Digital giants have until July to improve consumer complaints handling with new dispute resolution processes, Treasury has announced while promising to investigate issues with “harmful” apps, and to address anti-competitive conduct that is harming Australian users.
The commitments – which are among the undertakings in the government’s official response to the Digital Platform Services Inquiry (DPSI) fifth report that the ACCC handed down last year – also include in-principle support for the ACCC’s recommendation that digital giants be forced to be more responsive to complaints about fake reviews, scams, and harmful apps.
Ongoing ACCC research into the prevalence of fake reviews has found the problem to be widespread, with one new analysis putting influencers on notice after finding that 81 per cent of surveyed influencers were posting potentially misleading advertising.
With digital giants reluctant to remove reviews except in very specific circumstances, Assistant Treasurer and Minister for Financial services Stephen Jones echoed the ACCC’s earlier findings that Australian businesses were being disadvantaged by digital giants’ refusal to provide transparent, responsive dispute mechanisms.
“We want Australians to have confidence that they can use digital platforms safely, and that they’ll be heard by the platform if something goes wrong,” Jones said in announcing the governments’ official response to the DPSI report.
“Online reviews are a valuable source of information for consumers and it is important that such information is genuine and reliable,” the response noted in accepting the ACCC’s observation that digital platforms “do not have adequate processes for consumers to raise issues and concerns experienced online.”
“Fake reviews can mislead consumers and result in significant harms for Australian businesses,” the government observed – alluding to reputational damage already caused during disputes involving the likes of Airbnb, Glassdoor, HealthEngine, Service Seeking, and many small Australian businesses.
Potential consumer mechanisms might include a ‘notice-and-action’ process; verification of “certain” business users; verification of advertisers of financial services and products; and better reporting on efforts to mitigate fake reviews on digital platforms.
The mooted creation of an ex ante digital competition framework would introduce legislation to address anti-competitive behaviour identified by the ACCC – for example, when digital giants self-preference other services in their portfolios that limit consumer choice, or where they force developers to use in-app payment systems that involve commissions of up to 30 per cent.
Noting that the ACCC had “presented a strong case” for ex ante legislation against anti-competitive behaviours of “certain digital platforms,” Jones directed Treasury to look into the design of such legislation next year.
The government will also undertake further work to “identify and classify” the problems created by harmful apps – potentially creating “specific obligations to address concerns relating to harmful apps”.
Thinking globally, legislating locally
As well as setting a July 2024 deadline for the industry to develop a voluntary code for managing consumer disputes, the government will direct Treasury to develop a potential legislative framework that would enable the creation of service-specific codes.
Such rules could, among other things, create new competition measures forcing “designated” digital platforms to comply with “targeted” mandatory codes of conduct designed to rein in their strength as ‘gatekeepers’ – a market-dominating role that the ACCC, like comparable authorities in the EU, has already flagged as requiring additional consumer protections.
Australia’s process will be developed with an eye on the outcomes of similar efforts in the EU, Germany, Japan, and the UK – with “extensive consultation” shaping a “consistent and cohesive” regulatory framework addressing digital giants’ most problematic behaviours while “ensur[ing] Australians continue to enjoy the benefits of the best technology in the world.”
ACCC acting chair Catriona Lowe welcomed the government’s support for its recommendations, noting that digital giants have “huge influence across the whole economy” and lauding recent moves to force them to be more proactive about scams and online safety.
Noting examples of “unfair and arbitrary treatment of smaller businesses that rely on the platforms to reach customers,” Lowe said the government’s proposed reforms “will ensure fairer and more transparent treatment of small and medium-sized businesses, allowing Australians to fully realise the benefits of participating in the digital economy.”
Despite the government’s deadline, just how well the industry can develop consensus around a dispute resolution mechanism remains to be seen: the ACCC discussion paper attracted over 90 submissions, with all digital giants weighing in – except Twitter/X, which was last month thrown out of Australia’s voluntary misinformation and disinformation code after refusing to engage with the Digital Industry Group (DIGI) over issues with its complaints handling.
Many submissions argue against the very reforms the government has now embraced: Google, for one, argued that “speculative harm is not suitable for ex ante regulation”, warning that such legislation “risks chilling innovation by outlawing conduct that is in fact pro-competitive” and arguing that many of the harms identified by the ACCC “we do not think are substantiated.”
“Economy-wide harm is not suited for a regulatory framework focused only on digital platforms,” Google wrote, arguing that online scams, fake reviews and opaque data practices “are unrelated to a lack of competition” and should be addressed by “economy-wide reforms” to consumer and privacy law “rather than platform-specific regulation.”
Opposition from recalcitrant digital giants must not delay the creation of Australian legislation, Lowe said, noting that “it is our experience that platforms rarely extend changes made in one jurisdiction to others.”
“It is critical,” she said, “that the Australian Government works quickly to implement these reforms so that consumers and small businesses aren’t left behind.”