Algorithm regulator in view as Australia takes on duopoly

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An Australian algorithm regulator, able to probe Google and Facebook's opacity, is among recommendations of a preliminary report by the country's competition watchdog.

A proposal that bans the default installation of Google's Chrome browser on smartphones, tablets and desktops, is also among 11 preliminary recommendations.

The report found the Google Facebook duopoly were able to favour related businesses or those they had a commercial relationship, and had the incentive to do so. "The platforms' algorithms rank and display advertising and news content in a way that lacks transparency to advertisers and news organisations," says ACCC chair Rod Sims.

The regulator concluded that Google "has substantial market power in online search, search advertising and news referral", and Facebook had substantial market power in markets for social media, display advertising and online news referral. It also outlines concerns about how consumers' data is collected and used to target advertising.

Sims (pictured) says that while digital platforms may have brought positive change for consumers, they have become "unavoidable business partners" for many Australian businesses and the dominant gateways between news media businesses and audiences.

"This can reduce the brand value and recognition of media businesses," he says. "In addition traditional media businesses and in particular, traditional print media businesses, have lost advertising revenue to digital platforms. This has threatened the viability of business models of the print media and their ability to monetise journalism."

Acknowledging the critical role of news and journalism in society, he says the cut in the number of journalists resulting from a downturn in advertising "has implications across society because of the important role the media plays in exposing corruption and holding governments, companies, powerful individuals and institutions to account."

On the subject of the range and reliability of news available via Google and Facebook, the ACCC says its preliminary view is that consumers face "a potential risk of filter bubbles, or echo chambers, and less reliable news on digital platforms.

"While the evidence of filter bubbles arising on digital platforms in Australia is not yet strong, the importance of this issue means it requires close scrutiny."

It says the amount and variety of data digital platforms collect goes beyond that which users actively provide, prompting consumer concern. In particular, it criticises the length, complexity and ambiguity of online terms of service and privacy policies, "including click-wrap agreements with take-it-or-leave-it terms".

Sims says the preliminary recommendations and areas for further analysis identified have been put forward as potential options to address the actual and potential negative impacts of digital platforms and contribute to the debate about the appropriate level of government oversight.

"Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content. Yet, digital platforms face less regulation than many media businesses," he says.

Other preliminary recommendations suggest ways to strengthen merger laws, deal with copyright, take-down orders and the review of existing, disparate media regulations.

The ACCC is looking for feedback, with eight areas proposed for further analysis.

These include 'badging' of media content, as well as options to fund the production of news and journalism, such as tax deductions or subsidies, a digital platforms ombudsman to investigate complaints and provide a timely and cost effective means to resolve disputes, and a proposal for digital platforms to allow consumers to opt out of targetted advertising.

Submissions should be made by email to platforminquiry@accc.gov.au (link is external) by 15 February 2019.

The ACCC is required to provide a final report June 3 next year.

• Australian publishers have welcomed the preliminary report. Executive chairman of News Corp Australia Michael Miller said the report highlighted the impact the digital platforms have as "unavoidable business partners and gateways between news media businesses and both consumers and advertisers.

"As global campaigners against the dominance and lack of transparency of the digital platforms, we are encouraged by the ACCC preliminary recommendation that Google and Facebook's strong market position justifies a greater level of regulatory oversight."

Chief executive of Seven West Media Tim Worner particularly welcomed the ACCC's recognition of the need to address regulatory imbalance between digital platforms and other Australian content and local media businesses. "While the Preliminary Report is focused on news and journalistic content, we note that Google and Facebook also have a massive impact on producers of all Australian content and we hope this preliminary report is a first step towards taking real action to address the effect they have on all Australian businesses and consumers."

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