Australian regulators are piling the pressure on Google and Facebook

THE economic influence of giants such as Google and Facebook on the global market is undeniable.

So much so that last year, the Australian Competition and Consumer Commission (ACCC) started five investigations to probe into the effect of the two aforementioned digital platform providers on the market.

The preliminary report from the inquiry that was released soon after, concluded that both internet firms have “substantial market power” in numerous areas, and that there is a “lack of transparency in the operation of Google and Facebook’s key algorithms.”

Citing examples of results page from Google searches as well as Facebook’s user feed, and given the prevalence of these two platforms in Australia, ACCC expressed concerns that the lack of transparency hurts news publishers in the country and their monetization plans.

Call for increased scrutiny

One of the recommendations made by the competition watchdog was to set up a regulatory body to oversee all integrated digital service providers that meet a certain revenue threshold to keep them from engaging in discriminatory practices.

These practices may include, “favoring their own business interests above those of advertisers or potentially competing businesses.”

This new body would also keep a close watch on how online ads are ranked and displayed, as well as the order of news and editorial content on the platforms.

The report added, “The relevant digital platforms would need to be obliged to provide information and documents to the regulatory authority on a regular basis, and the regulatory authority would need appropriate investigative powers.”

Admitting that there has to be a need to restrict businesses from “gaming” the platforms’ algorithm, ACCC said the new body would only provide oversight instead of forcing full disclosures of algorithms.

“The ACCC considers that such a regulatory approach would provide assurances to both businesses and consumers that algorithms are not being used to favor certain businesses or, in the case of news stories, are operating in such a way as to cause significant detriment to the production of news and journalistic content or media markets,” the report read.

Google and Facebook push back

Meanwhile, Google Australia’s Managing Director Mel Silva is understandably concerned by the report had called the proposed oversight body an “algorithm regulator,” and said establishing such body will “risk poor outcomes.”

In a blog post, Silva wrote:

“We already provide extensive guidance on search ranking, including our 164 page Search quality rater guidelines, and the How Search Works guide.

“And of course, Google Search results are open for all to see. We believe this approach balances the need for transparency against the risk of manipulation by bad actors and do not believe that an algorithm regulator would lead to higher quality search results or promote journalism.”

According to Silva, Google, as massive it is, does have a lot of competition, whereby it still battles for searches from users against other search engines and specialized service searches on e-commerce platforms and travel websites.

FAcebook VP of APAC Policy Simon Milner too rejected the proposed regulation, and said that the development of technology has transformed how everything is consumed, including news and Facebook’s algorithm has little to do with media decline in Australia.

“Technology has impacted consumer behavior in very dramatic ways, but turning the clock back won’t be good either for news consumers or for the thriving online services industry that Australia has built. Instead, it is important to look at responsible and effective ways to fund journalism,” said Milner.

Regulating tech companies seems to be something of a double-edged sword, whereby well-intentioned policy that meant protect consumers and businesses may also end up stifling innovative solutions.

And thus, the key is to maintain a balanced approach of common sense regulations, without encroaching too much into technological innovation that is meant to help businesses in the first place.

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