“Encouraging step”: Small businesses central to digital platform competition crackdown

The federal government plans to impose new competition rules on platforms like Google, Meta, and Amazon, and will consider if the digital giants unfairly wield their market power to the detriment of small business users.

The proposal is an “encouraging step” to address the potential power imbalance between SMEs and the digital platforms they are now reliant upon, said Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson.

Assistant Treasurer Stephen Jones on Monday announced plans to hand new enforcement powers to the Australian Competition and Consumer Commission (ACCC), arguing existing competition rules are insufficient to monitor search engines, social media platforms, and app stores.

Digital platforms designated under the proposed scheme and found to have breached competition laws could face fines of up to $50 million, or 30% of their turnover.

Jones said the government would first target app stores, over fears they are self-preferencing their own services over rivals in search rankings.

The digital ad market — which is dominated by Google — is another high-priority area.

In a consultation paper, the government says there is evidence that small businesses struggle to “understand how their digital advertising dollars are being spent and whether they are getting value for money”.

Many small businesses depend on Google’s ad tech services to either sell advertising space online or reach new customers.

But the ACCC has found there is a lack of transparency in that supply chain, with Google using its vertical integration “to engage in a range of conduct which has lessened competition over time and entrenched its dominant position”.

Google is likely to argue its services allow small businesses to reach a large number of potential customers, as it did in prior submissions to the ACCC.

The government is also concerned market dominance could lead to small businesses paying higher prices, subscribing to unfair “take it or leave it” contracts, and finding it difficult to switch to separate products or services providers.

Ombudsman Bruce Billson welcomed the government’s announcement, saying small businesses should benefit through the digital economy without being unfairly slugged by major platforms.

A quarter of disputes small businesses bring to the ASBFEO now involve a digital platform, he said, showing the “considerable tension, confusion, and in some cases, bewilderment” in those relationships.

“The significant dependency that an increasing number of small and family businesses have on these platforms puts them in a potentially vulnerable situation if those platforms are operating in a way that could be harmful,” he said.

While it is important to protect consumers in their relationships with digital platforms, Billson supports the government’s focus on small traders.

“It’s our role to unashamedly say there’s a very significant small business dimension to these and we’re just keen to see how that dimension is reflected in the measures.”

Stakeholders are free to share their views with the Treasury before February 14, 2025.

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