John Durie: ACCC pushes for new laws to deal with fake reviews and scams on Google and Meta
The federal government has yet to commit to the reforms, but said Treasury would consult before potential legislative changes are introduced next year.
The Australian Competition and Consumer Commission (ACCC) has recommended sweeping new powers to bridge the bargaining gap between digital platforms like Google and Meta and small business and consumers by imposing new conditions on the platforms and the creation of an ombudsman to force the platforms to the bargaining table.
The federal government has yet to commit to the reforms, but said Treasury would consult before potential legislative changes are introduced next year.
The consumer and small business changes will come first, with changes to the competition rules to come later.
New regulatory powers are one thing; ensuring the digital giants comply is another, given they are past masters and known to use legal delaying tactics and government lobbying.
Competition is seen by some as the best form of attack but the ACCC is trying a dual program.
The ACCC aims to link its new powers with those being introduced in other countries as part of a concerted campaign against the platforms.
Digital platforms held to account
The digital platform report, handed to the government at the end of September, covers both small business and consumer issues, which will be addressed by new legislation, and wider competition issues, which will be handled by enforceable codes of conduct.
The key recommendations for small business include mandatory dispute settlement and a new requirement that will hold the platforms responsible for material carried on the platforms, including fake restaurant and other reviews.
The ACCC has also called for wider powers against unfair trading, which will be prosecuted with a lower threshold than the present law against unconscionable conduct.
The government has recently passed laws banning unfair terms in contracts but the new provision will give the ACCC wider power over unfair behaviour.
In a statement issued today, ACCC chair Gina Cass-Gottlieb said the report “also reiterates the ACCC’s support for a new economy-wide unfair trading practices prohibition”.
The digital platform report is part of a long-running program at the ACCC covering different aspects of the new industry, which has thrown competition regulators around the world in a spin trying to control the technology behemoths.
These global platforms — including Google, Meta, Apple and Amazon — provide consumer solutions like internet search, combined with anti-competitive clauses that preference their own products, charge excessive prices and control consumer data and advertising in a way that threatens to block innovation.
The new legislation is aimed at restoring some balance in the bargaining position between small business and the trillion-dollar giants, which set terms like demanding fees worth 30% of revenue derived from apps on their mobile phones.
Scams and reviews in focus
Former ACCC boss Rod Sims had proposed to use the new digital platform controls to introduce new competition rules making it easier for the ACCC to block mergers. But new ACCC chair Cass-Gottlieb has stopped short of a massive reform program.
In her statement, Cass-Gottlieb said the ACCC’s analysis “identified concerning consumer and competition harms across a range of digital platform services that are widespread, entrenched, and systemic”.
“The critical positions that digital platforms hold, as ‘gatekeepers’ or ‘intermediaries’ between businesses and consumers, mean they have a broad influence across the economy, making the reforms we are recommending crucial and necessary for all Australians,” she added.
“In addition, consumers have experienced harms from inappropriate and fraudulent apps made available on app stores, as well as from fake reviews and review manipulation.”
Cass-Gottlieb said digital platforms that either host or serve as intermediaries between scammers and their victims “are in a unique position to identify and stop scams and remove harmful apps”.
“Losses reported to Scamwatch from scams conducted via social networking and mobile apps almost doubled in the last year between 2020 and 2021, with $49 million recorded in 2020 compared with $92 million in 2021. This shows that digital platforms need to do more to stop their users from being scammed,” she continued.
“We also need more action on fake reviews from platforms whose services feature ratings and reviews, including those appearing on search, social media, app stores and online marketplaces.
“These problems have been made worse by a lack of avenues for dispute resolution for consumers and small businesses, who often simply give up on seeking redress because they cannot get the digital platforms to properly consider the problem.”
Cass-Gottlieb said the new laws would “provide user-friendly processes for reporting scams, harmful apps, and fake reviews”.
They would reduce the risk of scams by verifying certain business users such as advertisers, app developers and merchants.
Under the plans, the platforms must publish review verification processes to provide important information to readers of online reviews to help them assess the reliability of reviews on the platform.
In addition, they need to “report on scams, harmful apps and fake reviews on their services, and the measures taken to address them”.
They must also “ensure consumers and small businesses can access appropriate dispute resolution, supported by the establishment of a new digital platform ombudsman scheme”.
Cass-Gotlieb said the new specific codes of conduct would “prevent anti-competitive self-preferencing, tying and exclusive pre-installation arrangements, address data advantages and ensure fair treatment of business users”.
The codes of conduct would also improve switching, interoperability and transparency.
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