Unfair trading practices in digital markets are rampant, according to the ACCC. Photo: File.
Consumers face increasing unfair trading practices in digital markets including manipulative interfaces that direct users to more expensive subscriptions or purchase options, according to the Australian Competition and Consumer Commission (ACCC).
The 10th and final report of the ACCC’s five-year Digital Platform Services Inquiry has found that without sufficient laws in place, consumers and businesses are continuing to encounter a significant number of harmful practices. And the ACCC wants the Federal Government to do more to counter them.
“Digital platform services are critically important to Australian consumers and businesses and are major drivers of productivity growth in our economy,” ACCC chair Gina Cass-Gottlieb said.
“While these services have brought many benefits, they have also created harms that our current competition and consumer laws cannot adequately address.
“This is why we continue to recommend that targeted regulation of digital platform services is needed to increase competition and innovation, and protect consumers in digital markets.”
The report recommends strong counter-measures should be adopted, including an economy-wide unfair trading practices prohibition, an external dispute resolution body for digital platform services, and a new digital competition regime.
Throughout the course of the inquiry, the ACCC observed conduct by the most powerful digital platforms distorting the competitive process.
It says such conduct includes denying interoperability, self-preferencing and tying, exclusivity agreements, impeding switching, and withholding access to important hardware, software and data inputs.
“Seventy-two per cent of Australian consumers surveyed by the ACCC reported they had encountered potentially unfair practices when shopping online, such as accidental subscriptions or hidden fees,” Ms Cass-Gottlieb said.
“An unfair trading practices prohibition is required to protect consumers from these kinds of tactics, both online and offline.
“Our consumer survey also found 82 per cent of respondents agree there should be a specialised independent external dispute resolution body for users of digital platform services to escalate complaints which cannot be resolved with platforms directly.”
Ms Cass-Gottlieb said an external dispute resolution body would also help Australian small businesses who relied on digital platforms to reach their customers.
“For example, when a fake review is made about their business on a search engine or marketplace, or when they have an account deactivated and lose their means of accessing their customers on social media.”
She noted a lack of competition in digital markets could lead to higher prices, less choice, lower quality or even greater harvesting of personal data, ultimately impacting everyday users.
The report also outlines how rapidly evolving digital markets and emerging technologies, such as cloud computing and generative AI, may exacerbate existing risks to competition and consumers in Australia or give rise to new ones.
Cloud computing refers to the provision of global, on-demand network access to computing resources such as networks, servers, storage, applications and services. It can be contrasted with traditional on-premises computing, where an organisation installs and maintains its own IT infrastructure for private use.
“We found the major providers of cloud computing in Australia – Amazon, Microsoft and Google – are vast, incumbent digital platforms that are vertically integrated across the cloud technology stack,” Ms Cass-Gottlieb said.
“Vertically integrated cloud providers may be incentivised to engage in conduct that could harm their competitors – for example, anti-competitively bundling their own services across different layers of the cloud stack.”
The ACCC has called for a whole-of-government approach to countering unfair trading practices in digital markets.
Assistant Minister for Productivity, Competition, Charities and Treasury, Andrew Leigh said the Federal Government acknowledged ACCC’s concerns and took the need to protect online consumers seriously.
“We welcome the final report of the Australian Competition and Consumer Commission’s five-year Digital Platform Services Inquiry – a landmark investigation into the power and practices of the biggest digital platforms,” Dr Leigh said.
“Our government is committed to building a digital economy that is dynamic, open, and safe – where innovation thrives, consumers are protected, and competition isn’t stifled by monopoly power.”
