Digital Platforms Inquiry - accc.gov.au

1 2018 Preliminary reportDigital Platforms InquiryISBN 978 1 920702 47 2 Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601 Commonwealth of Australia 2018 This work is copyright. In addition to any use permitted under the Copyright Act 1968, all material contained within this work is provided under a Creative Commons Attribution Australia licence, with the exception of: the Commonwealth Coat of Arms the ACCC and AER logos any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright, but which may be part of or contained within this details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY AU licence. Requests and inquiries concerning reproduction and rights should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT notice The information in this publication is for general guidance only.

2 It does not constitute legal or other professional advice, and should not be relied on as a statement of the law in any jurisdiction. Because it is intended only as a general guide, it may contain generalisations. You should obtain professional advice if you have any specific concern. The ACCC has made every reasonable effort to provide current and accurate information, but it does not make any guarantees regarding the accuracy, currency or completeness of that information. Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication. This should be done prior to each publication edition, as ACCC guidance and relevant transitional legislation frequently change. Any queries parties have should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 11 Platforms Inquiry preliminary reportContentsExecutive summary 1 Overview 1 The growth of Digital Platforms 2 Digital Platforms .

3 Their business model and their market power 4 Digital Platforms and advertisers 5 Digital Platforms and news media businesses 6 Digital Platforms and consumers 7 What can be done to address these issues? 8 Preliminary recommendations 9 Proposed areas for further analysis and assessment 14 The next steps 18 Ongoing investigations under the Competition and Consumer Act 18 Introduction 19 Terms of Reference

4 19 The ACCC s Inquiry to date 19 Structure of this report 19 Chapter 1: The rise of Digital Platforms What are Digital Platforms ? The rise of the Digital Platforms The role of Digital Platforms in news and journalism A disrupted media sector 31 Chapter 2: Do Digital Platforms have market power? Scope of the ACCC s market power assessment How google and Facebook monetise their services Market power in social media services Market power in search advertising Market power in display advertising Market power in news media referral services Preliminary recommendations 63 Chapter 3: Digital Platforms and advertisers Digital advertising in Australia The effect of Digital Platforms on advertisers 75 Chapter 4.

5 Digital Platforms and news media businesses News publication and broadcasting in an online world The supply of news referral services by Digital Platforms How the market power of google and Facebook affects the supply of news referral services The roles of Digital Platforms in Australian media markets Regulatory imbalance in Australian media markets The impact of regulatory imbalance Practical challenges in requesting removal of content from Digital Platforms 152ivDigital Platforms Inquiry preliminary reportChapter 5: Digital Platforms and consumers Consumers bargain with Digital Platforms Consumer attitudes regarding their user data The nature of consumer consents Disclosures in privacy and data policies The extent of consumer control The current privacy and data protection regulatory framework Preliminary recommendations 223 Chapter 6: Choice and quality of news and journalistic content What are news and journalistic content ?

6 The public interest value of news and journalism The inherent difficulties in providing news and journalism Analytical framework for assessing choice and quality A brief history of journalism production in Australia How the internet and Digital Platforms disrupted the commercial media business model Impacts on the resourcing of journalism in Australia Impacts of Digital Platforms on journalistic coverage in Australia Impacts on the consumption of journalism Areas for further assessment 290 Chapter 7: Future trends Emerging developments in online news New devices, new data Artificial intelligence, machine learning and chatbots Future market developments in Digital Platforms Conclusion 328 Glossary 329 Appendix A: Results of the ACCC s experiment searching for news-related content on google Search 335 Appendix B: Recent reviews of media industry laws and regulations 337B1 Media laws and regulations 337B2 Intellectual property laws and regulations 340 Appendix C.

7 ACCC review of Digital Platforms processes, terms and policies 3411 Digital Platforms Inquiry preliminary reportExecutive summaryOverviewOn 4 December 2017, the then Treasurer, the Hon Scott Morrison MP, directed the Australian Competition and Consumer Commission (the ACCC) to hold an Inquiry into the impact of online search engines, social media and Digital content aggregators ( Digital Platforms ) on competition in the media and advertising services markets. The ACCC was directed to look at the implications of these impacts for media content creators, advertisers and consumers and, in particular, to consider the impact on news and journalistic Platforms offer innovative and popular services to consumers that have, in many cases, revolutionised the way consumers communicate with each other, access news and information and interact with business.

8 Many of the services offered by Digital Platforms provide significant benefits to both consumers and business; as demonstrated by their widespread and frequent use by many Australians and many Australian businesses. The ACCC considers, however, that we are at a critical point in considering the impact of Digital Platforms on society. While the ACCC recognises their significant benefits to consumers and businesses, there are important questions to be asked about the role the global Digital Platforms play in the supply of news and journalism in Australia, what responsibility they should hold as gateways to information and business, and the extent to which they should be accountable for their particular, this report identifies concerns with the ability and incentive of key Digital Platforms to favour their own business interests, through their market power and presence across multiple markets, the Digital Platforms impact on the ability of content creators to monetise their content, and the lack of transparency in Digital Platforms operations for advertisers, media businesses and consumers.

9 Consumers awareness and understanding of the extensive amount of information about them collected by Digital Platforms , and their concerns regarding the privacy of their data, are also critical issues. There are also issues with the role of Digital Platforms in determining what news and information is accessed by Australians, how this information is provided, and its range and Platforms are having a profound impact on Australian news media and advertising. The impact of Digital Platforms on the supply of news and journalism is particularly significant. News and journalism generate broad benefits for society through the production and dissemination of knowledge, the exposure of corruption, and holding governments and other decision makers to is important that governments and the public are aware of, and understand, the implications of the operation of these Digital Platforms , their business models and their market ACCC s research and analysis to date has provided a valuable understanding of the markets that are the subject of this Inquiry , including information that has not previously been available, and has identified a number of issues that could, or should, be addressed.

10 Many of these issues are complex. The ACCC has decided that the best way to address these issues in the final report, due 3 June 2019, is to identify preliminary recommendations and areas for further analysis, and to engage with stakeholders on these potential engagement may result in considerable change from the ACCC s current views, as expressed in this ACCC s preliminary recommendations are summarised on pages 9-14 and the specific matters for further analysis and assessment are summarised on pages 14 ACCC welcomes feedback, and will use the preliminary recommendations and areas for further analysis identified in this report as the basis for further engagement with businesses, consumers and other stakeholders that have an interest in these carrying out the Inquiry , the ACCC has looked generally at the three categories of Digital Platforms identified in the Terms of Reference, namely.