ACCC seeks enhanced regulatory powers over Big Tech in cloud and AI sectors

ACCC has called for enhanced oversight of Big Tech in final report. (Photo: T. Schneider/Shutterstock)

The Australian Competition and Consumer Commission (ACCC) is advocating for stronger regulatory powers to monitor the influence of major tech companies in the cloud computing and AI sectors. This recommendation is part of the regulator’s concluding report from its five-year Digital Platform Services Inquiry, which highlights the urgent need for reform to promote competition and safeguard consumer interests in digital markets.

“Digital platform services are critically important to Australian consumers and businesses and are major drivers of productivity growth in our economy,” said ACCC Chair Gina Cass-Gottlieb. “While these services have brought many benefits, they have also created harms that our current competition and consumer laws cannot adequately address. This is why we continue to recommend that targeted regulation of digital platform services is needed to increase competition and innovation and protect consumers in digital markets.”

Final report reveals ongoing issues with digital market practices in Australia

The ACCC’s report outlines persistent harmful practices impacting consumers and businesses across various digital platforms. It calls for an economy-wide prohibition on unfair trading practices and suggests establishing a dispute resolution mechanism tailored to digital services. Since 2020, the inquiry has been reporting biannually to the Australian government, highlighting concerns over conduct by major digital platforms that hinder fair competition. These behaviours encompass limiting interoperability, favouring their own services, forming tying arrangements, entering exclusivity agreements, and restricting access to essential hardware, software, and data resources.

The report delves into international legislative developments concerning digital competition laws and explores key trends in private messaging apps, app marketplaces, digital advertising services, and online retail marketplaces. It also identifies emerging consumer and competition issues linked to cloud computing, generative AI, and online gaming. These rapidly advancing technologies could exacerbate existing risks or introduce new ones to competition and consumer welfare in Australia, said the ACCC.

The regulator emphasises the necessity for ongoing scrutiny of evolving digital technologies under a proposed digital competition regime. To this end, it advocates for a whole-of-government strategy for regulating digital platforms and proposes establishing the Digital Platform Regulators Forum (DP-REG) as a permanent oversight body.

The report notes that while cloud computing is expanding globally and within Australia, offering significant advantages for businesses and consumers, it also poses potential competition risks. Generative AI development requires substantial cloud resources, raising concerns about anti-competitive practices such as bundling or self-preferencing by cloud providers prioritising their AI products over competitors’ offerings, said the ACCC.

In response to earlier findings on necessary regulatory reforms in the digital economy, the ACCC proposed mandatory codes of conduct for specific ‘designated digital platforms.’ In December 2023, the Australian government accepted these recommendations and began consultations on implementing a new digital competition regime by December 2024. According to the ACCC, this initiative aims to level the playing field between big tech companies and Australian businesses while addressing existing and potential future competition harms.

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