by Ursula Mulvaney, arch.resource member
In the midst of a global pandemic, Big Tech continues to attract headline news with competition law, consumer protection, regulation and privacy continuing to intersect.
Over the last week we watched a “proxy battle” for the world as Australia sought to challenge the dominance of Facebook and Google in the news content market by proposing a new law that would make Google and Facebook pay for news. In response, Facebook announced it was stopping the sharing of news on its service in Australia. However, within a week it seems that Facebook “blinked first” as the social media giant “re-friended Australia”.
Certainly, the pandemic has heightened the utility, desirability and indeed the necessity of online platforms however at the same time there is growing consensus globally to level the playing field to foster innovation, growth and competitiveness.
It is clear that how the digital platforms choose to respond to the new law proposed in Australia that would make Google and Facebook pay for news content is being watched and considered globally and may indeed influence how governments seek to regulate for the digital age.
Background to the “proxy battle”
The Australian government established a special unit within the Australian Competition and Consumer Commission “ACCC” to proactively enforce, monitor and investigate competition and consumer protection in digital platform markets and asked the ACCC to create a mandatory code of conduct to govern the commercial relationship between digital platforms and media companies. A large part of the Inquiry focussed on Google and Facebook as they are the two largest digital platforms in Australia.
The proposed News Media and Digital Platform Mandatory code is intended to address the bargaining power imbalances between Australian news media businesses and digital platforms, specifically Google and Facebook. Whilst the code will initially focus on Google and Facebook, it could be expanded to other tech companies.
In response to Australia’s proposed law, Facebook announced it would restrict publishers and people in Australia from sharing or viewing Australian and international news content stating, “the proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content” and this seems to be at the heart of the issue for Facebook. Meanwhile Google is understood to have agreed to pay Rupert Murdoch’s News Corp for content from news sites.
Following discussions with the Australian Government Facebook reports to be looking forward to agreeing to new deals with publishers and enabling Australians to share news links once again.
Developments in the UK
In March 2020, the government commissioned the Competition and Markets Authority (“CMA”) to lead a Digital Markets Taskforce (“the taskforce”) to provide advice on the design and implementation of pro competition measures for digital markets.
The scope of the taskforce is broader than that of the CMA market study published last summer as it will cover platforms with a wide range of monetisation strategies, including those that are funded by commission from transactions (e.g., online marketplaces and App stores) as well as those that are funded by advertising. The Australian Inquiry did not focus on online shopping and e-commerce platforms such as Amazon and eBay.
In December 2020, the taskforce issued advice to the government and if implemented, the new modern regulatory regime will govern the most powerful tech firms – those with “strategic market status” (SMS) and a new “Digital Markets Unit” (DMU) will ensure the “rules of the game” are clear and up-front, and work with powerful tech firms to ensure they comply with them. It is envisaged the DMU should be a centre of expertise for digital markets, with the capability to understand the business models of digital firms, including the role of data and the incentives driving how these firms operate.
The new regime will become part of a wider regulatory framework for digital markets, including the new regime for harmful online content, and data protection laws. The CMA is now working with other regulators including Ofcom, the ICO and FCA through the Digital Regulation Cooperation Forum.
On receipt of the taskforce advice the government has committed to consult on proposals for a new pro-competition regime in early 2021 and to legislate to put the DMU on a statutory footing when parliamentary time allows. Unfortunately judging by recent news reports as to when new legislation might be announced, a spokesperson for the Prime Minister said only that the government would open a consultation “later this year”. Hopefully, the government will take the advice of the CMA and move quickly in taking this legislation forward and lead the way in championing a modern, pro competition, pro – innovation regime.
The recent face-off between Facebook and Australia attracted the attention of British MP’s and it is understood that the culture secretary, Oliver Dowden will meet executives from Facebook this week amid growing international pressure for the UK to introduce Australian-style legislation.
Potential penalties
One of the recommendations of the taskforce advice is that the DMU should be able to impose substantial penalties for breaches of the code and for Pro – Competitive Interventions orders. It proposes the legal test should require that the breach is committed intentionally or negligently for a penalty to be imposed. Interestingly the recommendation is more comparable to the approach followed by the ICO when deciding whether to impose penalties for breaches of data protection legislation than the CMA in its approach to competition law enforcement.
Enforcement action in the digital sector
In relation to enforcement action, the CMA is currently actively considering possible cases in the digital sector, drawing on the work of the market study carried out last year. It will also continue to consider any examples of digital platforms exploiting their market power or otherwise engaging in anti-competitive conduct and will stand ready to take enforcement action where it identifies evidence of anti-competitive conduct.
Developments in the EU
The EU may also follow Australia’s lead and will be important to follow the two draft regulations, Digital Services Act (DSA) and the Digital Markets Act (DMA) as they go through European Parliament. It has also been reported that the European Union Competition Commissioner warned of potential antitrust action against Google or other US technology giants if they threaten to pull out of markets.
Looking forward
It will be important to follow the developments of legislators around the world as they “campaign to rein in the Tech giants” and create a new regulatory regime fit for purpose. In the meantime, interested stakeholders in the UK should look forward to the consultation “later this year”
For questions relating to competition law, privacy, commercial or regulatory matters speak to your arch.law member. You can contact the author of this blog by email: ursula@arch.law
