Platforms warn Australia about 'unintended consequences' of reform

An industry group founded by Facebook, Google, Twitter and Verizon Media has issued a lengthy response urging the Australian government to carefully consider the potential economic damage of proposed changes to regulations and government oversight of digital platforms.

DIGI (Digital Industry Group Inc) issued its statement as part of an open consultation process following an inquiry by the Australian Competition and Consumer Commission (ACCC) into the power of digital platforms. That Digital Platforms Inquiry (DPI) resulted in a final report that was critical of the Google-Facebook 'duopoly' and called for serious policy changes tackling digital advertising, consumer privacy and potential future anti-competitive practices (see "Australian watchdog calls for serious crackdown on Google and Facebook".

"The ACCC DPI final report’s conclusions are generally predicated on the potential for consumer harm, rather than presenting substantive evidence of it," DIGI's response says. "The result is many recommendations that are arguably premature and lack an evidence base. We therefore urge the Australian Government to fully consider these unintended consequences and undertake necessary broader consultation with the digital industry, as well as other affected industries and stakeholders, before any major reform is announced."  

The DIGI statement also argues that the DPI report did not include "substantive analysis, nor much more than a passing acknowledgement, of the value of digital products and services to Australian consumers".

Specifically, DIGI argues that: 

• The digital industry makes sigificant contributions to economy, to the tune of $122 billion or 6.6% of GDP. 
• The digital industry could make an even greater contribution. The document lays out a case that Australia trails many other countries when it comes to the value added by its tech sector, and argues that the sector could contribute an additional $50 billion to GDP by 2037 if Australia "caught up to global leaders". 

Although the DIGI authors take pains throughout the document to stress that the organisation supports exploration of the issues raised in the DPI, the unspoken inference, of course, is that this $50 billion in economic value may fail to materialise if overly onerous regulations are put into place.

The DIGI statement comments directly on several areas of proposed change. Here is a sampling of DIGI's responses in some of these areas:

Changes to merger law:

It is disappointing to see this recommendation was retained in the final report, with a slight expansion of scope, without addressing the concerns raised by many in the technology industry.

...it is not an opportune time for innovation-stifling red tape to be legislated in the form of this recommendation.

Codes of conduct governing relationships between digital platforms and media businesses:

The government must consult widely on the competition issues such codes would be intended to address and which platforms should have to provide a code.

...placing restrictions on the commercial arrangements of a designated set of digital platforms to submit specialised codes of conduct governing their various B2B relationships may place digital native companies at a commercial disadvantage in a rapidly shifting digital advertising market.

Mandatory ACMA take-down code regarding copyright enforcement:

The proposed “mandatory industry code” would represent a significant departure from the globally accepted legal standards and norms for issuing take-down notices that are relied upon by online service providers and content creators around the world.

Apart from isolated anecdotes, the ACCC has not provided substantive evidence of a problem that requires such a drastic solution.

A digital-platforms code to counter disinformation:

To the extent that the code is intended to deal with sophisticated disinformation campaigns (for example, those that may be state-sponsored or by multinational criminal groups), many major digital platforms already work closely with Australian security agencies on information operations.

An appropriate intervention on one platform (such as partnerships with third-party fact-checkers) may be cost-prohibitive and unscalable for another. Therefore, the idea of a one-size-fits-all industry code of conduct is problematic in relation to disinformation, as it does not take into account variables that impact content moderation in this area.

Strengthening the Privacy Act:

At a high level, it appears that this recommendation is recommending reform that exceeds the standards of the EU’s General Data Protection Regulation (GDPR), which was introduced on May 25, 2018. In its consideration of such a model, we encourage the Government to fully assess the impact of the GDPR to date as to whether the regulations are operating as intended and are not unduly impacting innovation and competition in the technology sector.

Targeted advertising:

A default pre-selection of targeted advertising to 'off' will have an impact on the whole economy, for every company or other organisation—large and small—that advertises goods, services or public interest causes on the Internet. It will also have an impact on digital platforms that are supported by advertising—the same business model used by many traditional media organisations. Advertising powers free digital services and the wide range of freely available content available to consumers. The significant potential economic impact of this recommendation raises questions about whether such a recommendation is too wide in relation to the narrow terms of reference of the ACCC’s inquiry.

Privacy code for digital platforms:

DIGI looks forward to engaging with the OAIC [Office of the Australian Information Commissioner] about such a code, and welcomes the emphasis on industry consultation. We do however note that issues surrounding data privacy and the collection of personal information are not restricted to digital platforms, and that general economy-wide standardisation or guidance is more appropriate than a code that ringfenced to a handful of designated digital platforms.

The DIGI statement does not find fault with all of the DPI recommendations; it expresses agreement with several relatively non-controversial recommendations, including:

• An inquiry into adtech services and advertising agencies
• A process to implement harmonised media regulatory framework
• Stable and adequate funding for public broadcasters
• Grants for local journalism
• Tax settings to encourage philanthropic support for journalism
• Improving digital media literacy in the community
• Digital media literacy in schools
• Statutory tort for serious invasions of privacy.