Tougher rules are needed to stop platforms like Google and Apple using their market power to push consumers into expensive payment options, according to competition regulator Rod Sims.
In a speech on Thursday, the chair of the ACCC will argue that legal battles against digital platforms are insufficient to curb their growing influence over app marketplaces, which may be pushing up prices for consumers.
“Enforcement actions and market studies are necessary to tackle the problems arising from dominant digital platforms, [but] they are not enough on their own,” Mr Sims will tell a global competition webinar, according to an advanced copy of his speech.
“This conclusion is of fundamental importance.”
Mr Sims has led Australia’s competition and consumer regulator (ACCC) into many legal battles against digital platforms in recent years.
But now he says the platforms are too powerful to deal with in the courts alone.
Using app marketplaces run by Apple and Google as examples in his speech, Mr Sims will argue that each platform dominates the industry through their production of smartphones.
He will say Apple and Google require developers to process payments through them and impose 15 or 30 per cent commissions that prevent consumers from being told about other – possibly cheaper – options.
“The operation and policies of these app stores have huge implications for users on both sides of the services,” Mr Sims will say.
It found the market is plagued with poor transparency, inadequate dispute resolution, and unfair and potentially anti-competitive behaviour.
“We do not believe that Apple and Google are striking the right balance between providing streamlined, consistent processes for consumer complaints,” Mr Sims said.
The regulator is also probing consumer ‘gatekeeping’ at Amazon.
This is when a digital platform prioritises the display of its own products to consumers over those of third-party suppliers, even if they are selling better quality products.
The ACCC has suggested bringing Apple and Google into line by forcing them to make changes to their secretive algorithms while removing rules preventing developers from advertising alternative payment methods.
But Mr Sims said market studies are insufficient to compel the giants into action.
“It is likely, however, that up-front rules and regulation may be needed to achieve these objectives,” he said.
Media bargaining code could show the way: ACCC
The Morrison government has already shown a willingness to legislate against digital platforms, having created the news media bargaining code with Facebook and Google, Mr Sims said.
“We are extremely pleased with the results so far,” he said of the code.
Overseas, foreign regulators are also making moves to curtail digital platforms, including efforts to stop Amazon and Facebook dominating the retail and social media markets.
One issue, however, is that the platforms just keep growing, Mr Sims said.
In the decade to 2019, Google, Facebook, Microsoft, Amazon and Apple together made an estimated 431 acquisitions worth $US155.7 billion ($214.8 billion).
Mr Sims said regulators around the world must coordinate to deal with their market dominance.
He cited efforts in Europe, where the European Commission is probing Apple’s mobile ecosystem, and in the United States, where litigation is underway against Google for allegedly monopolising Android apps.
“International coherence and alignment on both regulatory and enforcement approaches is fundamental,” he said.
“Our own work at the ACCC must be tailored to match our own issues and concerns.
“But although the finer details of our approaches may vary, competition authorities must align our approaches as much as possible.”