Digital platforms have global impact on competition policy

Technology magnates such as Google and Facebook continue to infiltrate the buying choices of consumers, collecting ‘big data’ and driving e-commerce to new heights. It’s a challenging time for competition and consumer protection law on a global scale. Regulators are now grappling with the need to take a flexible approach to issues surrounding market power, data control and heightened privacy concerns. Today we’re looking how the laws in Australia, Singapore and the US are shaping up to respond to the digital age.

Australia

Digital media 

The Australian Competition and Consumer Commission (ACCC) has launched a Digital Platforms Inquiry exploring how market power is shared between platforms, the impact this has had on advertising and how consumers’ personal data is being collected. A preliminary report was released in December 2018, with the final findings to be made available in early July. From what we know so far, there will be an increased focus on how companies such as Google and Facebook monetise their services and the spread of market power in online advertising and news sites. The ways consumers interact with these online platforms through internet browsing and data collection is also under scrutiny. The preliminary report recommends the appointment of a new regulatory authority to review how privacy laws are intersecting with competition policy and whether the current media delivery framework is balancing traditional and online forms.

Anti-competitive behaviour

Online hotel booking site Trivago were sued in August 2018 for misrepresenting their pricing policy. The ACCC claimed Trivago’s TV advertisements induced consumers to believe that Trivago’s algorithm displayed hotels in order of the cheapest price, when in fact, the order in which they were shown was determined by the commission Trivago would receive from that hotel. The ACCC Chair Rod Sims said that “businesses must ensure the nature of search results, such as if they are sponsored or paid for, is made clear to consumers or they risk contravening the Australian Consumer Law”. The lesson here is that businesses need to be extra careful when it comes to price comparisons and consider how a consumer may interpret a representation.

The ACCC has also recommended introducing the mandatory notification of proposed acquisitions by key digital platforms. This would mean that if international companies such as Google and Facebook decide to buy a business operating in Australia, the ACCC will have time to review the proposition and analyse the impact this will have on local competition in the market.

Singapore

The Competition and Consumer Commission of Singapore (CCCS) has published a number of papers on e-commerce and competition, and the impact of data sharing between firms on competition law, intellectual property rights and personal data protection.

Collusion through data sharing 

There are growing concerns that collusion between firms through sharing sensitive data may potentially lessen competition. The CCCS is also monitoring the risks presented by using computerised algorithms to monitor information about competitor prices in real time, for example, where two firms use the same third-party provider to track the activities of other businesses and set their prices accordingly to gain a larger market share.

Data used for competitive advantage 

Today, data is a valuable commodity. New market entrants are clearly at a disadvantage in their early stages because they haven’t yet accumulated the information on consumer habits and trends which established competitors have access to. While the CCCS has noted this as a barrier to entry and expansion, the 2017 Big Data Paper stated that what makes for a ‘dominant’ market power comes down to whether the data could be reasonably replicated by competitors and if the use of the data is likely to result in a significant competitive advantage.

Mergers of app services

CCCS’s intervention in a merger between Uber and Grab resulted in each company being issued SG$6 million in fines. After Uber acquired a 27.5% share in ride sharing rival Grab, industry prices increased by 10-15% overall. As more apps are developed which offer similar services, regulatory bodies will be forced to monitor whether the market is delivering the best rates for consumers.

USA

Competition policy in the US is currently governed by a group of antitrust laws including the Sherman Act, Federal Trade Commission Act and Clayton Act. Harsh penalties may apply for a breach – up to US$100 million for a corporation. Technology companies with wide access to data and big influence in the industries they operate have made regulators more alert to competition threats.

A new technology task force was announced in 2019 by the Federal Trade Commission to combat the risk posed by the proliferation of social media, digital advertising corporations and mobile-operated apps. This department will work closely with the existing Department of Justice Technology and Financial Services Section to investigate potential anti-competitive behaviour.

The new FTC Blockchain Working Group is reviewing the use of cryptocurrency and blockchain, especially in identifying suspicious or fraudulent transactions. This, in conjunction with the digital and market analysis conducted by the Department of Justice, is expected to result in new regulatory strategies relating to online advertising and other tactics being used by big businesses to sway customer choice.

Sources: Ashurst ;  ACCC

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