Invited into our homes, but are Siri and Alexa ripping us off?
As digital platform service providers expand, they have greater access to consumer data. Photo: Getty
The strategies of the five biggest digital platforms find their expanding reach into our daily lives is exacerbating the risk to competition and consumers, states the Australian Competition and Consumer Commission (ACCC).
The continued expansion of Amazon, Apple, Google, Meta and Microsoft into emerging technologies and other markets demonstrated the critical need for regulatory reform, the ACCC said.
Digital platforms have expanded beyond their original core offerings of search and social media to include generative AI, digital health services, information storage, education, and financial products.
Their reach now included products and services in many markets and multiple touch points with consumers and businesses, the ACCC said.
In its latest report, the seventh in the Digital Platform Services Inquiry, it cited smart home devices and consumer cloud storage as examples to explore the impacts of the expansion of digital platforms into different products and services.
Risks to innovation
ACCC chair Gina Cass-Gottlieb said online products and services offered many benefits for consumers and businesses, but the continued expansion of digital platforms has also increased the risk of those platforms engaging in harmful behaviour, such as invasive data collection practices and consumer lock-in practices that can reduce choice and stifle innovation.
“Robust competition is critical for markets to function well. As the digital economy evolves and the ecosystems of digital platforms continue to expand, we must be equipped with the appropriate regulatory tools to ensure effective competition in these markets,” Cass-Gottlieb said.
“This report is further evidence supporting our earlier recommendations that we should update our competition and consumer laws to ensure consumers and businesses continue to benefit from the opportunities created by digital platform services. Our proposed reforms include a call for targeted consumer protections and service-specific codes to prevent anti-competitive conduct by particular designated digital platforms.
“Australians increasingly use digital platforms for work, study and play and can benefit from their wide range of interconnected products and services. While the size and scale of digital platforms alone does not raise concern, there is a risk that this expansion may be driven by a desire from digital platforms to entrench or extend their market power,” Cass-Gottlieb said.
The ACCC has not made specific findings of anti-competitive conduct in this report but considers that when a digital platform service provider has significant market power in one or more markets, certain behaviours have a higher risk of harming competition.
The ACCC is concerned about technology like Siri. Photo: Getty
It said digital platforms with significant market power can use practices like bundling or tying of products, pre-installation and default settings to limit customer choice or deter innovation from competitors.
Consumer cloud storage is commonly embedded within digital platform operating systems, devices and productivity suites, and in some cases is no longer available as a standalone product. Consumers may use a bundled cloud storage service even when there are more innovative or high-quality alternatives available to them.
Co-ordination decisions, such as among families who use the same services to share files or photos, or lock-in effects arising from the cost and inconvenience of transferring files to a new service, can further deter consumers from switching to a different service.
“Integrated cloud storage services can be convenient for consumers, but they can also discourage consumers from purchasing new products and services outside the ecosystem. This makes it harder for competitors who offer standalone services to compete and potentially stifles the development of innovative products,” Cass-Gottlieb said.
She said when a digital platform held a crucial gatekeeper position between consumers and businesses, there was an opportunity and incentive to harm competition. For example, certain digital platforms can exercise control through self-preferencing – favouring their own products and services over competitors who rely on the platform to reach consumers.
Voice assistants like Google Assistant, Siri and Alexa may provide an opportunity for Google, Apple and Amazon to encourage users to favour their products and services to the detriment of rivals, the ACCC said.
The report also found that as digital platform service providers expand, they have greater access to rich consumer data, which they can collect and use throughout their ecosystems of products and services.
For example, Amazon, Apple and Google collect vast amounts of consumer data through smart home devices. It’s not always clear from the relevant privacy policies if the data collected exceeds that which is needed for device functionality or product improvement.
As digital platforms create products and services in other sectors, consumers face the risk of losing control over their data.