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Home / Business / & # 39; No choice & # 39 ;: ACCC finds Google, Facebook market power makes life difficult for small businesses

& # 39; No choice & # 39 ;: ACCC finds Google, Facebook market power makes life difficult for small businesses



The Competition watchdog, the Australian Competition and Consumer Commission (ACCC), has identified a number of concerns about the action between small businesses and digital platforms such as Facebook and Google-owned Google.

Releasing the results of its 17-month digital platform investigation last Friday, the ACCC made 23 recommendations to the government, mainly focused on addressing the problems arising from the market power US technology companies have in Australia.

623-page report found lack of transparency, inadequate dispute resolution, unfair contract terms and preferences are key issues SMBs face in their engagement with digital platforms, and also recommend a review of privacy laws, which could see small businesses beating new bureaucracy.

While the ACCC has at times been hampered by the behavior of Facebook and Google, it has chosen recommendations that primarily improve the ability of regulators to monitor the sector and address issues arising from their market power, rather than tackle the significant and increasing the influence of the platforms themselves.

In response, Google and Facebook issued statements acknowledging the release of the ACCC report, while digital platform lobbyist DIGI has argued the recommendations should be viewed against an "innovation test" investigating how a Google and Facebook incident would "affect Australia's digital industry for By the way. "

Treasurer Josh Frydernberg on Friday responded by recognizing digital platforms are responsible for an "important innovation" that has "fundamentally changed the way" the media works.

The Treasurer also accepted the "overall conclusion that there is a need for reform", but did not commit to implementing the recommendations, signaling an upcoming government response later this year.

Small businesses have no choice

The final report spent a considerable amount o exploring the size and shape of Google and Facebook in Australia, ending their gigantic user bases and command of ad revenue, giving them an unmatched level of market power in their respective industries.

Crucial to more than half of Australian small businesses with Facebook pages and a similar amount using Google services, including advertising, ACCC concluded that businesses have little choice in doing business with digital giants.

"Small business owners must use digital platforms if they want to survive in today's current economic climate," the ACCC said in its report, referring to a post.

Digital platforms dominate our time online

Source: ACCC (2019).

Finding Google and Facebook has significantly benefited small businesses, especially through providing affordable online advertising, while recognizing the importance of digital platforms for businesses, but also highlighting a number of concerns about how the market works .

It was also revealed that ACCC is conducting ongoing investigations into both Facebook and Google business practices after discovering possible breaches of the regulations while making the request.

Lack of transparency

During the last two over the years, about half of all ACCC complaints about Google and Facebook were related to a lack of transparency in the provision of advertising services, including t problems with dispute resolution. [19659002] Companies that provided input for the inquiry often complained about Facebook and Google about changes in the algorithms that control how their products work without notifying businesses or explaining why.

For many small and medium-sized businesses, changes to the operation of these algorithms can have a negative impact on business, including reducing exposure to Google and Facebook users or making it more difficult to secure returns using their advertising ising services.

Other Common Complaints SmartCompany has covered previous cases where Google AdWords and SEO optimization have been used by large companies to push smaller competitors out of the online market, as well as cases where social media policies are hindering companies in gaining access to marketplaces where most of their customers reside.

Digital platforms dominate Aussie ad spend

  ad spend

Source: ACCC (2019).

In its assessment of the relationship between small business and digital platforms, the ACCC said: "This is likely to be contrary to what can reasonably be expected from a competitive market."

"Google and Facebook have significant market power in the offering of search advertising and display advertising services respectively.

" Due to this market power, Google and Facebook each have undoubtedly a reduced incentive to maintain the quality of all the attributes of these services. "

Reviews that do not work, say businesses

ACCC's small business consultation also identified small business anger about the way Facebook and Google solve instances of defamatory comments and false reviews.

Complaints have centered on the time and resources needed to address instances of fake reviews with tech giants, while others noted a lack of transparency on Google's part in deciding to take down negative reviews.

Several stakeholders expressed frustration that Google reviews work only appeared in many small business accounts without their knowledge or consent, with this lack of communication that led them to completely withdraw from digital advertising, "read ACCC consultation notes.

Dispute Resolution Spotlight

Two of the ACCC's recommendations address these issues, among others. First, the watchdog wants digital platforms to develop a set of minimum dispute resolution standards to be administered by the Australian Communications and Media Authority (ACMA).

It is hoped that standardized dispute resolution will give small businesses a better path to redress when they encounter problems in their dealings with digital platforms.

Second, the ACCC has recommended the establishment of an ombudsman scheme to protect consumers and business users of digital platforms by fielding complaints, making binding decisions and conducting market research. [19659031]

"The ACCC has identified specific areas where there should be access to an ombudsman, including fraudulent content complaints, business users' complaints related to the delivery of advertising campaigns and suspended business accounts," the regulator said.

The ACCC wants every ombudsman's scheme to have the power to compel Google and Faceboo k to provide information, make binding decisions about their operations, and even order compensation where appropriate.

Should small businesses be covered by the Privacy Act?

Buried on page 479 of the report, the ACCC also lobbied some information to the government and noticed it could review the Privacy Act to assess if it covers enough entities.

Under current law, the Privacy Act which sets a number of regulations for the way companies handle consumer data, does not apply to most businesses with a turnover of less than $ 3 million annually.

If this were changed, hundreds of thousands of additional businesses would be run under the law's provisions and associated compliance frameworks. [19659015] The ACCC has urged the government to take a broader look at Australia's privacy laws and recommended that they be strengthened in several ways.

"[Consider] broader Australian privacy law reform to ensure that it continues to effectively protect consumer personal data in light of the growing volume and scope of data collection in the digital economy," ACCC

said unfair contract terms back in the spotlight [19659030] On Friday, the ACCC reiterated its long-standing call for unfair contract terms (UCTs) to be banned, noting the likelihood of unfair terms between Google, Facebook and businesses across the country.

"The ACCC has observed terms in contracts that may involve a significant imbalance in the rights of consumers and digital platforms, but which, if deemed to be an unfair contract period, will not be subject to fines," the regulator said.

ACCC revealed on Friday and is currently investigating whether Facebook's Terms of Use and Privacy Policy contain unfair contract terms.

The federal government has said it will strengthen current UCT laws, which do not include any financial penalties, and has announced a consultation on whether to ban, but has not committed to this position yet.

Gatekeeping a business risk

The significant market power behind Facebook and Google, along with its position as the owners of retail transactions platforms, raises questions about their "self-preference" capacity, the ACCC said.

Also known as gatekeeping, the practice of using market power from digital platforms shows favoritizing their own products and business interests at the expense of other companies using their platforms.

"They also have the ability and incentive to favor a business for which they have an existing relationship (and for which additional revenue can be generated), such as websites that are members of their display or audience networks or use their advertising technical services , ”so ACCC.

This problem came to a head in Europe as early as 2017 when the European Commission found that Google was systematically ranking prominently with Google Shopping in search results, demoting competing comparison services.

The Commission spent a total of € 2.42 billion ($ 3.9 billion) during the course of the behavior, and while the ACCC has not addressed any of the companies for this behavior in Australia, it said that this area should be closely monitored.

The proliferation of voice shopping and its ability to give digital giants to tech giants priority search results that benefit their own business interests has also been raised in the past, but was not affected by the ACCC.

"The ACCC is still of the opinion that digital platforms with significant market power, and present in related markets, have the ability and incentive to engage in these types of self-preferences." the regulator said.

ACCC has recommended the establishment of a specialist platform for digital platforms in its offices to "build on and develop expertise in digital markets, including monitoring of self-preferences.

It is hoped that this branch would conduct a public inquiry. on the competition for the provision of advertising technology services, an area that the ACCC also identifies as lacking competitiveness.

Full ACCC report, along with the regulator's recommendations, can be reached here.

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