The continued expansion of digital platforms into emerging technologies demands urgent regulatory reform, the Australian Competition and Consumer Commission’s (ACCC’s) Digital Platform Services Inquiry has argued.
Although the report has not identified any specific examples of anti-competitive conduct, it concluded there was a higher risk of harming competition given the “significant market power” of digital platforms in one or more markets.
In particular, the report examined the growing influence of the five biggest digital platforms (Amazon, Apple, Google, Meta and Microsoft) in Australia and the impact they have on Australians’ daily lives and livelihoods, increasingly via their interconnected products and services, including smart home devices and consumer cloud storage.
The ACCC in its report also pointed to the expansion of platform providers beyond their core offerings, such as search and social media, to new markets, including generative AI, digital health services, information storage, education, and financial products.
Additionally, consumers, it said, may face competition harm arising from the common practice of bundling or tying of products, pre-installation and default settings, which ultimately reduce options for customers.
Also, the report looked at consumer cloud storage which is often embedded within digital platform operating systems, devices and productivity suites and is sometimes no longer available as a standalone product.
On top of that, there were coordinated decisions, meaning that families often choose to use the same services to share their files. This, the ACCC posited, may lead to lock-in effects resulting from the cost and inconvenience of transferring files to a new service.
“When a digital platform holds a crucial ‘gatekeeper’ position between consumers and businesses, it has the opportunity and incentive to harm competition. For example, certain digital platforms can exercise control through self-preferencing – favouring their own products and services over competitors who rely on the platform to reach consumers,” ACCC noted in its report.
“Some digital platforms have expanded into new gatekeeper roles with voice assistant technology that is incorporated into smart home devices. Voice assistants like Google Assistant, Siri and Alexa may provide an opportunity for Google, Apple and Amazon to encourage users to favour their products and services to the detriment of rivals.”
According to the ACCC, the continued expansion of data collection practices by digital platforms also granted them access to rich consumer data. As these platforms create products and services in other sectors, consumers face the risk of losing control over their data.
As far as emerging technologies were concerned, the report found that the five largest digital platforms were making substantial investments in research and development (R&D) and buying smaller companies in areas such as generative AI and virtual reality. This has increased their market dominance, putting them in “strategically important positions” in the developing digital economy.
“The critical role digital platform service providers have in the development of new technologies like artificial intelligence and cloud computing demonstrates their importance to the Australian economy, now and in the future,” ACCC Chair Gina Cass-Gottlieb said.
She added that the latest report supported earlier recommendations to update the Government’s competition and consumer laws to ensure consumers and businesses would continue to benefit from opportunities created by digital platform services.
“Our proposed reforms include a call for targeted consumer protections and service-specific codes to prevent anti-competitive conduct by particular designated digital platforms.
The ACCC will continue to work with the Government on these reforms.
The ACCC’s Digital Platform Services Inquiry is due to be completed and a report on the inquiry given to the Treasurer by 31 March 2025.