ACCC Final Report Signals Push for Digital Platform Regulation 

 For years now, the Australian government has been investigating the country’s internet landscape, hoping to address the consumer and competitive harms it attributes to major digital platforms. Now, it seems poised to do just that. On June 23rd, the Australian Competition and Consumer Commission (ACCC) published the final report of its Digital Platform Services Inquiry. Amid the publishing of this report, the agency has made dozens of regulatory recommendations and is seeking greater authority to address online competitive and consumer risks head-on in the coming years. Assessing the implications of this latest report will be vital to understanding the future of digital platform regulation, both in Australia and overseas. 

The ACCC has laid out its rationale for conducting this investigation. With 94% of Australians aged 14 and over owning a smartphone, and over 99% of adults accessing the internet (up from 90% in 2019), digital platforms have never before had such influence over Australians’ day-to-day lives. Furthermore, the report highlights the critical role these platforms play in connecting Australia with the rest of the world, allowing Australian businesses, especially small and medium-sized enterprises, to more easily reach international customers. Given the immense power these platforms wield over Australian consumers and businesses, combined with a recent wave of international regulation such as the EU’s Digital Markets Act, or the UK’s Digital Markets, Competition and Consumers Act, it should come as no surprise that Australia is eager to take similar action. 

In its report, the Commission decries several consumer harms, including manipulative UI design practices (dark patterns), subscription traps, and practices intended to limit customers’ abilities to be informed about their rights and obligations. The Commission highlights research by the Consumer Policy Research Centre (CPRC), 83% of Australians had negative experiences from a website or app using design features aimed at influencing their behaviour, with 75% of Australians with online subscriptions having had some form of negative experience when trying to cancel a subscription. The Commission is especially concerned that 10% of Australians with subscriptions have given up trying to cancel a subscription, instead opting to pay for services they no longer use. Concerningly, the CPRC also found that large platforms have not adjusted cancellation processes globally in response to the EU’s Digital Services Act, reinforcing the need for domestic regulation. 

Similarly, the ACCC takes note of some alleged anti-competitive behaviours on the part of digital platforms. The report explicitly denounces the self-preferential nature of certain app marketplaces, such as the App Store and Google Play Store, raising concerns that digital platforms can use their control over these marketplaces to stifle competition from third-party services. Additionally, they highlight that the limited interoperability between messaging services and operating systems, as with iMessage and iOS, may hinder smaller standalone services’ ability to compete with larger platforms.  

Furthermore, as generative AI continues to gain momentum among digital platforms, the Commission has expressed its concerns around this emerging technology. First, they note a significant degree of vertical integration taking place across the field, with many leading digital platforms integrating generative AI into their core products and services. Furthermore, the vast energy and water resources required to train and deploy AI models, combined with their currently unprofitable nature, may prove to be significant barriers for smaller developers hoping to enter the generative AI sector. As such, the ACCC is very keen on monitoring the developers of such AI models to mitigate the risks of future anti-competitive behaviour. 

While one would hope that Australia’s existing laws and enforcement tools could adequately address these matters, the Commission draws attention to the ways in which Australia is currently unprepared to deal with these threats. Pursuing enforcement cases through local courts can prove to be restrictively slow, with parties often appealing at several junctions, allowing potentially anti-competitive behaviour to continue for extended periods as a case navigates Australia’s legal system. The report continues, “A case-by-case approach to anticompetitive conduct does not present an efficient mechanism to address systemic harms in dynamic and interrelated markets… platforms can easily adapt their practices to maintain dominance.” 

Although the ACCC has made clear the inadequacies of Australia’s current regulatory environment, it lays out several recommendations to address these aforementioned issues. Firstly, to address online consumer protection concerns, it highlights the need for an economy-wide prohibition against unfair trading practices and the strengthening of unfair contract terms laws. Furthermore, it recommends more targeted efforts against digital platforms to protect users from scams and other harmful content. These measures include mandating a “notice-and-action” mechanism, verification of certain business users, additional verification of advertisers of financial services and products, and improved review verification disclosures.  

Next, in regard to digital platforms’ alleged anti-competitive behaviour, the ACCC recommends that the government “support targeted obligations” to address, among other issues: anti-competitive self-preferencing, exclusive pre-installation and default agreements, impediments to consumer switching or interoperability, data-related barriers to entry and expansion, and exclusivity or price parity clauses in contracts with business users. Finally, the report also requests that the government “adequately resource[s] the ACCC to continue to monitor changes to services it has examined throughout its inquiries to date, as well as emerging services such as generative AI.” 

This month, Australia has taken a major step forward in its journey to regulate digital platforms. With its concerns articulated and policy recommendations announced, the Commission has laid the groundwork for an ambitious new digital framework. The challenges it identifies are not unique to Australia, but the report signals that Australia is no longer interested in waiting for international bodies to take action. How the government acts in the coming months will shape not just the future of digital platform oversight in Australia but its ability to safeguard competition, consumer welfare, and technological innovation in the years ahead.