Facebook contracts may be unfair: ACCC

The Australian, March 28, 2018

The competition watchdog has raised the prospect that users who signed up to Facebook were unwittingly signing up to potentially unfair contracts, as the regulator ramped up its investigation into global tech giants.

The Australian Competition & Consumer Commission recently launched a world-first probe into the Australian digital media market amid concerns over the uneven playing field and disruption sparked by the increasingly monopolistic US tech giants.

It also comes at a time when global governments raise concerns about the regulation of social media giants in the wake of the Cambridge Analytica scandal, in which the firm — working for Donald Trump’s presidential campaign — harvested and misused data on 50 million members.

Personal data harvested by Google and Facebook about Australian consumers will form a key front in the ACCC’s inquiry.

At The Australian’s Global Food Forum in Sydney yesterday, ACCC chairman Rod Sims said the Cambridge Analytica scandal was “in a sense” good, as people now understood “how much data Facebook has on you” and “what they can potentially do with it”.

He said the watchdog was investigating the “competitive aspects” of the local digital media market.

“To what extent do Facebook, Google and other platform developers damage their competitors through the way they do business? To what extent do users know how the data is being used? To what extent the contracts they’re signed up to are fair?” Mr Sims said.

“I know Facebook have said, well, you know, people agreed to this. Well, I suspect 80 per cent of people in this room are Facebook users and I would be interested to know how many know what they signed up to,” he said.

“Did they know that when they connected to another website, that Facebook was gathering data on that? It’s all in the terms and conditions if you want to have a look at them but I’m not sure many of us do.

“There are a whole lot of issues there. We’re just starting on this exercise but it will be a fun journey,” Mr Sims said.

The technology giants profit from people’s personal data by using the information to create highly targeted advertisements and content, but little is known about their secretive practices. The ACCC is also scrutinising the technology giants’ “bargaining power” with publishers, their impact on “quality news”, and the influence of their algorithms on journalism.

The Turnbull government asked the ACCC to launch the inquiry in December as part of its media reform package. The two companies have presided over a massive transfer of not just wealth, but editorial control, from local media companies to their platforms.

US government officials have ratcheted up pressure on Facebook over its handling of user data, with federal regulators saying they are investigating the social media giant’s privacy policies and 37 state attorneys-general demanding explanations of its practices. The moves add momentum to a push for new regulation of Facebook and other internet giants after the company’s disclosure that an outside firm improperly accessed and retained user information.

A share rout has knocked nearly $100 billion off the company’s market value. Facebook has struggled to calm a firestorm of criticism from users, advertisers, politicians and officials in the US and Europe after a whistleblower went public with information about the Cambridge Analytica scandal.

Facebook has so far acquired 66 companies, with the $US19bn purchase of WhatsApp Messenger in 2015 its biggest deal to date. It also owns Instagram, virtual reality outfit Oculus and many other businesses ranging from travel recommendation apps to file hosting and sharing. They are designed not to diversify the Facebook model but to further reinforce the platform’s capability.