The Australian Competition and Consumer Commission (ACCC) has issued a clarion call for regulatory reform in response to the growing influence of digital platforms. The report, the seventh in the Digital Platform Services Inquiry, underscores the need for more robust regulations to keep pace with the rapid expansion of digital giants such as Amazon, Apple, Google, Meta, and Microsoft.

The ACCC said digital platforms have expanded beyond their original core offerings (for example, in search and social media) to other markets including generative AI, digital health services, information storage, education, and financial products. Their reach now involves products and services in many markets and multiple touch points with consumers and businesses. “Australians increasingly use digital platforms for work, study and play and can benefit from their wide range of interconnected products and services," ACCC Chair Gina Cass-Gottlieb said. "While the size and scale of digital platforms alone does not raise concern, there is a risk that this expansion may be driven by a desire from digital platforms to entrench or extend their market power.”

The report uses smart home devices and consumer cloud storage as case studies to illustrate the impacts of digital platform expansion. It does not make specific findings of anti-competitive conduct but suggests that certain behaviours by digital platforms with significant market power could harm competition.

"The continued expansion of digital platforms has also increased the risk of those platforms engaging in harmful behaviour, such as invasive data collection practices and consumer lock-in practices that can reduce choice and stifle innovation," said Cass-Gotlieb. The ACCC's statements underscore the growing concern over the unchecked power of digital platforms and their potential to harm consumers and competition.

The report also delves into the role of digital platforms in developing emerging technologies. It notes that the five largest platforms are making substantial investments in areas such as generative AI and virtual reality. This development further highlights the need for regulatory oversight to ensure that these technologies are developed and deployed in a manner that respects consumer rights and promotes competition.

The ACCC also finds that as digital platform service providers expand, they have greater access to rich consumer data, which they can collect and use throughout their ecosystems of products and services. For example, Amazon, Apple and Google collect vast amounts of consumer data through smart home devices. The ACCC said it was not always clear from the relevant privacy policies if the data collected exceeds that which is needed for device functionality or product improvement.

“Consumers who use multiple products from a single digital platform may be forced to agree to unfavourable terms and conditions and/or accept unpalatable data collection practices due to a lack of suitable alternatives or because it is simply too inconvenient or costly to move out of that ecosystem,” said Cass-Gottlieb.

As digital platforms create products and services in other sectors, consumers face the risk of losing control over their data, the ACCC said. In a previous report, the ACCC made recommendations including new service-specific mandatory codes of conduct for certain 'designated digital platforms.' These recommendations, along with the proposed reforms in the latest report, form part of the ACCC's ongoing efforts to ensure that the digital platform sector remains competitive and consumer-friendly.