers’ attention and data, which they monetise, primarily via advertising opportunities to organisations.
The data held by Google and Facebook is particularly valuable not just because of the scale and scope of user data collected, but also its quality and accuracy, specifically key data (for example, gender and age) which are provided by users directly on sign-up and geo-location when accessing via a mobile smart device.
The ubiquity of the Google and Facebook platforms has placed them in a privileged position – resulting in their abuse of market dominance.
They act as gateways to reaching Australian consumers and they are, in many cases, critical and unavoidable partners for many Australian businesses, including news media businesses.
Many businesses advertise their services and products on these platforms, yet the ACCC identified potential concerns about whether advertisers are able to adequately verify whether advertisements on digital platforms are served to their intended audience.
Due to their market power and dominance, businesses are reliant on the services provided by Google and Facebook in order to reach customers.
These businesses seek to use information collected on current and potential audiences to target their advertising and digital platforms have the granularity and immediacy of user data to enable this.
The problems for business users are magnified by the ‘programmatic’ nature of online advertising products and services – in essence, unidentified algorithms.
Google and Facebook have both the ability and incentive to favour their own related businesses (self-preferencing) at the expense of other business users of the platform.
They also have the ability and incentive to favour a business with which they have an existing relationship (and through which additional revenue may be generated), such as websites that are members of their display or audience network, or use their ad tech services.
In the European Commission’s 2017 decision, Google was found to have systematically given prominent placement to its own comparison shopping service (Google Shopping) and to have demoted rival comparison shopping services in its search results.
The availability of an independent third-party ad verification service to set standards would help address concerns and provide advertisers with a degree of transparency.
Additionally, few consumers are fully informed of, fully understand, or effectively control, the scope of data collected and the bargain they are entering into with digital platforms when they sign up for, or use, their services. More education needs to be done with regard to this.
The Federal government has said it will respond to this report by end of 2019.
There is not a minute to waste.
Nigel Phair is the Director, UNSW Canberra Cyber.