Thursday, 30 November 2023
Economics References Committee; Report
I present the report of the Economics References Committee on the influence of international digital platforms, together with an accompanying document. I move:
That the Senate take note of the report.
The context for this inquiry was that the ACCC has been doing a large body of work in relation to digital platforms under this government and the last. This is a very slow but important body of work, and so the Senate, in its wisdom, decided to establish an inquiry to look at these matters. I thank the Senate very much for giving us the opportunity to do this important inquiry. At the outset, I give my thanks to Senator Walsh, the deputy chair, for the way that this process has been conducted; to all the members of the secretariat; and to all the other senators that participated.
The basic point to come out of this inquiry is that large tech companies are very lightly regulated in this country. Compared to a bank or a telecommunications company, they face virtually no regulatory burden. That is a major problem because, in our society today, we have a situation where big tech companies know more about us and have more power and influence over our society than, I would say, any monopolist has had in history. They make the robber barons look like they are not very powerful people at all, in a historical context.
Of course, it's difficult to try and work out what to do here because we're talking about global companies operating across multiple jurisdictions that have huge cultural power and have been very successful at evading regulation—and, of course, that is part of their approach. So, rather than setting out 20 or 30 unreadable recommendations, this committee has proposed just eight. We start off with a recommendation that deals with the significant fragmentation of our approach here in this country. We basically have four institutions—the OAIC, the ACCC, the eSafety Commissioner and ACMA—that have some jurisdiction in relation to digital platforms. These are not organisations that are working together on the big issues of the day, certainly not in any public way. We had to FOI the meetings of the so-called DP-Reg organisation, which is a group of people from these agencies that get together to talk about issues in order to work out what was going on from a coordination sense.
Our first recommendation is that we believe that the country would be well served by having a proper consolidation of these regulators so that they are able to deal with the multifaceted challenges that the big platforms pose. This committee was not a rerun of the social media inquiry or other inquiries. It looked at competitive restraints and it looked at where there were problems where people were being exposed to organisations that had too much power and were not sufficiently regulated in any form.
The next set of recommendations went to the bundling of products and services. There were significant submissions to the committee received that large tech organisations would bundle payment services alongside products in order to evade competition and in order to lock down their very strong monopoly position. Because, of course, in a practical sense, if you think about this, if you control the hardware of a phone or a physical platform like an iPad and you control the operating system and the software and the apps, you have a vertical integration which is unique and it allows you to have a completely unfair market bargaining position. So we have sought to address that issue in that recommendation of unbundling.
One of the features of banks and telecommunications organisations in this country is that they do face a high regulatory burden. One of the other processes we are undertaking in this committee is an inquiry into the corporate regulator ASIC, which has not been a strong regulator. Although the parliament has enacted very strong laws, we have not seen large corporations face the full force of the law and that has caused great anguish in our community. But having said that, the starting point is a sound point that they do face a high regulatory burden. One thing that a bank and a telco must have is mandatory dispute resolution. They must provide that as part of their service offering.
Another thing which occurs in other parts of our economy is that consumers can access a small claims tribunal. These are the most powerful and pervasive companies in the history of capitalism; therefore, we have recommended that there be dispute resolution and we recommended that there be a small claims tribunal. These are very reasonable recommendations.
When we were in government, I chaired the inquiry into the media bargaining code and I well remember the threats that were made by Google and Facebook. Google was going to leave Australia and leave billions of dollars of advertising revenue on the table, and Facebook was going to turn off all their community pages. We held the line as a parliament and we were able to win the day on that. But these big tech companies, in my estimation, will do anything to evade regulation. But if we're able to tilt the scales in favour of the typical Australian by giving them access to mandatory dispute resolution and a tribunal, it would make a big difference when there is a problem with these big tech organisations.
Finally, we were able to meet with the Frances Haugen, the Facebook whistleblower, who was able to give us some very interesting information based on her insider status at Facebook. We have recommended that there be transparency measures which apply to these companies based on a certain turnover. They would have to disclose the information relating to their algorithms. They would have to disclose how they target advertising, what sort of information they are collecting on people and how they are using it. I think these are pivotal recommendations.
We also recommended a right under Australian law that would allow people to delete their data. They should be able to delete their data from a digital platform if they so wish, provided that that does not create any foreseeable law enforcement issue. The last recommendation we made was in relation to the utilisation of children's data. We recommended a special code for the collection and use of children's data, which could be, as with media bargaining, a bill of this parliament. This would protect children who, I believe, are the most vulnerable to the size and the scope of these organisations.
In essence, the committee has conducted a very lengthy review. It has fundamentally recommended that these organisations be regulated as if they are utilities. I think this is sound. I think that these are achievable things that we should do. The basic principle here is that, if the organisations want to do business in Australia, we shouldn't feel as if we cannot apply a reasonable standard of regulation to them. They will always resist it, but it is achievable. We have the precedent in relation to media bargaining. That has now caused a regulatory contagion, and other jurisdictions now have similar laws to Australia's in relation to media bargaining. We should do the same as we have done on media bargaining and on esafety and go further to regulate these organisations as if they are utilities. If we don't do this, I believe they will be even further out of control in future and even harder to rein in.
I want to again thank the secretariat and Senator Walsh, in particular, for the way in which this inquiry was conducted.
I rise to take note of the report on the committee's inquiry into the influence of international digital platforms. I want to quickly note and support Senator Bragg's mention of the collegiality on this inquiry. I look forward to continued bipartisanship across the parliament as we all continue to progress reforms in this really critical area. It is a critical area because the influence of digital platforms is truly massive. Every day, millions of us are messaging a friend, running businesses through platforms and interacting in some way with these platforms. While the opportunities and impacts that platforms have on the economy are significant and are welcomed, the challenges presenting to users and governments are also significant. Platforms have significant market power and control over consumer experiences online.
It was clear in this inquiry—as it was in the earlier inquiry into foreign interference through social media, for which I was deputy chair—that the platforms need to do a lot more. They need to do a lot more to be transparent about their practices, they need to do a lot more to be accountable to the community and they need to do a lot more to be accountable and transparent to the community through the parliament as well. We all agree that these platforms need to do better and need to be more transparent in meeting community expectations. We also agree that regulation is required.
This inquiry, which was chaired by Senator Bragg, looked at many of these issues. We also had the opportunity to look at how government is responding to them. I'd like to thank my committee colleague Senator Jana Stewart, who has a longstanding interest in the impact of digital platforms on our gig economy workers—people like the delivery drivers who, we know, are too often putting their lives on the line every day at work and the commercial passenger vehicle drivers that we all rely on and whose livelihoods depend on the conduct of these platforms. I do look forward to this place closing the loopholes to better protect these workers who are dependent for their livelihood on how big platforms operate and how big platforms treat them.
The rights of consumers and improving market competition are at the heart of the government's response to addressing the influence of digital platforms. Like the chair, Senator Bragg, I want to recognise the work of the ACCC, who have since 2019 been thoroughly and methodically inquiring into digital platforms and their services. It's their work and their recommendations which have led to a great deal of reform by the government, and it's their work which submitters also point to as leading the way for future directions. Government responses include a ban on unfair contract terms, which came into effect this month, and progressing options on unfair trading practices. The government is committed to delivering reforms set out in the ACCC's interim report 5, on regulatory reform options.
Importantly, the work of modernising the Privacy Act, another recommendation of the ACCC's digital platform inquiry, is now underway. These much-needed reforms will increase individuals' rights to their data. It will improve their privacy, including a right to delete, and it will increase transparency. The government will also develop a children's online privacy code, a much-needed reform to keep children safe. To conclude, I again thank the chair, the committee, the submitters and the secretariat for this inquiry and the report.
I rise to speak to this report, Influence of international digital platforms. I want to acknowledge the hard work of the chair in pulling this together. It's been a timely review. It's interesting to see this report land in the same week that we've seen the seventh interim report from the ACCC. Both raise very significant and legitimate concerns, particularly about the market power of a handful of platforms that control an increasing part of our life.
The first two recommendations in this committee report should be taken on seriously by this parliament. The first is to have a coherent single regulator. You won't have all the expertise in one place, but somebody, some agency, needs to have the power and the critical mass to take on these huge global players. At the moment, literally trying to find who's responsible for any particular mischief that these platforms are undertaking can be half the struggle, let alone then trying to find a valid regulatory basis upon which to act. As these platforms grow, and as their influence over our lives grows, the need for us to push back and have public interest regulation grows with it. We've seen Europe taking really significant steps in trying to limit market power and put in transparency for these big platforms. If we do nothing else, we should copy what Europe does. It has an effective set of regulations and is a very good starting point for addressing transparency and market power.
When you read this committee report, together with the ACCC report, you realise what a problem we have. The ACCC's most recent report looked at five big platforms. It looked at Alphabet, Amazon, Apple, Meta and Microsoft—of course, Alphabet is Google and Meta is Facebook. The ACCC said that the increasing bundling of services by these big platforms, whether it's artificial intelligence or immersive technologies, those voice assistants that we all use, health and fitness apps, media streaming, linking into our home devices, gaming, our cloud services—those suites of services that we're increasingly using for our daily lives—are all being bundled up in a single platform. That's a problem that was identified in this committee report with this recommendation that I read, and the Greens read, as being a clear direction to this parliament to put some legislation in to unbundle these services.
As both reports make clear, the bundling of services also is a major problem for any kind of competitive market to operation. That bundling happen in a number of different ways. One way in which bundling can be deeply uncompetitive is where there may be a family plan. Someone may have an iCloud plan; a parent buys an iCloud plan for the family, which is used as core data photo storage service for the whole family. Then, when members of that family begin to get economic independence, they are still locked into an iCloud related service and a bundle of services that might be provided out of Apple, or whichever platform has the cloud service that they had as a kid. We see, as well, this bundling of voice assistants linking to our smart devices at home. It's getting to the point where, if you want to pull out of your primary platform, you've got a next-to-impossible task not only of pulling out of, say, your phone provider or pulling away from your internet provider but also of unbundling all of your home devices, unbundling your voice assistant and maybe picking a different entertainment app.
The ACCC has said very clearly that these big market players have a plan. Their plan is to immerse your life in this bundle of services and make it next to impossible for you to choose a competitor. It also said that these services are actively hunting for any emerging competitor and that, as an emerging competitor gets any kind of viable business going, the services are literally sucking them up, purchasing them and subsuming them in these large platforms. Is that the future we want? Do we want a future where huge global platforms—at the moment there are maybe five, but maybe in the future it will be three or two—control so many aspects of our lives? Obviously, that's a dystopian future that we should be pushing against, but it's the future that will happen unless we recognise the need for public interest regulation.
I think those are the two critical key recommendations from this report. Let's have a well-empowered, single—but not sole—regulator with primary responsibility and the statutory powers to force some of these platforms to unbundle and to deliver public interest regulation in this space. Let's do that. And let's recognise that the bundling of services is actually a critical threat not just to market operation in the space but increasingly to the sharing of ideas to the democratic marketplace. Unless we confront that sooner rather than later, we're going to have the next-to-impossible task of unpicking people's lives as they become increasingly immersed in a single platform with all the bells and whistles that are now wrapped around those platforms. I don't want to see a future Australia where what you see, what opinions you get and who you talk to is moderated by a single global corporate entity. I don't want that. The Greens don't want that. I don't think the Acting Deputy President Polley wants that, if I can tell from looking across the chamber! I think that may be something that unites this chamber, in a very strange and peculiar way! But that's the risk, unless we confront that sooner rather than later.
I'll finish with this. We don't have to reinvent the wheel, here. There are unique things about the Australian market. But what we've seen Europe do with those two critical acts that have passed in the last couple of years about transparency, the market and the way in which these large online markets operate in Europe is an excellent starting point for us. We should do that. We should urgently implement privacy reforms that can't wallow for another 12 months. And we should take seriously what both this committee and the ACCC have said to us, which is that these massive global corporate interests should not rule our democracy and should not rule our lives. We have an obligation for public interest regulation in this space. I seek leave to continue my remarks later.
Leave granted; debate adjourned.