Chapter 1Introduction

Referral of the inquiry

1.1On 26 September 2022, the Senate referred the following matter to the Economics References Committee (the committee) for inquiry and report by the last sitting day in 2023:

The nature and extent of international digital platforms operated by large overseas-based multinational technology companies—so called ‘Big Tech’—exerting power and influence over markets and public debate, to the detriment of Australian democracy and users, with particular reference to:

(a)the market shares of such international digital platforms across the provision of hardware and software services;

(b)vertical integration, or linking of multiple services, products and/or hardware, within such international digital platforms and resultant outcomes on users’ ability to exercise choice;

(c)whether algorithms used by such international digital platforms lack transparency, manipulate users and user responses, and contribute to greater concentrations of market power and how regulating this behaviour could lead to better outcomes in the public interest;

(d)the collection and processing of children’s data, particularly for the purposes of profiling, behavioural advertising, or other uses;

(e)the adequacy and effectiveness of recent attempts, in Australia and internationally, to regulate the activities of such international digital platforms;

(f)broader impacts of concentration of market power on consumers, competition and macro-economic performance, and potential solutions; and

(g)any other related matters.

Conduct of the inquiry

1.2The committee advertised the inquiry on its website and released an issues paper to guide submitters.

1.3It also wrote to relevant stakeholders and interested parties inviting submissions by 28 February 2023. The committee published 77 submissions, which are listed at Appendix 1.

1.4The committee held three public hearings:

26 July 2023 – Sydney in person and by teleconference.

22 August 2023 – Canberra in person and by videoconference.

03 October 2023 – Canberra by videoconference.

1.5A list of witnesses who gave evidence at the hearings is available at Appendix2.

1.6Links to public submissions, Hansard transcripts of evidence and other information published by the committee for this inquiry are available on the committee's website.

Acknowledgements

1.7The committee thanks all individuals and organisations who assisted with the inquiry, in particular those who made submissions or gave evidence at public hearings.

Structure of the report

1.8This chapter provides details on the referral and administration of the inquiry.

1.9Chapter 2 examines economic benefits from the rise of technology, respective market shares of Big Tech firms and the risks of concentrated market power of Big Tech.

1.10Chapter 3 details a range of competition concerns arising from the power of Big Tech and proposed solutions in relation to vertical integration, mergers and acquisitions, self-preferencing, tying and interoperability.

1.11Chapter 4 describes bargaining imbalances that arise between consumers and Big Tech companies. It considers issues relating to this imbalance including unfair contract terms, unfair trading practices and inadequate dispute resolution, and proposals to address these concerns.

1.12Chapter 5 explores privacy and competition concerns in relation to the data collection practices of Big Tech. It considers concerns with profiling, data brokers and cloud storage, and potential solutions to these concerns.

1.13Chapter 6 considers the risks of Big Tech algorithms and automated decision‑making including filter bubbles, bias and discrimination, dis- and misinformation and lack of Australian content discoverability. It then considers the role of transparency in mitigating these harms.

1.14Chapter 7 looks at the consumer harms of scams, harmful apps and fake reviews, and possible mechanisms to address these concerns.

1.15Chapter 8 examines the risks arising from collection, collation and use of children’s online data. It discusses unethical and criminal behaviours, as well as potential solutions for protecting children online.

1.16Chapter 9 explains the potential risks and opportunities for reform of emerging technologies, with a focus on the metaverse and artificial intelligence.

1.17Chapter 10 provides the committee’s view and provides several recommendations to promote better consumer and competitive outcomes in digital platforms markets.