Chapter 4Bargaining imbalances
4.1International digital platforms hold a significant level of power over individuals and Australian businesses, ranging from small enterprises operating via online marketplaces, news media selling content and buying advertising services, to the Australian Government’s use of cloud infrastructure and services.
4.2This chapter discusses issues relating to this bargaining imbalance, including:
how unfair contract terms can be implemented by BigTech.
unfair trading practices used by Big Tech.
inadequacy of dispute resolution processes and options for reform.
Unfair bargaining power and contract terms
4.3Businesses’ reliance on Big Tech leaves them vulnerable to exploitative or unfair contract arrangements.
4.4Submitters argued the significant market power of digital platforms means consumers have no or limited bargaining power to negotiate terms, conditions and prices.[1] This power imbalance means platforms can impose exploitative agreements where terms are offered on a ‘take it or leave it’ basis. This imbalance is explored below across a range of markets and service types.
4.5The NSW Small Business Commissioner 2022 Small Business Survey found:
… one in four [small businesses] encountered difficulties with the digital platform or online marketplace. Qualitative survey responses suggest small businesses experience challenges leveraging the benefits of online marketplaces or digital platforms and accessing customer service and support … Reported challenges includes pricing structures that do not align with small business profit margins, high service charges without performance accountability and payment delays which make it difficult for small businesses to manage their cashflow.
Data terms
4.6A significant number of businesses are reliant on Big Tech for advertising on social media services and search engines. This reliance enables Big Tech to impose unfair conditions on business transactions, forcing businesses to grant access to user generated data and facilitating Big Tech gains in advertising revenue, against the threat of losing access to the platform service altogether.
4.7Free TV Australia (Free TV) advised the committee of multiple instances where Big Tech companies used their dominant market power to enforce non–negotiable contract terms. It submitted these terms are unfair and anticompetitive:
… because there is no reason to link data collection with services offered in other markets, other than to provide such a financial disincentive for the publisher to opt out, that they continue to share the data with Google or Meta, as applicable, so as to not suffer revenue loss.
4.8It provided the following examples:
Google requires publishers to give Google ownership of all data collected as part of providing ad server services. If an ad publisher opts out of this requirement, Google automatically disables eligibility of that publisher’s inventory from accepting any Google data targeted campaigns.
Meta forces publishers to share user data with Meta when implementing sharing tools to allow users to share articles on Meta’s social media platforms.
The Google Ad Manager product for connected televisions collects user data and passes it through the ad tech stack for use in other market segments. When requests have been made by app developers to stop this data collection practice, Google stated that this feature is ‘part of their roadmap and is not able to be switched off locally.
Books
4.9Submissions commented on how the market power of large eBook sellers, particularly Amazon, creates negotiating imbalances and disadvantages physical and smaller businesses.
4.10The Australian Publisher’s Association observed:
International online retailers like Amazon have significantly impacted physical bookstores, making it difficult for them to compete with their convenience, extensive selection, and discounted prices. This has led to a decrease in foot traffic to physical bookstores, negatively impacting small businesses that rely on in-store sales. Amazon's dominance has also made it harder for smaller publishers and independent authors to get their works noticed.
4.11The Australian Library and Information Association (ALIA) and National and State Libraries Australasia (NSLA) commented on issues caused by monopoly suppliers being able to unilaterally change terms without notice and control supply of digital resources. It provided an example of Amazon refusing to allow libraries to purchase certain eBooks:
As authors are bound to exclusive publishing deals, when a platform such as Amazon refuses to license to libraries those books are not available to the wider public through the library service, cutting off equitable access to these resources. Unlike physical books, there are no alternative sellers for libraries if a monopolistic platform will not negotiate. The library cannot buy from another supplier, or purchase second hand materials. The community simply has no access.
4.12The ALIA and NSLA further stated that Amazon’s practices affect the incomes of authors, for example by encouraging consumers to return audiobooks for full refunds:
When an audiobook was “returned” the author had to pay back the money from the original sale. In essence Amazon was giving customers a library‑like experience, however unlike a library which pays for content, this model was being financed from authors’ meagre incomes.
App stores
4.13The Apple and Google app stores are nearly the only options for creators of mobile apps to provide their product to consumers. Therefore, developers must accept their terms and conditions of usage in order to sell their product.
4.14Submitters argued this level of market control enables Apple and Google to impose prescriptive and even harmful conditions on app developers' access to each app store that may limit, eliminate, or otherwise interfere with app developers' ability to distribute their applications.
4.15Mr Luc Delany, Chief Executive Officer, International Social Games Association, stated:
We are highly regulated by the app stores, which set up their own sets of policies, and they have a high degree of control over how our services are operated and how a consumer can use and purchase from us or, through the platform, through the app stores. The app stores dictate the terms of service. They are take it or leave it. They dictate if your service even gets in front of a customer and if it is discovered, how it's discovered.
4.16Similarly, Free TV gave an example of Apple changing terms without notice:
… for apps that required a sign-on, those apps must now offer “Sign in with Apple” as an option. This change was made with no ability to negotiate with Apple for alternative arrangements. The announcement was made on 12September 2019. Any apps that were in development at that time had to immediately comply with the new terms and conditions. Existing apps had until April 2020 to comply. While the development costs associated with this change were significant, more fundamentally, this changed the nature of the relationship between the consumer and the app developer/provider. Rather than a more direct communication between local content providers and their users, Apple now controls that interaction through a hashed e-mail address that routes all communication via their servers. There is no transparency as to how Apple itself uses the information that it is able to be obtained by performing this intermediation role.
Cloud
4.17In relation to cloud markets, some submissions argued that the dominant market power of Amazon Web Services makes it difficult for smaller businesses to negotiate contract terms and get fair prices.[13]
4.18Mr Rob James, Principal Consultant and Chief Executive Officer, Rob James Consulting Pty Ltd, described the market as a ‘pseudo-duopoly between Microsoft and Amazon’ which affects the ability of small businesses to compete.[14] He stated smaller cloud businesses:
… don't have the resources or the capabilities to be able to manage or negotiate a structure that is going to be suitable for them when dealing with large organisations that are very inept to be able to negotiate anything specific for them … you're limited to dealing with a handful of players that are based predominantly in the United States … Again, for larger public sector organisations that do have some buying power, that's less of an issue, but, for the small to medium sector, that does become a challenge ...[15]
4.19This view was contested by Amazon Web Services, which argued that the cloud sector is highly competitive as it is ‘a small fraction of the global IT services market’ and faces numerous competitors.[16]
4.20Submissions argued the dominance of some Big Tech providers in the cloud sector means they can impose non-transparent agreements, making it difficult for business consumers to understand conditions of signing up to a particular service, such as disadvantageous terms or switching costs.[17] Google summarised:
Importantly, restrictive contracting and tendering practices are often not transparent to industry participants in confidential tender processes, and cloud customers may not appreciate the disadvantages of restrictive terms until they later seek to add new cloud functionality or switch some services (or consider upfront price too attractive to refuse in any event). With overly complex agreements that lock in clients for years to come, some legacy software vendors may be forcing customers toward a monolithic cloud model, but also creating downstream effects that would limit choice and potentially disrupt growing and thriving digital ecosystems around the world.
4.21The committee was advised that customer billing information is provided in an opaque fashion, making it difficult to switch between services because customers cannot understand their current consumption costs.One submission provided an example of the confusing billing system:
Amazon Web Services [AWS] has multiple websites to determine your final bill or invoice. The information is spread across these multiple sites, making it very difficult (some would say impossible) to determine what cloud services have really been purchased. One of the billing websites (‘AWS Cost Explorer API’) requires users to pay to access the information about what the user has spent money on. Amazon Web Services has another billing related website that summarises the final costs as ‘zero dollars’ unless you expand each of the individual services that have been consumed. The immediate impression a user gets when visiting the billing summary is that they have not spent any money, which is very incorrect and, in my opinion, deceptive. Microsoft Azure and Google Cloud Platform both experience similar issues (not as poor in my view). An example that is common across each cloud provider is that users cannot map individual service usage to the amount it cost… The end result is that users of these cloud providers end up paying for services that they do not even know they have switched on or have enabled.
Telecommunications
4.22Optus highlighted the ‘significant imbalance in power’ between telecommunications companies and large ‘streamers’, such as Netflix, YouTube, Disney, Amazon Prime, Facebook, Instagram and TikTok.
4.23Optus raised issue with the fact that streamers do not pay for traffic over the telecommunications infrastructure. The rapid growth of telecommunications traffic has placed strain on communications infrastructure and forced telecommunications providers to make large capital investment to keep up with demand. It is a growing concern for telecommunications providers to sustain the required growth.
4.24Streamers obtain additional revenue from high bandwidth services, without incurring additional costs. Optus summarised:
Essentially, streamers benefit significantly from a substantial cross-subsidy provided by the Australian communications sector and internet users, leading to an unsustainable imbalance that permeates the entire telecommunication ecosystem.
4.25Optus recommended implementation of a policy that requires large streamers to contribute to investment costs. This could be through the establishment of regulated commercial agreements or a digital levy. The United Kingdom (UK), Spain, France and Switzerland have all implemented digital services taxes or levies of this kind.
4.26Relatedly, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) suggested the government continue to invest in regional broadband to support small businesses. Access to reliable internet supports competition as it allows businesses to innovate, reach new customers and grow online.
Financial technology (fintech)
4.27The committee was advised that there are a limited number of payment platforms used in Australia, creating an uncompetitive environment for payment technology pricing.
4.28AirWallex stated the current Australian payment laws and regulations exacerbate the market concentration of payment platforms such as Apple Pay and Google Pay.
4.29This market dominance makes it difficult for innovative fintech companies and payment providers to succeed, in turn limiting competition for bigger companies such as banks ‘and ultimately leading to less choices and higher prices for Australian families and businesses’. The small number of accessible payment networks and technology platform providers means payment providers have limited ability to ‘shop around’ for better deals.
4.30AirWallex advised that to match consumer expectations, payment providers such as AirWallex must use popular online payment platforms. The Reserve Bank of Australia (RBA) mandates pricing restrictions on the fees paid by merchants for the use of card-based transactions (interchange fees). However, the RBA ‘does not regulate the costs those payment platforms charge payment providers, and the interchange fee restrictions are less than it costs to use a payment platform’.
4.31Payment providers must therefore process transactions for consumers at a financial loss. When combined with RBA-enforced restrictions on what payment providers can charge for interchange fees, small fintech companies face a significant cost barrier to increased investment in Australia and delivering technological advances.
4.32AirWallex recommended reconsideration of the interchange fee ceiling to balance against the limited number of suppliers. For example, in Singapore and Hong Kong, interchange fees have a tiered system.
Streaming video on demand
4.33Screen Producers Australia (SPA) identified detrimental business practices applied in commercial commissioning contracts by global streaming video on demand (SVOD) platforms such as Netflix, Amazon Prime, Disney+ and Paramount+. SVODs are highly successful global technology businesses with rapidly increasing revenues and audiences, and which are increasingly replacing more traditional platforms of free to air TV, cinema and DVD as the predominant way Australians seek screen entertainment.
4.34SPA stated the rise in streamers has changed the bargaining dynamics between Australian content producers and streaming businesses, allowing them to impose unfair terms:
With negotiating power largely in the hands of streaming services, Australian producers and creative contributors are increasingly expected to sign away a full suite of proprietary rights over a longer – sometimes indefinite time period. The result of this is the accelerating loss of Australian intellectual property and business autonomy for Australian screen producers.
4.35SPA considered the circumstances that led to the development of the News Media and Digital Platforms Mandatory Bargaining Code (NMBC) are nearly identical to the bargaining imbalances for Australian screen producers and called for enhanced contract protections in the screen industry.[34]
4.36Internationally, France, the UK and Canada have implemented regulatory interventions to address the market imbalance faced by independent screen producers.Their approaches range from a focus on collective bargaining rights for independent producers, investment requirements in cultural and linguistic content, and intellectual property rights arrangements.
News Media
4.37The NMBC came into effect on 3 March 2021. The NMBC was conceived to address the bargaining imbalance between local news organisations and digital platforms using local news content on their services.[38] The mandatory code incentivised digital platforms to reach commercial deals with Australian news organisations for the inclusion of news media on platforms.
4.38The Minister may designate a platform under the NMBC, initiating a mandatory process for negotiation and arbitration. When making a designation, the Minister must consider whether a platform’s agreements have made a ‘significant contribution to the sustainability of the Australian news industry’. To date, no digital platform has been designated under the NMBC.
4.39However, Google and Meta have struck over 30 commercial agreements with Australian news businesses. Treasury considered these unlikely to have been made without the incentive of the NMBC.
4.40Although the NMBC has been positively received overall, some submitters suggested there is a need for reform. The Special Broadcasting Service Corporation (SBS) stated the NMBC is a ‘key support to public interest journalism, [but] it has not fully achieved its intended outcomes and there remains opacity about its effectiveness.’[43]
4.41Submitters argued the failure to designate any platforms to date weakened the NMBC as there is not sufficient incentive for large platforms to negotiate. SBS suggested Meta has not entered meaningful negotiations with SBS. Commercial Radio & Audio (CRA) commented:
90% of commercial radio networks have been unable to strike a deal with Google.
95% of commercial radio networks have been unable to strike a deal with Meta.
4.42Despite the frustrations of some media organisations, Treasury argued the NMBC is fulfilling its purpose:
… the objective of the [NMBC] is to address bargaining power imbalances so as to ensure news businesses receive fair remuneration from digital platforms for the value their content generates. It is not designed to redistribute resources across the news sector or to guarantee that all news businesses receive funding. Other policy and funding tools are available to achieve these objectives.
4.43CRA recommended a prominence regime to ensure Australian radio can compete with Big Tech:
The prominence regime applicable to commercial radio must ensure free, easy and universal access to Australian free to air commercial radio stations on car entertainment systems, as well as through smart speakers and other connected devices that are capable of delivering radio. To maintain the current diversity and accessibility of radio content it is vital that any prominence regime applies equally to AM, FM and DAB radio.
Reform to unfair contract terms
4.44The Australian Competition and Consumer Commission (ACCC) proposed strengthening of contract terms to create a more even bargaining relationship between Big Tech and consumers. This was supported by the Centre for AI and Digital Ethics.
4.45Free TV recommended a code which requires designated entities to offer fair terms and conditions of service that:
restrict the ability of designated entities to charge inflated prices;
impose positive obligations to provide fair and non-discriminatory terms of access to key services and platforms, supported by an audit obligation;
prohibit terms of service that require acceptance of data collection by the platforms in the provision of services (such as Google’s ad serving, or Meta’s social sharing tools);
address the restrictions on how publishers can seek to monetise their content, including by prohibiting restrictive terms relating to the placement and pricing of advertising and the sharing of their data with the digital platform …
Unfair trading practices
4.46Many submitters advised the committee that the current regulatory framework lacks adequate legal protections from unfair trading practices. Unfair trading practices may create consumer harms and an unfair playing field for small businesses and can discourage small businesses from competing in markets.
4.47In relation to potential consumer harms, the Consumer Policy Research Centre (CPRC) commented:
Unlike other countries that have prohibitions on unfair practices, several business practices that lead to unfair consumer outcomes are currently not illegal in Australia. Examples include business models that thrive on high‑pressure sales of low value products, that fail to provide accessible and meaningful support to their customers and are predicated on opaque business processes that undermine consumer autonomy. Often these unfair business practices target those consumers specifically experiencing vulnerability or disadvantage.
4.48The ACCC identified several harms that could be considered unfair trading practices but are unlikely to be covered by the Australian Consumer Law. These included:
adopting business practices to dissuade a consumer from exercising their contractual or other legal rights;
inducing consent or agreement by very long contracts, providing insufficient time to consider contracts or all-or-nothing ‘clickwrap’ consents;
engaging in harmful and excessive tracking, collection and use of data; and
using dark patterns and other interface design strategies (such as prominence and framing) which impede choice and harm consumers.
Dark patterns
4.49Submissions raised concerns about ‘dark pattern’ use, a practice which refers to a user interface which has been designed to take advantage of how users habitually use platforms thereby tricking them into doing things they didn’t intend to. Dark patterns may confuse users into buying or signing up to something by accident, spending more money, or sharing more information than intended.
4.50The CPRC stated 83 per cent of Australians have experienced negative consequences because of dark patterns. Manipulative online designs cost Australians money, lead to a loss of control over their personal information and impact their wellbeing.
4.51Australian research found that young people are especially vulnerable to dark patterns. Reset Australia explained the prevalence of dark patterns employed in apps popular with young people to confuse users and obtain data:
An analysis of the privacy policies and practices of 10 apps popular with Australian young people noted that eight of them deployed dark patterns, which actively attempted to “trick” young people into agreeing to sharing more personal data than is necessary. Dark patterns are frequently deployed in children’s apps too. For example, kids games often ask children to share their location or phone books, or encourage them to “share their top score,” which requires linking the app to other accounts or sharing it with contacts. It is not always explicitly clear that this will allow additional data collection and transfer. This active obfuscation is often exacerbated by potentially misleading statements by digital platforms … when questioned about behavioural advertising and children across 2021 and 2022, Meta issued a range of opaque potentially misleading replies.
4.52The ACCC raised issue with online service providers making it difficult for consumers to cancel subscriptions after free trials, with the consequence that many subscriptions roll-over to paid subscriptions despite consumers no longer using or wanting them.
4.53For example, Amazon is currently facing court action against the United States of America (US) Federal Trade Commission (FTC) for enrolling consumers into its paid Amazon Prime subscription without consent and then making it difficult to cancel. The FTC maintains this behaviour is manipulative, coercive or deceptive.
4.54In response to these concerns, Mr Michael Cooley, Director, Public Policy Australia, Amazon Australia, said the cancellation process had since been updated and is ‘two clicks … simple, transparent and clear’.
Unfair trading practices prohibition
4.55The ACCC recommended an economy-wide unfair trading practices prohibition be implemented to protect consumers and small businesses. This recommendation was supported by multiple submissions.
4.56The CPRC outlined potential harms and argued:
Failure to protect consumers will mean that Australians will continue to be exposed to business models that manipulate consumer consent, use opaque business processes that undermine consumer autonomy or exploit consumer vulnerabilities. Australian consumers deserve better.
4.57The Centre for AI and Digital Ethics supported the introduction of a prohibition on unfair trading to better address ‘systematic undesirable business practices’ than currently covered by the Competition and Consumer Act 2010 (CCA):
… we support substantive measures to require platforms to take responsibility for their dealings with consumers, and promote fair and honest practices. These include robust enforcement of the unfair contract terms provisions in the ACL [Australian Consumer Law] as applied to the context of platform services. In particular, we support a prohibition on unfair trading to act as a ‘safety net’ catching other forms of unfair conduct.
4.58CHOICE also voiced its support for unfair trading laws and noted they work effectively in other jurisdictions including the United States, European Union (EU), UK and Singapore:
Consumers still lack legal protections from unfair trade practices… This gap allows businesses to operate unfair business models with limited legal consequences. The ACCC’s Digital Platforms Inquiry identified this as an important policy solution which will address consumer harm on digital platforms.
4.59The CPRC outlined several factors to consider when drafting an unfair trading prohibition, based on its analysis of international practices. It should:
be drafted as a principles-based law but with specific guidance or an evolving a blacklist of unfair practices to give clarity to both regulators and businesses
allow regulators to investigate and proactively enforce the law before widespread harm takes place
have provisions in place for the law to evolve over time to address new and emerging unfair practices
hold businesses accountable through penalties and enforcement action that effectively deter unfair business practices
offer meaningful redress to consumers impacted by unfair practices
quickly stop practices found to be unfair overseas from making their way to Australia
expand the scope of consumer harm to include the impact on mental health in addition to financial and reputational loss.
4.60The government has acknowledged that unfair trading practices are not covered in existing provisions of Australia’s consumer laws. Federal, state and territory consumer ministers agreed the matter warranted further investigation, so the Department of Treasury released a Regulation Impact Statement for public consultation, concluding in November 2023. Responses to that consultation are currently being considered and a Decision Regulatory Impact Statement will be produced during 2024 to discuss the results of the consultation process and identify a preferred regulatory response.
Dispute resolution processes and escalation
4.61With the accelerated digitisation of services, particularly during the COVID-19 pandemic, individuals and businesses are increasingly reliant on digital platforms.
4.62The ACCC noted:
Digital platforms have fundamentally changed the way in which Australian small businesses connect and sell to their customers, and for many they are their only channel to their marketplace.
4.63As in any business relationship, problems and complaints can arise. Digital platforms most commonly receive complaints regarding decisions to block or terminate user accounts, changes to platform services as well as fake reviews, scams and harmful apps.
4.64While small businesses and consumers are protected under the Australian Consumer Law (ACL) including consumer redress options, enforcing these rights is challenging in the digital economy.
4.65Dispute resolution can advance through four stages:
(1)internal resolution with the user utilising self-help material, FAQs or community forums;
(2)internal resolution using platform-led processes through webforms or in-situ reporting;
(3)external dispute resolution; and
(4)judicial resolution.
Inadequate internal dispute resolution processes
4.66Several submissions suggested the internal complaints handling mechanisms of many international digital platforms are difficult to access and are, in many cases, inadequate for small businesses and individuals to reach a satisfactory outcome when issues such as access difficulties or security breaches occur.
4.67A 2022 report commissioned by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) as part of an External Dispute Resolution Scheme Feasibility Study noted:
Platforms have put in place a range of sophisticated capabilities to prevent and minimise approximately 75 million potential problems each year in Australia before they escalate. Machine learning, AI and specialist review teams work proactively to block harmful content, eliminate bad actors and scams, demote or remove fake reviews and enforce guidelines.
These capabilities enable platforms to prevent 95% of potential problems before they were experienced by the user, or result in a complaint or dispute.
4.68Despite these capabilities, around 880 000 disputes arise each year that cannot be resolved within existing systems. Misdirection and lack of transparency around why content has been blocked or accounts suspended were key challenges for businesses and users. Additionally, 16 per cent of issues on digital platforms remain unresolved.
4.69The ACCC succinctly outlined the problem:
Consumers and small businesses seeking to enforce their existing rights against digital platforms under the ACL face obstacles such as unclear and costly dispute resolution processes, as well as informational and power disadvantages.
4.70For many small and family businesses operating primarily on social media and digital platforms, restoring accounts that have been shut down after being hacked is particularly problematic as businesses are excluded from accessing the platform’s internal complaints mechanisms without an active account.
4.71Small businesses and individuals also wear much of the costs of the resolution process. DITRDCA’s study stated:
Given the scale and scope of interactions online, the economic cost of issues, complaints and disputes in Australia each year is $4.2 billion. Of which the majority ($3.7 billion) is the cost to users and businesses. A significant driver of this cost is the time and effort associated with misdirection and difficulties in resolution when an issue or complaint escalates to a dispute.
4.72The ASBFEO emphasised the need for improved processes:
Implementing adequate internal dispute resolution processes and dedicated contacts would enable small businesses to have their dispute handled efficiently and resume operating their businesses sooner.
4.73The Australian Communications Consumer Action Network (ACCAN) found that almost three in four Australians agree that it needs to be easier to make a complaint and to get complaints resolved when interacting with digital platforms.
Improving internal processes
4.74The ACCC’s 2019 Digital Platforms Inquiry Final Report recommended the Australian Communications Media Authority develop minimum internal dispute resolution standards to apply to digital platforms.
4.75The ACCC’s 2022 Digital Platform Services Inquiry interim report No. 5 – Regulatory reform (ACCC Regulatory Reform Report) also outlined the need for:
Mandatory internal dispute resolution standards that ensure accessibility, timeliness, accountability, the ability to escalate to a human representative and transparency.
4.76The ASBFEO advocated for a collaborative model with the ASBFEO working alongside digital platforms to improve their internal processes with a focus on preventative measures and information tools. In particular, the ASBFEO noted digital platforms require functional support tools, internal escalation steps and real person contact points.
International examples
4.77Internationally, the EU’s Digital Services Act (DSA) enables users to defend themselves against ‘unjust restrictions’ by setting out rules for internal complaints handling systems and out of court dispute mechanisms.
4.78Japan has placed co-regulatory obligations on specified digital platforms to create systems and procedures for complaints and dispute handling.
External escalation
4.79Where internal dispute resolution processes fail to reach a satisfactory outcome for users or businesses, disputes with digital platforms are often escalated to independent third parties, such as the ASBFEO, for assistance.
Current external resolution options
4.80The ASBFEO currently assists with business-to-business dispute resolution, establishing connections with digital platforms, encouraging engagement, helping the parties to find a way forward and consider the type of resolution that may suit the parties. However, the committee heard that it is not appropriate for a government body to resolve every individual or small business dispute.
4.81The ASBFEO advised it has generally experienced constructive engagement with digital platforms when initiating contact on behalf of small and family businesses, including obtaining contact points within platforms to escalate disputes. However, the committee was advised that ASBFEO’s experience is not always consistent or successful.
4.82While the ASBFEO plays a role currently providing some dispute resolution for small businesses it cannot make binding decision or order compensation. The committee was advised:
… our legislation enables us to encourage their engagement and to suggest to them what a path forward to resolution might look like. In the absence of that, the only punitive action we can take is to perhaps provide a notification to other businesses that, in our dealings with this business, we haven't had satisfactory interactions, and people might want to think twice about doingso.
4.83The ASBFEO can also refer individual case matters to other agencies on critical matters (system wide or strategic matters) for their consideration.
4.84The ACCC also noted the limited powers of existing dispute resolution:
In the ACCC’s view, existing bodies lack the resources to deal with the range, volume and complexity of disputes occurring on digital platforms, and may not be capable of delivering sufficient remedies.
Reform to dispute resolution
4.85Evidence to the committee supported the need for clearer complaints handing processes and proposed a range of dispute resolution and escalation options for improving consumer and competition outcomes.
4.86The ASBFEO proposed it could hold an expanded role as an external dispute resolution service, providing a formalised external escalation option for small business where internal resolution with platforms have been exhausted. However, the ASBFEO suggested a further escalation point to a regulator that is less ’light handed’ than the ASBFEO and which holds determinative powers could also be considered.
Consumer Voice
4.87The ACCAN proposed a consumer voice be funded ‘to advocate for consumers on digital platforms policy matters.’ The consumer voice would engage with future policy and regulatory consultation processes around increasing digital platform issues facing consumers.
Super complaints mechanism
4.88One option the committee received support for was a ‘super complaint’ mechanism. Such a mechanism was seen by the ASBFEO as a way for credible dispute resolution agencies (such as the ASBFEO) to escalate and refer disputes between small business and digital platforms direct to the ACCC for guaranteed investigation.
4.89The proposed super complaints mechanism is similar to provisions for trusted flaggers in the EU’s DSA or provisions in the UK’s Online Safety Act 2023 (see Box 4.1 for details).
4.90The 2023-24 Budget included establishing the first phase of a ‘super complaints’ mechanism within the ACCC that ‘will enable consumer and small business advocacy groups to submit a complaint to the ACCC where they have strong evidence of systemic market issues under the consumer law’. The new designated complaint function will commence in July 2024. It is unclear whether the new function will encompass digital platform related complaints made by the ASBFEO or similar bodies.
Box 4.1 UK Super Complaints Mechanism The UK’s Online Safety Act 2023 also includes provisions for ‘super‑complaints’ for eligible entities to alert the regulator to their concerns about systemic issues. The UK government noted: Super-complaints will need to focus on the systems and processes that companies have in place, rather than any specific content issues. They will also need to focus on issues occurring across multiple in-scope services, as organisations can raise concerns about a single company’s conduct through Ofcom’s [Office of Communications] enforcement complaints processes. The UK regulator will accept super-complaints where provider services or conduct appears to or presents a material risk of: causing significant harm to users or members of the public; significantly adversely affecting the rights to freedom of expression within the law of users or members of the public; causing significant unwarranted infringements of privacy; or otherwise having a significant adverse impact on users or members of the public. |
Ombudsman scheme
4.91Another dispute resolution option proposed was the establishment of a digital platforms ombudsman to provide an independent complaints escalation mechanism for consumers and small businesses.
4.92The ACCAN noted discussions have been ongoing for some time about the appropriate institutional arrangements, and urged the Government to make an in-principle decision by the end of 2023 on whether an ombudsman scheme will be established and which entity should provide the function. It advised:
Consumers face significant harms on digital platforms in the form of social networking scams, mobile app scams and a lack of redress. It is essential that the consumer voice is strengthened through access to external dispute resolution and funded representation.
4.93The CPRC also supported the establishment of a digital platforms ombudsman, stating:
There must be effective dispute resolution pathways to enable consumers to seek redress for when things go wrong in the online space. As consumers increase their engagement online, a Digital Ombudsman needs to be adequately resourced to meet benchmarks for industry-based customer dispute resolution to ensure consumers can effectively resolve any disagreements that will arise.
4.94In addition to being a central point for independent dispute resolution, an ombudsman could be well placed to identify systemic consumer harms on digital platforms.
4.95A digital platforms ombudsman was recommended by the ACCC in its 2019 Digital Platforms Inquiry final report. The ACCC noted an ombudsman would require powers to compel information, make binding decisions, order compensation as appropriate, and order the take down of scam content.
4.96In 2019, the government of the day committed to developing a pilot scheme to be assessed throughout 2020. It is unclear how far this proposal progressed.
4.97The ACCC reiterated its recommendation for an ombudsman scheme in its 2022 Regulatory Reform Report, detailing the benefits, scope and design considerations of such a scheme. It noted an independent ombudsman scheme was:
… important for ensuring the effectiveness of internal dispute resolution measures. In the ACCC’s view, existing bodies lack the resources to deal with the range, volume and complexity of disputes occurring on digital platforms, and may not be capable of delivering sufficient remedies.
4.98While supportive of the notion of a digital platforms ombudsman, Meta advised the role and powers of any new agency or body needed to be ‘flesh[ed] out’. Meta highlighted that it is currently referred complaints from a range of government bodies including Scamwatch, the eSafety Commissioner, Human Rights Commission, Privacy Commissioner and the ASBFEO. While a single point of contact may be more streamlined, Meta highlighted the complaint issues being handled are very diverse.
Judicial resolution
4.99Once other channels for resolution are exhausted, judicial resolution can be the final escalation point for business disputes, including those involving digital platforms.
4.100Where the regulator is unlikely to prosecute a case, there is a need for small business access to justice that is right-sized, affordable and timely.
4.101The ASBFEO has previously highlighted the ACCC’s priority to pursue cases where broader systemic issues are apparent. Due to limited capacity, the ACCC rarely engages in individual small business disputes:
… many small businesses facing anti-competitive conduct are left to either accept this conduct or defend their own economic interests.
Further, the ACCC’s focus on systemic issues results in any resolution and applied penalty occurring significantly after the anti-competitive conduct is experienced by the individual small business. This delayed action and any resulting penalties applied does little to rectify the relevant damage experienced by the small business.
4.102The ACCC noted in its Regulatory Reform Report the limitation of judicial remedies in certain cases:
… where disputes are largely low in individual value but high in volume, and involve multiple jurisdictions, use of the State and Courts as an enforcement mechanism is not practicable or cost effective.
4.103The ASBFEO advised that a judicial approach operating similarly to state level small claims tribunals would assist small businesses to escalate more serious matters which may not be picked up by a regulator. However, it noted the constraints of chapter III of the Constitution require a federal determinative forum to be a court. In light of this, the ASBFEO proposed a Federal Small Business and Codes List be established in the Federal Circuit Court of Australia. It noted such an arrangement ‘would empower small businesses to defend their own economic interests, reducing the need for government intervention.’ The ASBFEO stated:
… the introduction of the list would provide a low-cost alternative for small businesses to utilise should they seek a timely, cost-effective judgement, or where other dispute resolution options have failed.