ACCC: Digital takeovers may harm consumers

Consumer watchdog still has digital platforms in its sights after its recent inquiry, with market dominance under scrutiny

The takeover of smaller rivals by large digital platforms, which includes swagging their customer data sets, poses a threat to consumers’ choice and privacy, according to Australian Competition and Consumer Commission (ACCC) chair, Rod Sims.

Speaking at the Consumer Policy Research Conference, Sims said few consumers are fully informed of, nor can they effectively control, how their data is going to be used and shared. 

“There are further concerns when the service they sign up to is taken over by another business,” he said.

Sims singled out Google and Facebook, whose market dominance has been scrutinised by the consumer body in its Digital Platforms Inquiry. These new concerns were raised in relation to Google’s recently announced proposed acquisition of Fitbit.

“The change in data collection policies, when a company like Fitbit transfers its data to Google, creates a very uncertain world for consumers who shared very personal information about their health to Fitbit under a certain set of privacy terms,” said Mr Sims.

Citing other examples, such as Google’s acquisition of DoubleClick, which saw the search giant update its privacy policy years later and remove a commitment not to combine DoubleClick data with personally identifiable data held by Google.

In another case, when Facebook acquired WhatsApp, the social media platform claimed it was unable to establish reliable matching between Facebook users’ and WhatsApp users’ accounts. Yet two years later, WhatsApp updated its terms of service and privacy policy, indicating it could link WhatsApp users’ phone numbers with Facebook users’ identities.

“Given the history of digital platforms making statements as to what they intend to do with data and what they actually do down the track, it is a stretch to believe any commitment Google makes in relation Fitbit users’ data will still be in place five years from now,” said Sims.

The all-encompassing dominance of the two platforms when it comes to digital services can’t be underestimated, with Sims saying the Digital Platforms Inquiry showed for business users and advertisers, Google and Facebook are essentially the gatekeepers to consumers in Australia. 

Not only do they collect data from consumers spending time on their own websites and apps, which accounts for over 39 per cent of Australians’ time spent online, they have the largest network of trackers on third-party websites and apps, Sims explained.

According to the ACCC, a study of the top 1 million websites found a Google tracker on more than 70 per cent of websites and a Facebook tracker on over 20 per cent. Research of the top 1 million apps on the Google Play store found that 88 per cent of the apps were sending data to Google and 43 per cent of the apps were sending data to Facebook. Virtually every keystroke registers a hit in their data bank and reinforces their market power.

However, while their market dominance gives them access to unparalleled amounts of private and public data, it’s precisely this which risks eroding consumer trust because of the lack of transparency about data usage policies.

The ACCC says its inquiry showed around 80 per cent of users considered digital platforms tracking their online behaviour to create profiles, and also the sharing their personal information with an unknown third party, a misuse of their information.

“Vague, long and complex data policies contribute to this substantial disconnect between how consumers think their data should be treated and how it is actually treated.

“Transparency and inadequate disclosure issues involving digital platforms and consumer data were a major focus of our Inquiry, and remain one of the ACCC’s top priorities.”

Since the inquiry, Sims said it continues to take action on these issues and that consumer regulators worldwide are taking up cases against certain digital platforms in relation to market dominance, privacy policies, and data usage practices. Locally, the Australian government is expected to release its response to the ACCC inquiry and while the regulator is seeing some positive changes from the platforms, it remains a significant challenge. 

“We are concerned that protections for consumers need to match the new digital age as the existing regulatory frameworks for the collection and use of data has not held up well to the challenges of digitalisation.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.  

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