The Australian Government has now released its response and an 'Implementation Roadmap' (Response) to the Australian Competition and Consumer Commission's (ACCC) Digital Platforms Inquiry Final Report (DPI Report), following a 12 week public consultation which closed on 12 September 2019. Our summary of the DPI Report is available here.

The Response accepted the conclusion that there was a need for reform, and outlines how and when the Government intends to reform the digital landscape in order to address competition and consumer law, privacy, copyright and media regulation, and "get the right regulations in place" for the digital world.

This alert identifies the key points from the Government's Response and how they might affect you and your organisation going forward.

1. Key points

The Response sets out four immediate commitments and other long-term commitments, with most developments to occur between 2020 and 2021.

Key changes on the horizon are:

  • the development of a digital platforms specialist branch at the ACCC;
  • a broad review of Australian privacy law;
  • broad changes to Australian media content laws, designed to create a level playing field for online and offline businesses;
  • an inquiry into the supply of adtech services and advertising agencies;
  • the development of a code of conduct for disinformation and news quality, to be overseen by the Australian Media and Communications Authority (ACMA);
  • the development of a code of conduct addressing bargaining imbalances between new media businesses and digital platforms;
  • the development of a voluntary notification protocol, designed to give the ACCC advance notice of any digital platform acquisitions that may affect competition in Australia; and
  • a pilot digital platforms dispute resolution scheme.

Importantly, the Response did not pick up key competition law changes proposed to merger control laws or to require Google to provide Android users with a choice of default browser and search options, although these changes were not ruled out and may still be adopted at a later date.

2. Material takeaways

National media reform: Media regulation reforms to commence in 2020 and will focus on:

  • the development of a platform-neutral media regulatory framework, including harmonising classification across delivery formats such as games, films, series on all platforms but excluding programs broadcast on television (the Terms of Reference are found here);
  • a review of the advertising rules and restrictions across all delivery platforms and mechanisms to monitor and enforce the regulatory framework, to commence later in 2020; and
  • potential content obligations on subscription video-on-demand services.

Potential implication for organisations: The proposed large-scale media regulation reform will be an iterative process over a longer period of time, but the immediate commitment demonstrates the Government's priority to reform all types of mediums and formats across the media landscape in both online and offline delivery of content to Australian consumers. These changes will significantly impact both traditional and new media businesses, both in a regulatory sense and in relation to the competitive markets in which they operate. All media companies are advised to stay abreast of these developments and set in motion plans to navigate the changes with minimal business interruption.

New Privacy legislation: The Government will conduct a general review of the Privacy Act 1988 (Cth) (Privacy Act), with particular attention to amending the definition of 'personal information,' the notification requirements, the consent requirements and pro-consumer defaults, and the introduction of direct rights of action for individuals (which may or may not operate in tandem with a new statutory tort of privacy). This will build on the already-announced higher penalties for breach of the Privacy Act. These items will require more consultation with stakeholders, but we can expect the Government to draft new legislation in 2020 to:

  • increase the maximum civil penalties under the Privacy Act to match those under the Australian Consumer Law; and
  • introduce a binding online privacy code applicable to social media and other online platforms that trade in personal information, to be developed by the Office of the Australian Information Commissioner (OAIC).

Potential implication for organisations: The Government is focused on ensuring privacy laws empower Australian consumers and protect their data. While the OAIC has not yet imposed the maximum civil penalty under the Privacy Act, we could see a shift towards increased and more robust regulatory enforcement, given (a) privacy enforcement developments abroad; and (b) the onset of data subject litigation through the courts if the government legislates the proposed direct right of action for individuals to seek compensation for interference with their privacy. These changes will be whole-of-economy changes, and will affect all entities subject to the Australian Privacy Principles (APP entities). All APP entities are advised to follow these developments, and use the implementation of any changes as an opportunity to conduct a general privacy health-check. This should include a review and update of privacy documentation, such as the entity's privacy policy and notices, consent mechanisms and data breach response plan, as well as staff training.

Governance: The Government has made the following commitments in the immediate term, being:

  • The "Digital Platforms Branch": a new ACCC unit to investigate the state of competition and consumer protection in digital platform markets, including developments in the EU, and to lead a separate inquiry of digital advertising markets including media agencies, with a preliminary response due in 2020. The Government has committed $27 million in funding for the new unit, which will also be able to take any necessary enforcement action;
  • Pilot dispute resolution scheme: a pilot external dispute resolution scheme in joint consultation with large digital platforms, consumer groups and government agencies in 2020, which may result in a Digital Platforms Ombudsman being established to resolve complaints and disputes between digital platforms and individual consumers/small businesses in 2021
  • Media businesses code of conduct: a voluntary, binding code of conduct to be developed by the ACCC governing the relationships between digital platforms and media businesses to increase transparency when reporting on and disseminating news content, to be finalised no later than November 2020. If agreement cannot be reached, it could result in the creation of a mandatory code instead;
  • Combating 'fake news' code of conduct: a voluntary code of conduct to address disinformation and news quality while noting the need to balance "disinformation with rights to freedom of expression and speech," to be overseen by ACMA. Potential further reform is expected in 2021; and
  • M&A: a voluntary notification protocol for large digital platforms regarding any proposed acquisitions, but timing is not specified.

Potential implication for organisations: The introduction of a specialist digital platform branch of the ACCC is a clear expression of the Government's intention to actively regulate digital platforms and business conducted on them. These changes, and the others listed above, create regulatory obstacles, but also opportunities for those who follow them closely and are prepared to adapt. Although these codes will be voluntary, there will be pressure to volunteer to be bound by them, failing which the Government may seek to implement mandatory codes.

3. Rejected ACCC recommendations

The Government has declined to support the following recommendations from the ACCC, being:

  • No copyright take-down code: the ACCC's recommendation for an industry code to govern take-down processes for digital platforms operating in Australia, managed by the ACMA. The Government cited concerns about effects on the copyright market and stakeholders. However, the Government has committed to a review of copyright enforcement reforms in late 2020;
  • No public interest journalism tax incentives: the ACCC's recommendation for a change in tax settings to support public interest journalism. The Government noted that there were adequate pre-existing mechanisms for some public interest journalism organisations to seek tax deductable incentives, and will otherwise focus on the deductible gift recipient reforms proposed in late-2017;
  • No current changes to merger control laws: the ACCC's recommendation to amend merger control laws to specifically include an assessment of data and technology in a merger context. The Government did not rule this amendment out in the long term, but considers that more public consultation is required in relation to how this amendment will be applied. This consultation is flagged to occur during 2020.
  • No current requirement for Android search engine options: the ACCC's recommendation to require Google to provide Android users with a choice of default browser and search options. The Government did not specifically reject this recommendation, however, is requiring the ACCC to monitor the effectiveness of a similar requirement being rolled out in Europe before the Government takes further action in relation to this recommendation.

4. Other policy recommendations

The Government has also recommended other policy developments including providing media industry support through funding and grants for regional journalism, exploring models to help promote and develop media literacy in the community and in schools. The Response also acknowledges work already underway, such as the consultation, commenced in March 2019, on potential reforms to strengthen unfair contract terms protections.

5. Digital: a global preoccupation

The Government’s response has very clear parallels with policy debates playing out in other parts of the world, notably Europe where both the European Commission and the UK government commissioned detailed reports in the context of global calls for regulation of the digital economy. For example, the UK Furman Report recommended that a new digital markets unit be created with specific powers: (i) to set a code of conduct for companies with “strategic market status”; (ii) on data mobility and open standards; and (iii) to secure access to non-personal anonymised data. The same report suggested an obligation on digital companies that have been designated with a strategic market status to make the UK authority aware of all intended acquisitions. The UK authority is also undertaking a market study into the digital advertising market and is expected to publish its early findings very soon.

The vast number of authorities looking into the same issues (and platforms) clearly gives rise to a risk of different and potentially conflicting legal and regulatory outcomes, with adverse effects for businesses and their consumers. There is a definite need for international coordination – a point explicitly acknowledged by ACCC commissioner Sarah Court when speaking at a competition law event in Brussels last week.

6. What’s next

The Government's full response is available here.