Out of every hundred dollars spent on digital advertising in Australia, $47 goes to Google and $21 goes to Facebook, leaving just $32 for every other social media site, search engine and news site to compete over.

And when Australians do an online search, 94 per cent of the time it's via Google; likewise, of those Australians who have a social media account, some 95 per cent use Facebook.

The statistics illustrate the dominance of the two platforms in advertising and media and, indeed, in the daily lives of Australians — and have now prompted Australia's competition regulator to launch a world-first attempt to curb its powers.

In a report last week, the Australian Consumer & Competition Commission said we are "at a critical point in considering the impact of digital platforms on society".

Advertisement

While ACCC chairman Rod Sims acknowledged the digital platforms have brought many positives for consumers, he also said they are "unavoidable business partners" for many Australian businesses and play a critical role in enabling businesses, including online news media businesses, to reach consumers.

In short, a lot of businesses simply can't operate without having their names come up in search results and their advertisements displayed online, but they have nowhere else to go but Google and Facebook.

(And importantly, digital advertising has in recent years changed from being a small part of the pie to half of all advertising in Australia.)

Rod Sims is the current of the Australian Competition and Consumer Commission. Photo / Supplied
Rod Sims is the current of the Australian Competition and Consumer Commission. Photo / Supplied

Yet, the all-important algorithms which determine which ads are shown and when and where are secret, meaning that advertisers don't really know what they are paying for and can't tell what they receive.

Likewise it is impossible to know to what extent the platforms favour their own businesses — such as their own shopping sites — over other businesses.

In a case taken by the European Commission, Google was found to have systematically given prominent placement to its own comparison shopping service (Google Shopping) and to have demoted rival comparison shopping services in its search results.

News organisations, who rely on the platforms for referral to their content, also don't know how the algorithms work.

Sims notes the important role news organisations play in "in exposing corruption, the creation of public debate and holding governments, corporations and individuals to account through their questioning and investigation", and raises the question of how much the digital platforms have contributed to the decline of journalism.

Advertisement

The ACCC wants to establish a regulator with investigative powers that would break open this secrecy by compelling Google and Facebook to reveal information about how they rank search results, surface news and advertisements.

Sims is also concerned about how much data the platforms are collecting about individual consumers and how little consumers know about this.

"The data collected from consumers using these platforms extends significantly beyond the data that users actively provide when using the digital platform services," he told journalists after he released his report.

"Concerns over data collection are heightened by the length, complexity and ambiguity of online terms of services and privacy policies.

This is an important point, there seems an understatement to consumers of the extent of data collection if you read the polices, and an overstatement to consumers of the level of control consumers have over their personal data use."

Like businesses, consumers have little choice but to use Google (imagine no email, no internet searches, no Google maps) and as a result there is a large power imbalance between them and the tech giants.

Sims wants to put the consumer back in control, by making the platforms inform consumers what information is being collected about them in clear and concise language — and more significantly — requiring their default settings to be "off" for data collection and for users to actively opt in.

Lifting the veil of secrecy around the algorithms (even if the regulators don't make the information public) and requiring consumers to opt into personal data collection (how many would say 'yes'?) are huge threats to the business models of Facebook and Google. They could no longer rely on consumer apathy and ignorance.

At the moment, Sims' plans are only proposals. It's up to Scott Morrison's government to implement them, and watching what he decides to do will be telling.

On the one hand, he has traditional media companies like Rupert Murdoch's News Corp, who have been lobbying for the government to curb the power of the internet giants.

One the other side are the internet giants, among the most powerful and influential companies in the world.

Google now has a market capitalisation of US$700 billion — a hundred times News Corp's — but Murdoch and his editors are still highly influential in Australian politics.

There is a lot at stake here — between them Google and Facebook collected about A$4 billion in advertising revenue in 2017 in Australia alone. If the ACCC is successful in its world-first plan to reign in the internet giants, other countries could follow.