New competition framework for digital platforms6 min read
The Federal Government has released a proposal paper for consultation on the framework for a new digital competition regime, which aims to promote competition by addressing anti-competitive conduct, unfair treatment of business users and barriers to entry and expansion that prevent effective competition in digital platform markets.
The regime outlined in the proposal is broadly similar to the framework recommended by the Australian Competition and Consumer Commission (ACCC) in its 5th Interim Report for the Digital Platform Services Inquiry (DPSI), released in September 2022. It includes key features such as designation of digital platforms, broad and service-specific obligations as well as enforcement and compliance mechanisms.
In this Insight, we provide details on the key elements of the proposed new regime and unpack what it could mean for digital platforms and for businesses that transact with those platforms, if passed by Parliament.
Treasury is seeking public feedback on the proposal paper by 14 February 2025. Further consultation will be undertaken on exposure draft legislation to inform final laws.
The framework is proposed to be a 'hybrid model' that adopts both broad and service-specific obligations. The broad obligations are intended to be specified in primary legislation and will apply to all designated digital platforms, while the service-specific obligations will be specified in subordinate legislation and apply to certain designated digital services only.
The Government has identified app marketplaces, ad tech services and social media services as 'priority services' that will be the focus of early designation investigations under the new regime once it comes into effect.
Background to the proposed new digital competition regime
In September 2022, the ACCC recommended service-specific codes of conduct that would apply to those digital platform services that meet designation criteria reflecting their importance to Australian consumers, businesses and markets, and their ability and incentive to harm competition.
In December 2023, the Government announced its in-principle support for the ACCC's recommendation to implement a new digital competition regime. The proposal paper, released on 2 December 2024, seeks stakeholder views on the Government's proposed regime.
The new framework will apply only to 'designated' digital platforms.
Designation considerations would include both quantitative and qualitative elements, which would be stipulated in legislation. Quantitative thresholds would act as the primary criteria to ensure the regime only targets large digital platforms with critical positions in the Australian economy.
The ACCC will conduct a designation investigation at the direction of either the Minister or the ACCC itself. Following this investigation, the relevant minister will make the designation decision.
The Government's proposed approach is consistent with designation of a digital platform under the News Media Bargaining Code in which designation sits with the Minister. However, this represents a departure from the approach taken overseas. For example, the EU's Digital Markets Act and the UK's Digital Markets, Competition and Consumer Act prescribe that designation sits with the relevant regulator (the European Commission and the Competition and Markets Authority, respectively).
Broad obligations
The proposed framework would include broad obligations to target anti-competitive conduct that is common across different digital platform services, which would be contained in primary legislation.
If an entity is designated, it would be required to comply with obligations in respect of the relevant designated service(s) that target conduct such as:
anti-competitive self-preferencing
anti-competitive tying
impediments to consumer switching
restrictions on interoperability that limit effective competition
unfair treatment of business users
lack of transparency.
Service-specific obligations
Additional service-specific obligations would be contained in subordinate legislation (such as regulations) developed by government, in consultation with the ACCC.
The main purpose of the service-specific obligations would be to inform the content and application of the broad obligations, and each service-specific obligation would be linked to one of the broad obligations.
All designated entities would be required to comply with the broad obligations in respect of their designated service, regardless of whether or not service-specific subordinate legislation has been made for that service.
App marketplaces
The Government is proposing that app marketplaces be one of the first services investigated for designation under the regime.
This follows the ACCC's identification of a number of significant competition and consumer issues in the operation of mobile app stores in its 2nd Interim Report in the DPSI released March 2021, including the market power of each of Apple and Google, the terms of access for app developers, self-preferencing and the use of data.
The Government has provided examples of the types of obligations it proposes to impose on app marketplaces, including:
prohibiting platforms from prioritising their own apps in search results; and
removing restrictions that force developers or businesses to use the platform's own payment systems.
Ad tech services
The Government is proposing that ad tech services be one of the first services investigated for designation under the regime.
This follows the ACCC's findings in the Digital Advertising Inquiry that competition for ad tech services in Australia is ineffective, with Google dominating the supply.
The Government has provided examples of the types of obligations it is considering imposing on ad tech services, including:
requiring platforms to provide transparent information about ad tech price, auction and ad performance; and
stopping platforms from giving their own advertising services unfair advantages over competitors.
Social media
The Government is considering whether social media should also be one of the first services investigated for designation under the regime, alongside app marketplaces and ad tech services.
This follows the ACCC's findings in its 6th Interim Report in the DPSI released March 2023, including that Meta's market position may result in consumers accepting terms and conditions that result in excessive data collection and use, which in turn provides a significant competitive advantage.
Enforcement and compliance
Penalties are proposed to match the maximum financial penalties under the Competition and Consumer Act 2010 (Cth) (ie the greatest of $50 million, three times the value of the benefit obtained, or 30% of adjusted turnover during the breach period).
Treasury will consider whether the regime should allow the ACCC to issue an infringement notice for an alleged breach as an alternative to applying to the court for a pecuniary penalty order, in addition to other types of orders such as injunctions, declarations and disqualification orders.
It is not proposed at this stage to provide for structural remedies, such as divestment orders requiring an entity to sell part of their business to a rival or new entrant.
Other considerations
The Government's proposal paper also considers administrative measures that may be required to ensure the effective operation of any new digital competition regime.
Administrative measures include:
an appropriate review mechanism for any decisions under the regime (eg designation).
ongoing resourcing to support its administration and enforcement (eg potential funding arrangements, including cost recovery from industry).
international alignment and pace of reform to ensure Australia keeps pace with successful reforms overseas.
mechanisms to ensure the framework is flexible and remains fit-for-purpose to address emerging harms in fast-moving and dynamic digital platform markets.
The Government is seeking public feedback on its proposal paper, with submissions due by 14 February 2025. The proposal paper includes a list of targeted questions addressing each key element of the regime. Further consultation will be undertaken in 2025 on exposure draft legislation to inform final laws.
