Australia Looks to Rein in Power of Facebook and Google

By Rob Taylor 

SYDNEY--Australia's antitrust regulator called for measures to curb the influence of Facebook Inc. and Alphabet Inc.'s Google in news and advertising and warned that a tech-sector watchdog may be needed to prevent abuses of power.

The Australian Competition and Consumer Commission, delivering its report at the end of a yearlong inquiry into digital media, proposed changes to merger laws to protect smaller tech firms and said major companies should offer more search and browsing choices for consumers. That could have implications for Apple Inc., which offers Safari as a default on its devices.

The regulator's report broadens the international challenges facing tech companies including Google and Facebook amid heightened scrutiny of how they handle sensitive data in other markets. Last week, the U.K. Parliament released a trove of internal Facebook emails that show Mark Zuckerberg and other executives pursuing hard-nosed tactics to stifle competitors.

One of the ACCC's top criticisms was a lack of transparency in how tech companies use algorithms to rank online inquiries. That opaqueness could warrant the establishment of a watchdog to ensure tech companies aren't abusing their power, the ACCC said.

Apple didn't immediately respond to the report. A spokeswoman for Google said the report had looked at "important topics in relation to Australia's changing media and advertising industry." A Facebook spokesman said the company is reviewing the ACCC's analysis and recommendations.

Australian Prime Minister Scott Morrison set up the inquiry last year in his former role as the country's treasurer. The probe was tasked with examining the impact of tech platforms on the loss of journalism jobs and a sharp fall in advertising dollars flowing to traditional media from $1.4 billion to $140 million between 2001 and 2016. The regulator was also asked to look into tax arrangements, amid concern of profit-shifting by overseas-based multinationals.

The ACCC said Facebook accounted for 46% of Australian display advertising revenue, including via its fast-growing photo-sharing app Instagram. Google accounted for around 94% of online searches in the country.

The ACCC report is preliminary, with a final report due after Australia holds a national election in May. It will then fall to the next government to decide whether to enact any recommendations. Still, the ACCC said it would be sharing its findings with regulators and other groups overseas, including the Organization for Economic Cooperation and Development.

Among its other recommendations, the regulator called for changes to merger law to prevent Google and Facebook using their dominance to buy up rivals. That would include an examination of whether deals would further concentrate personal data in their hands.

Tech firms passively collected data from online browsing and used it to assemble detailed profiles that could be accessed by advertisers or third parties, the inquiry found, as happened with Cambridge Analytica using Facebook data during the U.S. presidential election.

That could warrant changes to Australia's Privacy Act to give consumers more control over their data, backed up by penalties on companies that breach the law, the ACCC said.

Write to Rob Taylor at [e-mail]

(END) Dow Jones Newswires

December 10, 2018 02:35 ET (07:35 GMT)

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