Are we there yet? The Federal Government sets out its roadmap for reform in response to the Digital Platforms Inquiry

On 12 December 2019, the Federal Government released its response to Australian Competition and Consumer Commission’s (ACCC) Digital Platforms Inquiry (DPI) findings (Government response). The Government response outlines an extensive roadmap for further policy work in the coming year, which may leave stakeholders, many of whom have already devoted significant time and resources to the DPI itself, feeling exhausted before it has even begun.

The tone of the Government response, released almost two years to the day after the terms of reference for the DPI, is noticeably different from that of the ACCC’s Digital Platforms Inquiry: Final Report (Final Report), with express acknowledgements of the many benefits that digital platforms have delivered to consumers, business and the broader economy. The Government response also strikes an underlying note of caution about the potential for regulatory overreach, emphasising that it is not the role of government to protect domestic businesses from digital competition and the importance of alignment between Australian and international approaches.

That said, over time, the ACCC appears likely to get many of the items on its Christmas list, either through direct implementation of its recommendations by Government, or via further reviews and consultations to be conducted during the course of 2020-21.

Key aspects of the Government response

• The Government has committed establishing a new Digital Platforms Branch within the ACCC (with additional funding of $27 million over four years).
  
  
• The ACCC has been tasked with conducting a further inquiry into adtech markets during 2020.
  
  
• The Government will shortly consult on reforms to strengthen unfair contract terms protections (including potentially imposing civil penalties) and continue work being undertaken through Consumer Affairs Australia and New Zealand on possible reforms to prohibit unfair trading practices generally.
  
  
• The ACCC will facilitate the development of a voluntary code of conduct to address alleged bargaining power imbalances between digital platforms and media businesses during the course of 2020. As noted in our previous article, this recommendation, perhaps more than any other in the Final Report, has the potential to affect the business models of media businesses. The code is intended to include mechanisms for compensating media businesses for the ‘value’ digital platforms derive from their content. Although real questions remain about how such ‘value’ could meaningfully be quantified, stakeholders will be negotiating under the threat of a possible mandatory code if sufficient progress is not made by November 2020.
  
  
• Government will implement a staged process of reforms to media regulation. Development of a uniform classification framework and extending Australian content obligations to streaming services are immediate areas of focus, with a review of advertising standards to follow later in 2020.
  
  
• The previously announced consultation on legislation to increase penalties and introduce binding privacy codes for digital platforms under the Privacy Act 1988 (Cth) will proceed as planned. It will also be supplemented with consultation on a range of additional reforms recommended by the ACCC, including strengthening existing notice and consent requirements and introducing a direct right of action for individuals for interference with privacy. While a further consultation process on these proposals could be seen as duplicative, it is hoped that it will produce more meaningful engagement with the potential for unintended adverse outcomes arising from some of the ACCC’s recommendations. The Government has specifically identified significant regulatory burdens and consumer ‘notification fatigue’ as potential risks in this context.
  
  
• While the Government has expressed in-principle support for some additional codes and schemes, including a voluntary code addressing ‘disinformation and news quality’ and an external dispute resolution scheme for users of digital platforms, significant uncertainty remains about their form and content.

The Government adopts a ‘go slow’ approach

In relation to the merger regulation reforms recommended in the Final Report, the Government response is cautious.

The Government response expresses support for digital platforms working with the ACCC to agree a voluntary protocol for the notification of proposed acquisitions. However, a further broad consultation will be held regarding the proposal for new ‘merger factors’ requiring the specific consideration in merger analysis of the importance of potential competitors and the significance of data assets. The Government response notes that the courts may already consider these issues as a matter of course.

There are a number of the ACCC’s recommendations which the Government has merely noted or to which it has adopted a ‘go slow’ approach. A proposal to require changes to search engine and internet browser defaults seems unlikely to be implemented in the foreseeable future, with Government simply tasking the ACCC with monitoring the impact of Google removing default browser and search engine settings from Android phones in Europe. At this stage, the Government does not appear to support the introduction of a ‘right to be forgotten’ in the privacy context. Similarly, it is not proposing to make any further changes to tax settings to fund public interest journalism or increase funding to the ABC and SBS. Copyright enforcement reforms will be subject to a further review late in 2020.

What’s ahead?

The annexures to the Government response point to a significant underlying program of work to be completed over the course of 2020 and 2021, with between five and ten reviews, consultations and inquiries to be undertaken by various bodies and a range of codes and protocols to be developed. This is likely to be a daunting prospect for stakeholders who have already participated in multiple rounds of consultation as part of the DPI itself.

While the Government responses closes the loop on the Digital Platform Inquiry process, it also marks the beginning of an intense reform and investigative phase that will continue throughout 2020 and beyond.