Sara Court, Commissioner of the Australian Competition and Consumer Commission (ACCC), writes about efforts to protect consumers’ interests in digital markets without stifling innovation in advance of the 2020 OECD Competition Open Day.
As Australia’s national competition and consumer regulator, the ACCC’s job is to promote competition and fair trading, and to regulate Australian national infrastructure to help to make our market economy work for everyone.
In addition to raising questions of the trade-off between privacy and convenience, the digital platforms are also presenting significant challenges to competition agencies around the world.
There is also the important question of how to protect consumers’ interests in these new digital markets without stifling innovation. These are issues the ACCC has been grappling with in recent market studies and inquiries, including the comprehensive Digital Platforms Inquiry, and in implementing Australia’s Consumer Data Right.
The Consumer Data Right
What is it?
The Consumer Data Right (CDR) is an economy-wide reform that will facilitate data sharing between data holders and accredited service providers in a way that promotes competition and innovation in the economy. The CDR is being implemented initially in the Australian banking sector, and then will be rolled out in stages across other sections such as energy, communications and potentially superannuation.
I expect the CDR to encourage competition between service providers, leading not only to better prices for customers but also more innovative products and services. It will let consumers leverage the value in their own data – a shift from current position where companies treat consumer data as a corporate asset from which they alone can derive value.
The core obligations of the CDR regime will be on data holders and accredited data recipients. Entities such as banks holding consumer data will have two key obligations:
- Sharing data: at a consumer’s direction, a data holder must share a consumer’s data with either:
- an accredited data recipient, such as a Fintech company requesting access to the consumer’s data in order to provide a service to that consumer
- the consumer themselves.
- Publishing generic information: a data holder will be required to make certain generic product data publicly available – generic product information includes: product type, product name, product prices, fees and charges (including interest rates), features and benefits, terms and conditions, and customer eligibility criteria.
- Essentially a data holder will be required to make publicly available any product data that does not relate to an identifiable or reasonably identifiable person.
Benefits for consumers
Financial products and markets are continually growing in complexity. The more complex a product becomes, the more difficult it is for consumers to understand the product’s key features and risks. Complex products are also difficult to describe in a clear, concise and effective manner in disclosure documents. Lots of us need help navigating this complexity – in selecting, managing, assessing and switching between different product offerings.
The CDR will give consumers a better understand of their data, allowing them to make more informed choices. The CDR will facilitate new entrants to make use of that data, and provide competitive and innovative product offerings in designated CDR sectors, including, but not limited to:
- comparison tools for financial products, such as credit cards and mortgages, with product recommendations tailored to consumers’ actual spending and repayment patterns;
- budgeting tools that show consumers all their financial products on one screen and help them better manage their finances by providing insights into current spending habits.
Our role in delivering the CDR is ground-breaking territory for the ACCC. It is a role which is clearly linked to our foundational objectives of empowering consumers and improving competition.
The Digital Platforms Inquiry
In December 2017 the Australian Government directed the ACCC to conduct a price inquiry into the effects of digital platforms in Australia.
During the inquiry the ACCC looked at the impact of search engines, social media platforms and content aggregation platforms on media and advertising markets. We also looked at the impact of platforms on news and journalism.
The Inquiry had a significant focus on Google and Facebook. This is because of their influence, size and significance. Google and Facebook are by far the two largest digital platforms in Australia by revenue and time spent by consumers online.
Changes to merger laws to recognise the power of data and potential for future competition in the market. Would also require large digital platforms to give advance notice of acquisitions.
Creation of a specialised digital platforms branch within the ACCC with the power to monitor, investigate and report on digital platform markets.
The largest digital platforms be required to submit codes of conduct to regulators to govern (amongst other things):
– how they address complaints of disinformation (‘fake news’),
– their negotiations with news media businesses.
Overhaul of Australia’s privacy laws to strengthen notification and consent requirements and the introduction of an enforceable digital platforms privacy code to target particular issues arising from the data practices of digital platforms.
Amend consumer law to prohibit unfair contract terms and unfair practices. Currently, unfair contract terms are voidable but do not attract penalties.
Australia’s communication and media authority to review internal dispute resolution processes at large digital platforms. Establishment of government ombudsman scheme to resolve complaints.
The Australian Government released its response to the Digital Platforms Inquiry final report in mid-December 2019. It agreed to fund an ongoing Digital Platforms Branch within the ACCC, which would monitor and report on digital platform markets, and conduct inquiries as directed, starting with an inquiry into the supply of ad tech services which enables targeted online display advertisements, and the supply of online advertising services by advertising and media agencies. The ACCC was also asked to facilitate the development of a voluntary code between digital platforms and news media businesses to address the bargaining power imbalances.
We have also investigated and taken enforcement action against digital platforms. For example, in late October 2019, the ACCC instituted proceedings alleging Google misled consumers about the personal location data Google collects, keeps and uses.
The review of customer loyalty schemes
Almost nine in ten Australian adults are members of a loyalty scheme, with the average Australian carrying between four to six loyalty cards. Some of the most popular Australian loyalty schemes report having more than 10 million members.
In December 2019 we published our final report into customer loyalty schemes. In it, we raise concerns about the opaque terms and conditions of major loyalty schemes that operate in Australia. These complex terms prevent consumers from making informed choices that align with their privacy preferences. Consumers also have limited control and visibility over how their personal information and other data could be used, shared and monetised.
As observed in the Digital Platforms Inquiry these issues are relevant to competition and data driven innovation in the digital economy as these innovations rely on the trust of consumers to enable to free flow of information. In particular, if consumers view that they cannot understand or control the use of their personal information, they may seek ways to undermine the accuracy of the information. In addition, empowering consumers to make more informed choices about how their data is processed assists in increasing competition between businesses in the privacy dimension of their services.
The ACCC’s final report highlighted specific issues including:
- whether consumers receive the benefits advertised by loyalty schemes
- unilateral changes by loyalty schemes to their terms and conditions, and poor communication about how their schemes work
- poor disclosure about how consumer data is used and shared, including selling insights from consumer data to other parties without consumer knowledge and
- the sharing of consumer data with unknown third parties.
To address the problematic practices observed in the review, the ACCC called on loyalty schemes to review their practices and reinforced the recommendations of the Digital Platforms Inquiry Final report for consumer and privacy law reform.
Trust is at the heart of the digital economy. Transparency over the collection and use of data will allow consumers to exercise real choice and meaningful control over their data.
Thoughtful regulatory frameworks can help us harness the benefits of innovation while protecting society from its potential harms.
2020 OECD Competition Open Day Blog Series
Blog 1: Collective bargaining 4.0: using labour law to extend coverage to new forms of work
Blog 2: Competition enforcement could help labour markets function better
Blog 3: Charting the way forward for digital competition policy
Blog 4: Innovation and competition in financial markets
Blog 5: BigTech vs BigBang: Competition in Financial Services
Blog 6: Merger enforcement in dynamic and innovative markets
Blog 7: Protecting consumers’ interests in digital markets – The experience of Australia