The data economy will drive dynamic change

| October 28, 2018

ACCC Chair Rod Sims has discussed a range of local and global issues in regulating the data economy in a speech delivered in Sydney.

Mr Sims examined the difficulty regulators face in determining the competition impacts when dynamic data companies merge, consumer issues and how the ACCC is well placed to take enforcement action in relation to data issues.

“One of the key challenges with merger cases in digital markets is predicting the likelihood of future competition between the target and the acquirer,” Mr Sims said.

“In fast moving markets, this is clearly difficult particularly when the target is a start up or currently only active in a neighbouring market.”

“Such transactions can end up leading to a large reduction in competition but, at the time of merger review, the chance of this occurring may well be considered low or difficult to predict.”

Mr Sims pointed to Facebook’s purchase of Instagram in 2012 as one example of the difficulties competition regulators face when determining the competitive impact of acquisitions in dynamic industries like social media. Instagram had just 13 staff and no revenue when it was sold in 2012, but has since grown into the second most popular social media platform in Australia, behind Facebook.

“It would be extremely difficult to predict what was going to happen in social media in the last five years, including whether in the absence of the acquisition by Facebook, Instagram would have grown and become an independent challenger to Facebook.”

“We do know where we are now. Instagram is the second largest social media platform, by some margin, after the Facebook platform in terms of the number of monthly active users in Australia.”

Mr Sims also discussed how consumer data is handled and the ACCC’s lead role in enforcing the Consumer Data Right (CDR).

“This is an exciting new role for the ACCC which is throwing up many new issues for the ACCC and no doubt many more to come. We are out there talking to banks, consumer groups, fintechs and broader stakeholders,” Mr Sims said.

“The CDR will enable customers to safely share their transaction, usage and product data with trusted service providers, if they choose to do so.”

“It will reduce the costs consumers incur when switching between providers and will lower the barriers to entry for new providers. Accordingly, it will encourage competition between service providers, leading not only to better prices for customers but also more innovation of products and services.”

Mr Sims also said that while they manifest in new ways, the competition and consumer law issues we see emerging in data are just incarnations of what we have seen in traditional markets.

He highlighted the example of the ACCC’s action against Trivago, which is currently before the courts. He said it underscores the ACCC’s growing concerns in relation to comparison platforms, and how algorithms present search results to consumers.

“In some respects, this is consumer protection 101. Allegations that a company says one thing – expressly or by implication – but it does another either overtly or more surreptitiously,” Mr Sims said.

”The ACCC is very well placed to deal with a range of future data issues, including in relation to enforcement. The consumer data right, and the digital platforms inquiry, set us up very well indeed for the issues to come.”

“We also have our Strategic Data Analysis Unit, which played a pivotal role in our action against Trivago.”

The Consumer Data Right (CDR) is a competition and consumer reform announced by the Australian Government in May 2018 and the ACCC has been delegated the lead role in rule-making, consumer education and enforcement.

Under draft legislation to implement the CDR, the ACCC will have rule-making responsibilities. In setting rules, the ACCC will consult with the Office of the Australian Information Commissioner (OAIC), the public, and sector-specific regulators. The ACCC will also work closely with the data standards body, Data61.