Wednesday, 06 March 2019 09:56

Facebook says digital platforms report at odds with ACCC's mandate Featured

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Facebook says digital platforms report at odds with ACCC's mandate Image by GraphicsSC on Pixabay

The Australian Competition and Consumer Commission's preliminary report from its digital platforms inquiry has taken a "near-exclusive focus on protecting certain publishers from disruption and competition" and is at odds with the competition watchdog's mandate, the Australian arm of social media behemoth Facebook claims.

In a submission made in response to the release of the preliminary report, Facebook said the ACCC failed to understand the "broader challenges facing journalism and news production".

Due to this preoccupation, many of the recommendations made in the report would not help journalism become any more sustainable, Facebook said, adding that some recommendations would cause significant harm.

"...their effect would be to protect selected news publishers from competition while sacrificing benefits enjoyed by millions of Australian users and advertisers—all without evidence that anyone has misused market power," the American firm said.

"Most notably, there appears to be no justification for the... recommendation to appoint a government News Ranking Regulator to 'monitor, investigate and report on' what news should or should not be featured in Australians’ private News Feeds."

The ACCC had concluded in the preliminary report that Google had 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.

ACCC chair Rod Sims said at the time: "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."

Facebook agreed with the ACCC that consumers should have the means to manage their personal information online and said this was why it invested "significantly in a multi-layered privacy approach, consistent with the best practice guidance issued by the Office of the Australian Information Commissioner".

The company said it also agreed on the proposal for an ombudsman to handle advertising-related complaints from advertisers and consumers. "Facebook supports sensible regulation that is effective, evidence-based, protects consumer interests and is pro-innovation for Australian businesses," the submission said.

"That could include, among other things, regulations strengthening privacy protection for consumers across all industries, and appropriate standards and commitments around transparency and user control of News Feed ranking."

Facebook said the challenges of monetisation faced by news organisations had started long before it arrived on the scene, claiming that Australian newspaper circulation had started to decline in the 1990s. The shifting of advertisements to the Web and the switch to people reading news online had added to the publishers' woes.

But, the submission argued, it was a mistake to say, as the ACCC did, that the digital advertising growth had come entirely at the expense of print media. "In fact, digital platforms like Facebook have grown the market for advertising. Facebook helped propel that growth with an unprecedented level of investment and innovation for the benefit of users and advertisers," it said.

Facebook said it was working to promote news publishers and quality journalism, adding that it had rolled out "significant innovations" in Australia over the last year and a half based on direct feedback and testing with local publishers.

The submission said appointing a government regulator for news ranking would not solve the problems of sustainability that journalism faced. "We suspect that neither the ACCC nor the Australian government would propose appointing itself as a monitor, investigator, and reporter of the daily process by which The Sydney Morning Herald predicts reader interests and chooses the news articles that will appear on its front page," it said.

"However, that is the functional equivalent of what the preliminary report proposes that the government do with respect to Facebook and its users. So what are the facts that would justify taking such an extraordinary step? They are not found in the preliminary report."

It said the recommendation to appoint an advertising regulator was conflating Facebook with Google "and misunderstands how advertising is supplied and delivered on Facebook".

Facebook also claimed the preliminary report was based on "unsound and unsupported" economic analysis. No evidence had been advanced to show that Facebook had misused its market power, though this did not preclude the ACCC from recommending reforms.

"But it is important that in undertaking any competition analysis, the ACCC applies a rigorous approach supported by economic evidence and consistent with internationally-accepted standards," the submission said.

"The preliminary report does not do this. [It] finds that Facebook has substantial market power in three relevant markets, but these conclusions are not supported by economic analysis and are contradicted by commercial evidence that Facebook has provided, which the preliminary report makes no attempt to grapple with. In several instances, the report’s findings appear to rest solely on allegations made by companies that Facebook competes with."

When it issued the preliminary report on 18 December, the ACCC had said it would issue a final report by June this year. Last month, ACCC chair Rod Sims said he was seeking more data from the advertising industry about the conclusions reached in the preliminary report.

Facebook's submission can be found here.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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