The ACCC’s new Chair, Ms Gina Cass-Gottlieb, has signalled that the year ahead for the tech sector will entail a continuation of focussed regulatory scrutiny, particularly through the consumer protection lens. We reflect on five recent ACCC speeches and announcements which have reiterated the continued focus on the tech sector from Australia’s competition and consumer regulator.
|The bottom line is: tech sector in-house counsel can expect the ACCC to remain interested in tech firm’s algorithms, data-handling practices and use of personal information, and the ACCC continues to support the introduction of a new “unfair trading practices” prohibition, which it sees as having an important role to play in the tech sector.|
The ACCC’s recent signals on consumer laws and the tech sector
In addresses delivered in September 2022, the ACCC’s Chair provided insight into the ACCC’s views on consumer law and tech firms:
- Five proceedings initiated against major digital platforms: In a 9 September 2022 address, the Chair noted that the ACCC had seen “concerning instances” of conduct by digital platforms which are said to have impacted consumers including “manipulative practices that harm consumers as well as competition”. The Chair referred to five proceedings commenced by the ACCC against large digital platforms which all related to alleged false or misleading representations, such as alleged false or misleading representations as to the collection and use of personal location data on mobile phones; alleged false or misleading statements in warning messages on an app; and alleged false or misleading representations as to whether a digital platform’s app kept users’ personal activity data private.
- The ACCC is analysing algorithms and source code: In a 16 September 2022 address, the Chair noted that, in relation to at least one proceeding commenced by the ACCC and “several cases since”, the ACCC had examined firms’ algorithms and source code to understand how a particular technology product’s algorithm operated. In one case, this analysis of algorithms was said to be “crucial to establishing the conduct under investigation”. The Chair noted that the ACCC had observed instances where some algorithms “boosted” a firm’s “own products when determining the order to display search results to consumers on their sites”. This is consistent with our experience advising clients on investigations and enforcement action in this sector. Algorithms are of course often considered to be highly commercially sensitive, and there are issues around the location of source code which is relevant to their responsiveness to compulsory processes of Australian regulators and courts.
- Confirmation of ACCC’s support for a proposed new “unfair trading practices” prohibition: In a 28 September 2022 address, the Chair stated that the ACCC looked forward to continuing engagement with the government in relation to the potential introduction of a new “unfair trading practices” prohibition. In the ACCC’s view, such “a general prohibition will be an important adjunct” to, but will “not replace unconscionability”. The ACCC has seemingly placed importance on this proposed prohibition because the ACCC remains concerned, for example, by “the extent of unfair trading practices used by digital platforms including dark patterns or interface design choices that exploit behavioural biases and frustrate consumer choice, and excessive collection and use of personal data.” (When the ACCC refers to “dark patterns”, it means the design of user interfaces “intended to confuse users, make it difficult for users to express their actual preferences, or manipulate users into taking certain actions”.)
- Past enforcement action indicates that the Australian Consumer Law is currently the ACCC’s go-to legislation for the tech sector: In three keynote speeches, the ACCC Chair referred to the same 5 enforcement proceedings commenced by the ACCC against tech firms, and each arose under the Australian Consumer Law. The ACCC considers these to be marquee enforcement matters that should put the sector on notice of its compliance expectations.
- A proposed new “unfair trading practices” prohibition is on the agenda: The ACCC has reinforced its support for the introduction of a new “unfair trading practices” prohibition. If legislated, a detailed assessment would be needed as to the concept of “unfairness” and its application to different products and features. We will of course stay close to this matter and keep you updated on any developments.
- ACCC’s 2023-2024 enforcement priorities: The themes addressed above provide context to, and indeed are reflected in, the ACCC’s 7 March 2023 Compliance and Enforcement Priorities announcement (HSF recently provided a briefing as to these focus areas). One priority area is “consumer and fair trading issues relating to manipulative or deceptive advertising and marketing practices in the digital economy”. The ACCC Chair used “manipulative” in each of the speeches referred to above and “manipulative practices” in the digital economy are now an enforcement priority for the ACCC. Another priority area is broader again: the enforcement priorities refer to “competition and consumer issues relating to digital platforms”.
- Digital Platform Services Inquiry: On 8 March 2023, the ACCC separately announced that it will examine the “expanding ecosystems” of digital platforms in Australia as part of its five-year Digital Platform Services Inquiry and, to that end, the ACCC published an “issues paper”. The ACCC’s report, due in September 2023, will “consider the extent of practices by digital platforms that impede consumers from making effective and informed decisions”, “how the expanded ecosystems of large digital platform service providers have impacted the collection and use of personal data of Australian users”, and the impact of digital platforms’ “expansion strategies” on the potential for consumer harm.
The bottom-line: regulatory scrutiny to continue in the near-term
Regulatory scrutiny of tech firms, particularly large digital platforms, continues apace. Firms can expect the ACCC to take a regnant interest in potential consumer harm arising from firms’ algorithms, data handling practices, and the use of consumers’ personal information. If the ACCC decides to investigate a matter, tech companies can expect the ACCC to seek to examine how a firm’s algorithms operate, and whether those algorithms align with representations made to consumers, in assessing whether consumers have been misled, and for the ACCC to take an “enforcement action first” approach to addressing its concerns.