The 378-page report, released on Monday, has hinted that the two companies, which earn about four-fifths of Australia's $8 billion digital advertising, could be involved in discriminatory conduct, the ACCC said in a statement.
It called for submissions on the preliminary report by 15 February 2019. The final report is scheduled to be released in June 2019.
The report contains 11 preliminary recommendations and eight areas for further analysis. It said the watchdog had concluded that Google has substantial market power in online search, search advertising and news referral while Facebook had similar clout in markets for social media, display advertising and online news referral.
The ACCC also proposed that a new or existing regulatory authority be given the task of investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content. Other preliminary recommendations suggest ways to strengthen merger laws.
Additional preliminary recommendations deal with copyright, and take-down orders, and the review of existing, disparate media regulations.
Consumers would be better off if they could make informed and genuine choices as to how digital platforms collect and use their data, the ACCC said, proposing changes to the Privacy Act to enable consumers to make informed decisions.
Another recommendation being considered is for a specific code of practice for digital platforms’ data collection to better inform consumers and improve their bargaining power.
“Digital platforms have significantly transformed our lives, the way we communicate with each other and access news and information. We appreciate that many of these changes have been positive for consumers in relation to the way they access news and information and how they interact with each other and with businesses,” ACCC chair Rod Sims said.
“But digital platforms are also unavoidable business partners for many Australian businesses. Google and Facebook perform a critical role in enabling businesses, including online news media businesses, to reach consumers. However, the operation of these platforms’ key algorithms determining the order in which content appears is not at all clear.”
The preliminary report also questioned whether social media companies were willing to curb fraudulent advertising and also queried the use of algorithms to track what content is being viewed by users.
“News and journalism perform a critical role in society. The downturn in advertising revenue has led to a cut in the number of journalists over the past decade. This has implications across society because of the important role the media plays in exposing corruption and holding governments, companies, powerful individuals and institutions to account,” Sims said.
“Organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia; they increasingly perform similar functions as media businesses like selecting, curating and ranking content. Yet, digital platforms face less regulation than many media businesses.
“The ACCC considers that the strong market position of digital platforms like Google and Facebook justifies a greater level of regulatory oversight.
“Australian law does not prohibit a business from possessing significant market power or using its efficiencies or skills to ‘out compete’ its rivals. But when their dominant position is at risk of creating competitive or consumer harm, governments should stay ahead of the game and act to protect consumers and businesses through regulation.”