ACCC keeps eye on tech giants' expanding reach

The ACCC is homing in on the rapid reach and influence of tech giants, and the impact that has on competition, data collection and emerging technologies.

In its seventh interim report [pdf] the competition regulator identified a need for regulatory reform as Amazon, Apple, Alphabet (Google), Meta and Microsoft continue expanding into emerging technology and other markets.

As each company has expanded beyond its initial offerings and into integral parts of everyday life, reform is critical, the commission argued.

Monday’s report builds on evidence from earlier recommendations that the government should update competition and consumer laws to safeguard consumers and businesses.

“As the ecosystems of digital platform service providers expand, the influence of those platforms on consumers grows,” the report said.  

“Digital platform service providers have extended their reach beyond their original offerings to generative artificial intelligence, health services, information storage, vast online retail marketplaces, education, mapping, music and financial products, just to name a few.

“The reach of digital platform service providers now involves products and services in many markets and multiple touch points with consumers.

"Australians are also increasingly reliant on services provided by digital platform service providers, such as productivity software tools, to work and communicate in business settings."

The report pointed to smart home devices and consumer cloud storage services as an example of one area where the digital platform service providers have expanded their scope.

The report recorded that 83 percent of Australian’s adults had a smart device such as a TV or speakers in 2022 and $8.4 billion was spent across “four key online retail marketplaces” between 2020 to 2021.  

The ACCC said while consumers can benefit from interconnected ecosystems tech businesses offer, the interconnectivity can also “increase consumer switching costs, discourage users from purchasing new products and services outside the ecosystem, and otherwise increase barriers to entry and expansion for rivals who offer standalone services or who do not have access to substitute data or connected products and services.”

The ACCC also said that “competitive harm may also occur where a digital platform service provider holds a ‘gatekeeper’ position and acts as an intermediary between users and businesses.”

“Competitive harm can occur in this context when a digital platform service provider can set the rules of access and exercise considerable control, including through practices such as self-preferencing.

“Self-preferencing by a firm can hinder rivals from competing effectively.”

The report offered the example of “certain digital platforms” expanding into new “gatekeeper roles in respect of voice assistant technology which may be incorporated into smart home devices, particularly Google (Google Assistant), Apple (Siri) and Amazon (Alexa).”

While the ACCC didn’t make specific findings of anti-competitive conduct in the seventh report, it did note risks associated with the widening reach of the companies, including barriers to entry and growth.

It also said these ecosystems “can exacerbate potential risks to competition and consumer welfare” due to a platform’s access to the high amount of consumer data.

“These risks include excessive data collection and the use of data to foreclose rivals. There are also potential harms to consumers, particularly for certain groups of consumers such as young and vulnerable ones.”

From all of this the ACCC said it backs “consumer measures and mandatory and enforceable obligations to apply to all platforms that provide certain digital platform services.”

“The ACCC also recommends legally binding codes of conduct, applied service by service, which require certain designated digital platforms to address issues including anticompetitive self-preferencing, tying and exclusive pre-installation arrangements.”

ACCC chair Gina Cass-Gottlieb said its “proposed reforms include a call for targeted consumer protections and service-specific codes to prevent anti-competitive conduct by particular designated digital platforms.”

“While the size and scale of digital platforms alone does not raise concern, there is a risk that this expansion may be driven by a desire from digital platforms to entrench or extend their market power,” Cass-Gottlieb said.