Necessity Arises: Crafting New Competition Laws for Digital Platforms

Australia’s competition watchdog said on Monday that new competition laws were required in response to the rapid expansion of digital platforms such as Amazon (AMZN.O), Apple (AAPL.O), Google (GOOGL.O), Meta (META.L) and Microsoft (MSFT.O) in the country. The Australian Competition and Consumer Commission (ACCC) said the growth of these platform service providers had increased the risk of them committing anti-competitive conduct, including invasive data collection practices that can restrict consumer choice and lock them into specific services.

In the latest report for its five-year Digital Platform Services Inquiry, the ACCC set out a series of recommendations that it says would address harm to consumers and small businesses in the market. These include recommending targeted competition obligations, based on principles set out in legislation, for sure ‘designated digital platforms’ that would be enforced alongside the continued use of existing anti-trust law to tackle issues such as exclusive dealing and resale price maintenance. The ACCC also wants to introduce sector-specific mandatory codes of conduct for designated digital platforms to prevent anti-competitive conduct and strengthen the verification of business users and reviews on the platforms.

These measures ensure Australia’s current competition laws keep pace with rapidly developing and innovative technologies like generative AI, cloud computing, and virtual reality. The ACCC is also considering changes to prosecuting breaches of anti-competitive conduct in the digital marketplace and clarifying its approach to merger control of these companies.

The ACCC’s report cites concerns about how these digital platform service providers invest in various sectors and technologies and expand their reach into people’s lives through interconnected products that offer convenience, functionality, and efficiency. The ACCC says it also needs to look at procedures adopted by digital platform service providers, such as self-preferencing their own products in online marketplaces or tying conduct where access to one product is conditional on using another.

It says it has already taken action against several of these firms for alleged anti-competitive behavior, and it will continue to pursue enforcement action where necessary. It is conducting ongoing scrutiny of these companies through its dedicated Digital Platforms Branch. It has used several interim reports to probe messaging services, apps, browsers and search, marketplaces, and digital advertising.

The ACCC also says it is working with companies to negotiate agreements to ensure local content creators and media outlets benefit from the growth of these services, not just global technology and entertainment corporations. But it warns the negotiations are likely to be lengthy and that the digital giants will be reluctant to give ground. This will be a significant challenge for the ACCC as it seeks to ensure that these agreements don’t result in a loss of competition and innovation while protecting consumers and preserving a strong level playing field in the digital economy. It has warned that failure to do so could lead to the government imposing a new regulatory regime for these platforms.