Submission on the final report of the Australian Competition and Consumer Commission’s Digital Platforms Inquiry

With Darcy Allen, Dirk Auer, Justin (Gus) Hurwitz, Aaron Lane, Geoffrey A. Manne, Julian Morris and Jason Potts

The emergence of “Big Tech” has caused some observers to claim that the world is entering a new gilded age. In the realm of competition policy, these fears have led to a flurry of reports in which it is asserted that the underenforcement of competition laws has enabled Big Tech firms to crush their rivals and cement their dominance of online markets. They then go on to call for the creation of novel presumptions that would move enforcement of competition policy further away from the effects-based analysis that has largely defined it since the mid-1970s.

Australia has been at the forefront of this competition policy rethink. In July of 2019, the Australian Competition and Consumer Commission (ACCC) concluded an almost two-year-long investigation into the effect of digital platforms on competition in media and advertising markets.

The ACCC Digital Platforms Inquiry Final Report spans a wide range of issues, from competition between platforms to their effect on traditional news outlets and consumers’ privacy. It ultimately puts forward a series of recommendations that would tilt the scale of enforcement in favor of the whims of regulators without regard to the adverse effects of such regulatory action, which may be worse than the diseases they are intended to cure.

Available in PDF here.

Submission to the Australian Competition and Consumer Commission’s Digital Platforms Inquiry

With Gus Hurwitz.

Executive summary: The analysis in the Australian Competition and Consumer Commission’s Preliminary Report for the Digital Platforms Inquiry is inadequate in several ways, most notably:

  • It mischaracterises the relationship between changes in the economics of media advertising and the rise of digital platforms such as Facebook and Google.
  • Its analysis of the dynamics of media diversity is misguided.
  • Its competition analysis assumes its results and makes unsupportable claims about the division of advertising markets.
  • It is recklessly unconcerned with the freedom of speech consequences of its recommendations.
  • It fails to recognise, and proposes to supplant, the ongoing social negotiation over data privacy.
  • It provides a poor analytic base on which to make policy recommendations, as it applies a static, rather than dynamic, approach to its analysis.

There is a real danger that if the policy recommendations outlined in the preliminary report were to be adopted, Australian consumers would be severely harmed.

Available here.