Taking on big tech: where does Australia stand?

Big tech is under fire in Europe. In its latest sting, the European Commission has slapped Google with an eye-watering €4.3 billion (AU$6.8 billion) fine for anti-competitive tying of its Android operating system to its in-house search engine and web browser.

The decision follows the Commission’s €2.4 billion (AU$3.5 billion) fine against the company for giving illegal advantage to its comparison shopping service, just over a year ago.

And the search company is not alone in feeling the heat from Brussels. Apple, Amazon, Facebook and Microsoft have all been on the receiving end of what some see as a “techlash” reflecting anti-US bias and protectionism.

So far, US competition authorities have taken a far more restrained approach. The Federal Trade Commission looked into various Google practices in 2012 and found it had no case to raise around search bias. Antitrust officials are instead encouraging vigilance but caution when it comes to intervening in data-driven markets characterised by high rates of innovation.

Closer to home, the Australian Competition and Consumer Commission (ACCC) is conducting an inquiry into the impact of digital platforms on media and advertising markets. It is attracting intense interest, not just here but abroad. There are also reports of the ACCC separately investigating Google’s data-harvesting practices.

Read more: What consumers need from the ACCC inquiry into Google and Facebook

Will the ACCC follow the US or European approach?

It is tempting to speculate about the outcomes of the inquiry in those terms, but to do so would be a mistake.

There are differences in the substantive laws across jurisdictions. The Australian rule on misuse of market power, for example, is not an exact replica of either its US or EU counterpart.

What’s more, the law in any country can only be understood by considering its ideological roots, the political and socio-cultural conditions in which it is shaped, and the institutional framework that determines its application. In other words, history and context matter.

Divergence between the US and European Union on how to deal with large powerful companies is nothing new and, in context, not all that surprising.

In the US competition is about consumer welfare

US antitrust laws were introduced in response to the economic and political power of “big business” and what was seen as a need to protect the “little guy” from a few “robber barons”.

However, since the 1970s, under the influence of the Chicago school, commitment to economic efficiency in the interests of consumer welfare has become the singular goal of antitrust.

In practice, this has meant agencies and courts have stressed a ground rule of trusting markets to self-correct and erring on the side of false negatives rather than false positives. Where there is intervention, it is to protect competition and not competitors.

In recent times, there has been growing dissatisfaction in some circles about the levels of concentration in the US economy and the role that permissive antitrust has played in creating so-called “data-opolies”.

Nevertheless, Chicagoan themes continue to underpin self-restraint on the part of US antitrust agencies, including when it comes to big tech.

In Europe fairness counts too

While EU competition laws are also concerned about the consumer, they are more pluralistic in their approach. This reflects their experience in the aftermath of the second world war, and the single market project.

EU-style antitrust has therefore always been based on – and continues to reflect – more normative values than the US, protecting ideas like economic freedom and fairness.

Fairness in this context, however, is not necessarily about protecting the losers from a legitimate competitive process. It is about protecting the right to equal opportunities for efficient competitors, or merit-based competition on a level playing field.

It is also about ensuring fairness for consumers. Anti-competitive conduct, the European competition boss argues, is unfair because it deprives consumers of the power to arbitrate the marketplace.

Australian competition law has its own flavour

Born in the late 1970s, the modern version of Australian competition law has followed the Chicagoan song sheet, favouring economic efficiency for consumer welfare as its primary purpose.

However, in a relatively small economy, marked by oligopolistic structures and high concentration in key sectors, Australia has always struggled with a balancing act between promoting efficiency and protecting small business.

“Fair competition” (a version of the iconic “fair go”) is a phrase often heard in Australian competition law dialect. But it is not to be confused with propping up inefficient rivals at the expense of competition.

Unlike in many other countries, Australia’s competition rules live within a statute that also has rules to deal separately with ensuring small businesses and consumers are treated fairly.

Read more: Australia's consumer laws still don't cover e-books and many other digital products

Under the Competition and Consumer Act, the competition, fair trading and consumer protection provisions are mutually reinforcing. Also unlike in either the US or EU, these provisions are enforced by a single agency, the ACCC.

Distinctive too is that the ACCC is an agency with substantial regulatory responsibilities in areas including communications and infrastructure. These may be relevant in a debate about whether powerful tech companies should be regulated like public utilities on the grounds that they provide services that are essential to consumers.

The ACCC’s inquiry will be holistic

Given this legislative and institutional framework, the ACCC’s take on big tech is likely to be a mix of US and EU approaches with more than a dash of homemade seasoning.

Competition

It will consider if platforms have market power, in which markets, and how such power is being exercised. Implications for the price, quality and choice of news for consumers will loom large.

It will consider what impact the proposed consumer right to data may have.

Consumer protection

It will also examine whether platforms are providing users with adequate levels of privacy and data protection.

Fair trading

The ACCC will look into whether the large platforms are behaving in a way that dampens innovation and investment incentives for start ups and smaller players.

Regulation

There will be consideration of whether platforms have an unfair advantage because the regulatory playing field is not even. Regulation of journalistic content and copyright will also come into play.

Read more: News outlets air grievances and Facebook plays the underdog in ACCC inquiry

Most importantly, the inquiry will not be static in its focus. It will have a firm eye on potential long term trends in and impacts of technological change within an Australian context.

Within a broad holistic framework, the ACCC will examine these questions in an integrated way. And will take its time to “get the answers right”.

A version of this article appears on Pursuit. Professor Caron Beaton-Wells will launch a podcast on 26 July about Competition Lore, focusing on the challenges of competition in a digital age. Listen to ACCC Chairman Rod Sims discuss the Digital Platforms Inquiry in episode three of the podcast.