Transcript of the Background Discussion "Digital competition – Should the Australian confrontation of Big Tech serve as a role model for the EU?"


This is a transcript of the event "Digital competition – should the Australian confrontation of Big Tech serve as a role model for the EU?" with Rod Sims, head of the Australian Competition and Consumer Commission and SNV's project director on "Data Economy" Aline Blankertz, which was streamed on 25 February 2021 online.

You can rewatch the event here.

The text has been edited for better readability. The spoken word prevails.

- Start of the transcript -

Aline Blankertz, project director "Data Economy", Stiftung neue Verantwortung: Thank you for joining me today to talk about digital competition, the Australian example, and what Europe might be able to learn from it. I’m glad that you have made your way here after we had cancelled Tuesday’s event due to technical problems. My name is Aline Blankertz and I lead the data economy project at Stiftung Neue Verantwortung. Stiftung Neue Verantwortung is an independent think tank on digital policy for society, and we work with policy makers, businesses, academics, and civil society to develop innovative policy recommendations. Rod Sims is with us today to give us deeper insights into the Australian approach to dealing with big tech. But first, let me give you a little bit of context. We currently observe a global surge for approaches to concentration of power helped by large digital platforms. In December 2020, the European Commission published its proposals of the Digital Markets Act and the Digital Services Act that aim to make markets more transparent, more contestable and fairer.

Besides, there is a long-running copyrights dispute over whether companies should pay publishers for sharing snippets, small parts of news articles. Australia is one step ahead and has put forward proposals that go further than Europe. And I’m confident that we can learn from their experience, even if we decide to take another route. The Australian Competition and Consumer Commission, the ACCC, has been at the forefront to investigate the news between platforms, data, media, and advertising. Last week, this culminated in Facebook taking down all news content instead of paying publishers for it, as required by the planned news media bargaining code. In the meantime, Facebook and Australia have made a deal to make arbitration really the last resort, if nothing else works. The ACCC is also inquiring into advertising markets and it continues to probe the merger between Google and Fitbit, which the European Commission has already approved.

Today I’m very happy to speak to the person who has shaped market regulation, as well as consumer and competition policy in Australia over the last few decades. He has also shaped the approach of the ACCC and its actions against big tech. Rod Sims is the chairman of the ACCC since 2011. He’s an economist by training and has held various important roles over the course of his career, including the Chief Economics Advisor to the Australian prime minister. Before we start the conversation, some very quick housekeeping. First of all, you are all muted and your video is off. So, enjoy your coffee. We have 60 minutes today. Only the first half of that will be for me to ask Rod questions. And in the second half, we will take questions from you. You can submit questions anytime via the F&A or Q&A button and vote for those that you’re most keen for Rod to answer. Last point, we will record the session and make it available online. So, let’s get started. Good evening, Rod. Thank you for joining us straight from Australia where you already have the day behind you.

Rod Sims, chairman of the Australian Competition and Consumer Commission: Good evening.

Aline Blankertz: Let me start with the first question. The news media bargaining code has attracted lots of attention over the last few weeks, with Google threatening to leave Australia, and Facebook removing news content. The code would force the two platforms to pay publishers for links to their content, with a specific amount to be decided through arbitration. Some argue that the strong bargaining position of Facebook and Google is because they have become so good at online distribution, while media publishers have just not kept up with technological change. At the same time, Google and Facebook have some interest in high-quality news coverage, so they could be expected to pay for the content that actually helps them make their product better. There’s a similar debate in Europe, but it takes place in the context of copyright law. I would like to better understand the Australian approach from the economic perspective. Which is the problem that you address with the news media bargaining code? Why is it necessary to force platforms to pay media firms, when they’re also helping them to gain subscriptions?

Rod Sims: Thanks, Aline. And thanks for the question. Let me make a couple of points. The first one is that Google and Facebook are very strong in Australia. Google has 95% of Australian search and Facebook is by far the dominant social media platform. And Instagram, which is also owned by Facebook, is also a very dominant social media platform. So, combined, Facebook dominates social media. Second point is that neither Facebook or Google produce news content. So, it’s not as if they have just invented a better way to produce news, they don’t produce news. I think the other point is that I don’t think it’s so much that publishers aren’t good at technical change or distribution. I think what’s happened is that Google and Facebook have put together such good business models that they now dominate.

They have, in a sense, become the internet. The idea that the internet is just thousands of people collecting individually is not the way it works. Google is the way you connect via search, Facebook is the way you connect via social media, and therefore, those companies have put themselves between the media publishers and their readers. In a competitive market, we argue that if you had, for example, many search agents and many social media companies, with much more equal market shares, that there would be commercial arrangements put in place, because the media companies might do deals with one and not with another, but there’s clearly even bargaining on both sides.  What we’ve observed here is that with Facebook and Google, they really just do things on “take it or leave it” terms. They dictate the terms of the arrangement. And our judgement is that that is affecting the fact that there’s a potential underpayment. Indeed, no payment. News media content that is being so much interrupted means that we’re getting less journalism in Australia. And journalism is a public good in a sense that, even if you don’t consume the journalism, you benefit from it.

Because journalists are out there asking questions and playing a key role in our society, in our democracy. So, the purpose of the bargaining code is to require and negotiate arbitrate model, which is very common in Australia. So, the code requires negotiations. And if negotiations aren’t successful, then you can go to arbitration, and an arbitrator will determine the outcome. What we find in Australia that, with the arbitration, the threat of going to arbitration strengthens the arm of the news media business in the negotiation. And so, you get a much more equal bargaining position and therefore, you’re able to have commercial deals.

You can’t have a commercial deal with a near monopoly, it’s always done on “take it or leave it” terms. So, evening out the bargaining power will have commercial deals and better arrangements for journalism. One final thing. The arbitration process takes account of the two-way value. It takes account of the fact that there are referrals from the platforms to the news media businesses and that is a value. You also have to weigh up the value that Facebook and Google get from news media on their platforms. The fact that it provides a more complete product, it means that people stay on the platform longer. The longer they stay on the platform, the more Google and Facebook make, in different ways. So, really, this is about, to use the economic terms, a market failure. Because you’ve got this market power, and there’s no doubt Facebook and Google have market power, that is beyond doubt. That creates a market failure that leads to under provision of journalism that damages society. It needs to be addressed, and that’s the logic for the code.

Aline Blankertz: Perfect. Thank you, Rod. I think that makes it very clear what your rationale is. And I think also, the element of arbitration is very important. A few years ago, they tried to mandate negotiations in Spain and they just settled on a price of zero. So, it didn’t really change anything. I’m keen to understand what Europe can learn from the latest developments in the confrontation. On Tuesday, Facebook and the Australian government reached an agreement. That means individual deals between the platforms and publishers may prevent the code from being enforced, and arbitration will have slower timelines. How do you assess the agreements with Facebook? Do you think there are good arguments for making these specific concessions? And how big is the pragmatic or political element in this?

Rod Sims: Thanks Aline, again. So, yes, Facebook and the Australian government did reach an agreement. And that does slow down the arbitration process a bit, but doesn’t change the fundamental elements of it. It just means there’s a two-month gap. I think the way I’d describe the deal is that, in any negotiation, and this is what this came down to be, there’s a whole lot of things the government was not going to change. It wasn’t going to change that there’s an automated recourse to arbitration, it wasn’t going to change final offer arbitration, and it wasn’t going to change the essential element that you can’t do deals with some companies and not with others. That’s the core of the code.

And what happened was, in the end, our treasurer talked to Mark Zuckerberg, I think principal to principal, and that’s probably the only way this could get addressed. And it’s basically a matter of working out what matters to each other party. I mean, in any negotiation, you find that there’s something that matters to the other side, that doesn’t much matter to you. So, if two months extra in the mediation stage between negotiation and arbitration matters to Facebook a lot, it didn’t matter to the government a lot. So, that was a change that could be made. But the government was quite clear that the integrity of the code would not be changed, that those core elements I mentioned would not be changed. So, I think that the agreement with Facebook was a good thing. It means the code is more palatable to Facebook, but it hasn’t undermined the integrity of the code. And so, I think there were good reasons to make changes.

You talk about how pragmatic or political, I mean, it depends whether you have a negative or positive view of politics. Politics is about pragmatism. Politics is about getting disparate groups together. And so, I’m not concerned about that at all. Because it was an open process, the changes were open, everybody could see them. And the government was quite clear it wasn’t going to undermine the integrity of the code. So, I think it was a perfectly acceptable process. If Facebook wanted things that didn’t undermine the integrity, then there would have been no agreement, and the government would have simply passed the law anyway, and Facebook would permanently not share news on their platform. That was one outcome. And as it turned out, the government could reach agreement with Facebook while still protecting the integrity of the code, and that’s what happened. And I think that’s a good outcome.

Aline Blankertz: Yes, that’s true. I mean, it seems like a good outcome for Facebook, the Australian government, and even the publishers, who now will have the option of resorting to arbitration. If I may ask, you mentioned interactions between the treasurer and Mark Zuckerberg. Were you somehow involved in those negotiations, as well? Do you have a personal element in this?

Rod Sims: Yes, I was involved. But not in the discussions. There was a very senior, extremely capable senior treasury person involved, and she sat in on some of these discussions, and some of them she didn’t. But I think it was very helpful when she did. She’s extremely clever. And at the end of those discussions, the treasurer, her, and me, would have a discussion. So, I was involved, but I wasn’t in the discussions with Mark Zuckerberg. But as soon as they were over, I was talking to the treasurer and this excellent treasury person. So, there was a lot of interaction, including all over the weekend and on a day-by-day basis. So, yes.

Aline Blankertz: So, it sounds as if you have some busy weeks behind you. And ideally, that’s better now.

Rod Sims:Yes.

Aline Blankertz: Well, I have one final question on the news media bargaining code. Because it might also have some unintended effects which could be similar to those that are relevant in the European copyright dispute. So, I’m particularly interested in the outcomes for small publishers and consumers. Local publishers currently do not seem to benefit much from the code, because the platforms are less likely to give them a good deal. And also, for consumers, missing out on news content on Facebook or even the Google Search engine doesn’t sound like a good prospect. Do you think these effects are inevitable side effects of the code? Or, what would be desirable outcomes for small publishers and consumers if the bargaining code works as intended?

Rod Sims: Well, if Google Search stays in Australia and Facebook keeps news on its platform, then clearly, there’s no loss for consumers. So, that’s fine. I don’t see any concern about the small players here. They are equally captured as the big players. So, I just don’t understand why you’ve got that concern. So, this is the big difference between, say, France and Australia. In France, you could do deals with the big players and then just turn around and say, well, here’s what the little players are getting. And that probably meets the requirements of the court system in France. But in Australia, everybody’s got the right to-- well, firstly, they can collectively get together and bargain under the code. And they can then go to arbitration if they want to. So, just as Australian Broadcasting commission, Nine Network, which owns important newspapers, News Limited and Seven West Media, and The Guardian, the top five that have probably got deals with Google and they will soon get them with Facebook, I don’t know, but I think so. So, they can do deals with them.

But Google and Facebook have still got a deal with the smaller players. And the smaller players can still go to arbitration. So, they can’t get told what to do. They’ve still got the same bargaining power benefit from the code as the ABC, Seven West Media, News Limited, and Nine do. They’re our four biggest companies. And the Guardian. So, I’m not surprised they’ve done deals with the big companies first, but I fully expect them to do deals with smaller companies. And it is also out of the code, the ability of Google and Facebook-- so, the smaller companies can have deals done in two ways. One is there can be a blanket offer that small companies can opt into, and if they opt in, that’s done. Or, they can collectively bargain to get a deal. For example, the main small publisher group is Country Press Australia. Now, in Australia, the country regions are politically very strong and play a very important part in Australian society. Country Press Australia is the umbrella group. I’m told it has about 160 publications from various, a whole lot of small, independent players, 160 of them, producing newspapers all over the country. And so, it’s quite easy for them to bargain collectively with Google and Facebook.

And in a sense, it’s just as easy to do that as the Guardian can do it, or Seven West Media, or others. So, I don’t really see the problem. I mean, we know that the platforms are talking to these players. So, the fact that they’ve already done the deals with the bigger players, I think it’s just their way of showing, you know, they’re just working from the biggest down to the smallest. But there’s no reason why they won’t get to the smallest. And the key difference between Australia and France is that small players can go to arbitration on their own. They’ve got that ability to do that. So, they’ve got all the leverage they want in the world.

Aline Blankertz: Yes. So, yeah, I think there is something very clear that Europe may be able to learn from the Australian example. And it seems you’re quite confident that the code will be enforced even in light of the concessions made earlier this week. So, that will make sense then, that yes, small players will then still have, well, a lot more bargaining power than without it. Yes?

Rod Sims: If I could make one other point, Aline. So, the code is now law. It went through our parliament today. It is now the law of the land. Whether or not the treasurer designates Google Search or Facebook News Tab, will depend on whether the treasurer is satisfied that commercial deals are being done. He will make that judgement. And, for example, if a number of smaller players like Country Press Australia don’t get deals, then I’d imagine he’d be more inclined to designate Google Search, which would enliven the arbitration. But if Google does the deal with Country Press Australia anyway, then you don’t need arbitration. I mean, the point of that arbitration is to improve the bargaining power. I personally hope and always hoped, a year ago hoped, that you would not need arbitration. You would have commercial deals done. In our experience in Australia, when you have a negotiate-arbitrate model, neither side wants to go to arbitration. Because they want to control themselves the deal. They don’t want to give it off to an arbitrator. But the threat of going to an arbitrator helps the bargaining position of the news media businesses. So, whether Google Search is designated and deals are done in the negotiation stage without the need for arbitration, or deals are done now, so that you don’t need to designate Google Search at all, doesn’t matter.

You’ve achieved the purpose. The purpose of the code is to strengthen the bargaining position. The purpose of the code is not to force people to arbitration, it’s to strengthen the bargaining position. And with that strengthened bargaining position, we already know that, I think at least four or five Australia media organizations, which employ the vast majority of journalists in Australia, have already got deals with Google that they are happy with. Only because the code is there did they get those deals. Whether or not Google Search is designated under the code, doesn’t matter. The code has already done its job as far as those deals are concerned. So, it’s the threat, if you like, of arbitration that matters. Not that you go to arbitration.

Aline Blankertz: Perfect. Yes. Thanks for clarifying that. So, I would just remind the audience, I’m sure we will come back to the news media bargaining code in the questions from the audience. And feel free to add them and vote them up in the Q&A or F&A. I would like to move to a related topic, which is online advertising. Because that also strongly affects how much publishers get from putting news online. In Europe, the DMA and DSA contain various clauses that are aimed at making advertising less fraudulent and more transparent. The ACCC just published an over 200 pages long interim report into digital advertising in December. It also touches on the topic of access to data, given that Apple and Google have announced that they will make third-party tracking harder. Most agree that this will make it more difficult for other ad-tech providers to compete, but some also help that it will improve privacy. Given that you look at this both from a competition and a consumer perspective at once, how do you tradeoff better privacy and less competition? In the interim report, it sounds as if you are putting more emphasis on the competition argument, but maybe this is just my reading. So, I’d be very keen to hear from you.

Rod Sims: The report we’ve done on ad tech is an interim report. We floated some ideas there, but it is a very tricky issue. And I think one example of that tradeoff between competition and privacy that you mention is Google’s proposal to not allow third-party cookies. And they argue that’s to protect privacy of the users, but of course, their competitors claim they won’t have as much data. So, it really is a tradeoff in that issue itself, between competition and privacy. And I think it is a very difficult issue. And I’d like to think you could deal with it by making sure nothing any competitive is done, and separately, having strong privacy laws.

And so, competition is one issue, privacy is another. You’ve therefore got two objectives. And where you’ve got two objectives, you usually need two instruments to deal with them. For those with knowledge of economic history, that was first put by Tinbergen, who won a Nobel Prize for the observation. So, I think we’re going to have to come up with a set of things to try and deal with that. But there’s no doubt it’s a tradeoff. And more broadly, in digital trade forms, people talk about getting more competition on digital platforms through data portability. There’s privacy issues involved with data portability, as well. I mean, once you comport your data, you might be porting other people’s data, as well. The data that you got on Facebook involves other people. So, these are complex issues, and I think in Australia we understand them well. We haven’t yet solved them. So, all I can do is acknowledge the tradeoff that you raised, and say it’s a difficult issue. That’s not very helpful, but that’s where we are at the moment. We recognize the problem. We’re trying to work through a solution.

Aline Blankertz: Okay. Well, that’s good to know you’re also still grappling with a challenge. And I’m curious what you’ll come up with. One option that’s being discussed in Europe is whether targeted advertising should be banned altogether and only contextual advertising be used. And I would argue that the main benefits are that this kills the incentive to collect massive amounts of data, and that things like manipulative targeting and this information become much harder to do. And others also argue that this actually reduces the data advantage that Google has vis-à-vis the publishers. Could this be a way to give publishers a large advertising budgets while also improving privacy? I think it doesn’t come up in the interim report so far, but is this something you have considered at all?

Rod Sims: It would be quite an extreme measure to do that. We acknowledge that targeted advertising has benefits. You’re more likely to be shown something you’re interested in. And of course, the advertisers want to know that their advertising is contributing to people buying their products more. So, there are benefits from targeted advertising and you’d have to weigh up the privacy and competition issue that you mentioned against those benefits. So, it is tricky. What we’re trying to do in Australia at the moment, is just make sure there’s transparency and people understand what’s going on. For example, we find that people, if you ask them, “Are you concerned about this, about the information that’s been gathered about you?”, people often say “No.”, and they keep using the platform anyway.

On the other hand, if you ask people, “What if what was going on looked like this?” We’re getting tracked and profiled and all sort of stuff. And they said, “That’s terrible. That’s terrible. We don’t want that happening. That shouldn’t be allowed to happen.” So, I think the first step is growing the understanding amongst the public of what’s going on, so that you can get an informed public debate about this and better be able to handle those tradeoffs. So, we are not at a spot where we would consider banning targeted advertising at the moment. It’s not something we are considering at the moment. As far as data goes, we just want to make sure people are well informed about what’s going on. Where do we get to down the road, I don’t know. But it’s not something we’re thinking about at the moment.

Aline Blankertz: Perfect. Thanks. That’s good to know. So, I see there are also some areas where Europe is, well, considering stronger measures than Australia. And I’m sure we will continue to learn from each other as those debates develop. So, now I will turn to questions from the audience. And there are already quite a few. So, let’s start with the first. Jay is asking if there was ever a discussion to impose conditions on publishers for how they use the money they receive from platforms. What benefits do you see, for example, if publishers had to set aside a certain amount to pay journalists, hire new journalist staff, support citizen journalism, instead of only considering shareholders? And I think there has been some concern about this money primarily going to, well, shareholders pockets and just publishers using it to improve their bottom line. So, it would be interesting to know how you have considered that.

Rod Sims: I had a bit of trouble hearing. But I think the question was how comfortable am I that the money will benefit journalism rather than just the shareholders. Was that the essence of the question, Aline?

Aline Blankertz: Exactly. Yes.

Rod Sims: It’s certainly something we’re going to be watching. It is an issue, obviously. I mean, some companies say that absent money from these commercial deals, they may have had to fire, or stop employing a large number of journalists. So, they’re saying that the number-- we hope journalism, because they won’t have to get rid of as many as they would have had before now, the trouble with that is, you just don’t know whether that’s the reality or whether that’s disguising the money going to the shareholders. But I think that the main media companies know that they have to explain clearly to the public how this money is being used to benefit journalism. And that the public will be watching, including probably their own journalists.

The journalists have an active interest in this. So, I think we’ll have to see how it plays out. But in the discussions I had with a number of news media businesses, I’m confident that the majority of the money will go to improve journalism. I can’t say that all of it will go, I just don’t know. I don’t know. But the conversations I’ve had, the thinking that seems to have gone into it suggests to me that in some cases it will all go to improve journalism, in fact, with a couple of media companies I’m very confident it will all go to journalism. In others I’m confident most of it will go. But it’s hard to be sure. But it’s something we’re going to have to keep an eye on. It’s a very real issue. So, thank you for the question.

Aline Blankertz: Thank you. It’s great to know that this is something that you do consider monitoring, as those negotiations and deals develop. And the second question comes from Luis who asks how was your personal experience, or from those of your friends and family, without reading news on Facebook? Did this change your news consumption in any way?

Rod Sims: Yes. I think it did. I mean, it’s interesting. The way Facebook did it, without any warning to anybody, and they took down not just news media content, but I was chatting today to an organization that represents people who’ve had transplants of one sort or another, and they were trying to put out very important transplant information, and their Facebook page, which is a very important way they use to communicate with their members, was taken down for five days. So, it did cause a fair bit of anger towards Facebook. And so, some people just said, “Well, I’ll stop using Facebook.” I’m sure, a minority. But others said, “I will get my news elsewhere.” Now, that means-- so, I think you have some people who probably don’t care much about news, who won’t be much affected. But of course, what news they do get won’t be from a credible source. It will more likely be fake news. Others who do want news will go elsewhere and so, will spend less time on Facebook. So, in my view, there’s no doubt that a significant amount of people will spend less time on Facebook if Facebook does take news off its News Tab.

Aline Blankertz: Perfect. Thanks. Yeah. I think people here have been trying to imagine how it must feel to go to Facebook and not find various types of content. So, it’s very good to hear your perspective on that. The next question I have comes from Florian who says, Stephen Scheeler, the former Head of Facebook in Australia and New Zealand compared Facebook’s initial behavior to an act of war. Do you consider Facebook’s news blackout an act of war as well? I think you touched on that but it would be great if you could expand.

Rod Sims: Just to be clear if the question was do I consider the Facebook action an act of war? Was that the question?

Aline Blankertz: Exactly. Yes.

Rod Sims: Oh, look. Act of war is probably a very strong term, but it was an unusual thing for a large company to do. To do it, I mean, Facebook had the right to avoid the impact of the code by not showing news on their platform. Right? The Australian code is not a must-carry regime. It is not that. If Facebook decide that they don’t want to show news, that is their right. And again, if I could just say, the purpose of the code is in recognition that Facebook needs news as a whole, but does not need any particular news company. So, if Facebook had half the Australian media organizations, it’s fine. Those other half lose out. It’s only when they have to deal with all of them that you get the bargaining power balance. Now, if Facebook, in dealing with all of the companies, believe that the money they have to everybody is too much, they can withdraw news. There’s no issue with that. I guess what was strange is that Facebook did it before the code came in. They could have done it after the code came in.

They could have given notice. They chose not to. And the sites that they took down had nothing to do with news media bargaining. The Transplant Association of Australia is not a news business. The emergency services information in Western Australia is not a news media business. And a corona virus outfit giving out information on corona virus is not a news media business. So, it was done in a very heavy-handed way. And whether that was deliberate or not, I don’t know. They certainly were trying to send a message. But we, in the Australian government, always knew they could take down news if they wanted to. The fact that they did it the way they did it, I actually think damaged their bargaining position. I think if they’d just negotiated quietly, they’d have been in a stronger position that just taking it down overnight, which got a lot of people angry. And I think put Facebook on the back foot. That is, put them at a disadvantage. Sorry, that was a cricketing analogy. Put them at a disadvantage.

Aline Blankertz: Yeah. Thanks. Thanks, Rob. Yes. I think that’s a very balanced way of putting this. And I think hardly anyone actually welcomed what they did, and especially with those algorithms taking down lots of content that wouldn’t even be covered by the code, certainly didn’t help in their public perception. The next question I have comes from Ben. He asks, pendulum arbitration is an interesting mechanism. Do you see other digital sectors where a similar mechanism could make sense? And maybe to just explain: My understanding is that the pendulum arbitration works that both parties put in a proposal and the arbitrator cannot decide on an outcome in the middle, but has to pick one of the two proposals. And the idea behind that, in general, is that you want parties to make reasonable proposals, to increase the chance of the arbitrator picking their preferred option. So, which other sectors do you think this would be interesting for?

Rod Sims: You’re right in describing the benefits, that you avoid ambit claims, so you have this huge gap between the parties. It narrows the gap because they both have to come up with reasonabledeals. It also means you have faster deals. If you have a conventional arbitration, it can take a very long time. So, it’s both the speed and the avoidance of ambit claims that are its benefits. Look, I don’t immediately think of any other aspect it could apply to. We do not believe in Australia that others who provide content to Facebook and Google should be able to bargain in this way. We could narrow this to journalism because of the public interest in journalism. So, others who provide content, we are not at all thinking about any arrangement like this for them. So, it is only about journalism. Whether there’s other context to do with completely different issues, perhaps I have not thought about that. So, we have no plans to extend it at all, at the moment.

Aline Blankertz: Okay. Great. Thank you. I have one more question from Florian on a specific aspect of the code, which is, what is meant by intentionality of news being published by the platforms as a criteria for payment?

Rod Sims: If I remember correctly, that’s in the explanatory memorandum. And it was a term that Facebook thought was important. But I think the fact that Facebook removed news last week, and now may put it back again, means that they do control whether news is on their platform or not. So, honestly, I’m not quite sure what it means. If they want to make use of that term in some future dispute, that’s up to them, but it seems to me that they have already shown that they can intentionally use news, or intentionally not, by their actions last week when they took news down. So, they are in control of whether news is on their platform or not. So, I don’t honestly know what the impact is. I haven’t thought it was a big impact. It may turn out to be, but at the moment I don’t see it. But another good question. Someone has obviously done a lot of homework and reading to ask that question.

Aline Blankertz: Well, yes. As I said, all over Europe, everyone has been following very closely what happened in Australia over the last few weeks. And I have another question, which I think is a little more high level. The question is, should we put effort and money in building our own critical infrastructure such as powerful search engines by nations or group of nations?

Rod Sims: Look, at this stage, I don’t think so. I think that would be very hard to do. Google has been very innovative. I think there are network effects, I mean, if different countries had search engines, they’d have to find ways to talk to one another. Now, our approach in Australia is, identify a problem and come up with a solution. So, the problem we found was the underfunding of journalism. We think our bargaining code provides a solution. We’re looking at ad tech and there’s, obviously, a lot of issues there, where Google has dominance. And our job now is to come up with an answer and a solution to that. The same with the ad market. So, our view is more solving the problems rather than anything as radical as nations, states, coming up with search engines. That would not be contemplated in Australia. It has been mentioned by some people, but it’s not something the two major political parties would ever contemplate doing. So, it’s not something that will happen from an Australian perspective.

Aline Blankertz: Okay. Great. Thank you. That’s good to know. And I have another question which goes in the direction of what else do we need in addition to the news media bargaining code. And that question is, against the backdrop of the current experience in Australia, what international approaches and regulations seem advisable to limit the undesirable changes in the markets caused by private companies in the platform economy? International regulations on taxation, international data protection regulations, further developed IP regulations, compulsory editorial supervision of user-generated content on the platforms, international arbitration courts. So, I think quite a lot to choose from. So, please feel free to pick one or two that you are keen to comment on.

Rod Sims: Aline, I’m sorry. The voice connection was not good and I missed the first half of that question. I’m very sorry. Could you repeat, please?

Aline Blankertz: Well, I think the first half is to summarize what else do we need to limit the undesirable changes in the markets caused by private companies in the platform economy? And then, options are, well, international regulations on taxation, data protection regulations, more IP regulation, compulsory editorial supervision of user-generated content. Do you think any of these would make sense?

Rod Sims: Thank you. I heard that completely. I just lost that first bit. So, thank you. That’s very clear. I think there’s a lot of issues there that do need to be addressed. They’re very complex issues. Obviously, taxation, in my view, is its own issue. I mean, we need an international taxation system where companies pay the appropriate amount of tax. And that’s something that should be left to organizations that administer the tax system. And that should happen with digital platforms as well as with other companies, other international companies. So, I just think you want the digital platforms paying taxes in accordance with the law. You may need to bring in some particular transfer pricing laws, to make sure that they’re paying their appropriate tax. That’s done for other industries. So, I think tax is important, but it’s a separate issue. Data protection is something that needs to be worked on. Obviously, Europe has the GDPR, if I’ve got the acronym right. That’s an important step, but I think there’s more to do there, to make sure that consumer’s data isn’t misused, to make sure that there’s not manipulation going on of consumer preferences, that consumers aren’t paying more because of this targeting. So, that’s something that needs to be worked on and it is an issue.

I mean, we haven’t seen these questions as much as ones of intellectual property. That hasn’t figured large for us. But there’s also the question of defamation and scams. A big question about whether people are defamed on the internet, and the Google and Facebook platforms, for example, who has responsibility for that? Should wejust leave it to the platforms to self-police? Or should governments set some rules? That’s an issue that has been grappled with now. And in the case of scams, there are a lot of scams going on, where people are losing a lot of money through misrepresentations. We’ve had a lot of celebrity scams, where celebrity images are used, well-known people, to sell things falsely. And then people put their money into them and they lose their money. Whose responsibility is it to stop that? Clearly, in the first instance, it’s the platforms themselves.

But if they don’t do that well enough, the government could step in. So, I think there’s a lot of issues there that are just growing in momentum. So, I don’t have-- I mean, obviously, tax, they’ve got to pay their tax. And that’s for the tax authorities to deal with. Beyond that, I think those are issues that we are grappling with in Australia, and it’s been grappled with overseas. The more we can harmonize the approach between countries, so the countries are all heading in the same direction, the better. In Australia, we are actively considering these issues. When it comes to privacy and some of these other issues, it’s not so much an ACCC issue. With scams, it is an ACCC issue. So, we do get involved in scams we’re the main organization dealing with scams in Australia. The privacy’s dealt with elsewhere. So, I think the realization of these problems is growing significantly and people are actively working on solutions.

And I’m confident that in two or three years we will be a lot more advanced than we are now in working out how to deal with them. But the platforms themselves have got to understand that unless they do better on these fronts, they will get regulated. So, there is that threat there for them. They need to think about privacy, they need to think about data, they need to think about scams very carefully. Otherwise, governments will step in.

Aline Blankertz: Okay. Thank you. I think that’s very helpful. Kind of a big picture view of the landscape of regulation for platforms. I have one final question because then we will be out of time. Could you please address the issue of preventing combination of personal data from different sources by Google as a potential measure to protect personal data? And this is something that is being dealt with in the DMA, the Digital Markets Acts in Europe, and basically, which will no longer be a doubt. Is this something you are looking at in Australia?

Rod Sims: Let me understand the question because again, I lost a bit of the sound. Are you saying will Australia address Google’s ability to combine different data sets that it gets through its various tracking of cookies, using cookies to track around the web, and through its various data sources and combining all that data? Like it combined its double-clicked data with its searched data? Was that the question?

Aline Blankertz: Exactly. Yes.

Rod Sims: Again, I think that’s something that we have to think about very carefully. I know that’s not a very clear answer. But on the one hand, there are some benefits from combining data. But on the other hand, you do have serious privacy issues. I know that in Germany, the competition regulator in Germany, which we know very well and that is someone I know very, very well, who does an excellent job, has been moved there to stop data being used from one part of the platform to another. It’s certainly something we have to think a lot about because it is potentially a source of a lot of the problems. So, in Australia, what we’re doing is going on a bit of a journey. So, with the media bargaining code passed, that now deals with that issue.

Although we’ll need to keep monitoring it from an ACCC point of view, because we’re the ones who enforce the code. Now we’re going to move to advertising technology, apps, data issues. So, we will have to progressively deal with those issues, but it will be very much solving each problem. And what you talked about is something that we will contemplate. But we’re not there yet. So, very much one issue at a time. We work very closely with all our international colleagues, in Germany, in France, in the United Kingdom. We’re very close to the United States, with the Department of Justice and the Federal Trade Commission. So, we are trying to work these things with them. So, we haven’t arrived at a conclusion, but we are thinking very hard about that issue. That’s not very helpful, I guess, but it’s certainly an issue that’s on our agenda.

Aline Blankertz: I think that’s very helpful to hear also that, as I said, understanding what you are factoring in and how you think about those questions. So, we are approaching the end of our session. So, let me just quickly wrap up. We have learned that the code is already law and the designation is still to be seen. And that will also, I understand, depend to some extent on the deals made with smaller publishers. We have talked about the benefits of arbitration and the specific one implemented in Australia. And that all of that, in the end, ideally will lead to more money for journalism as a public good. And that you will also be monitoring the outcomes.

Nonetheless, there are still lots of open questions relating to scams and privacy and also, the tradeoff between competition and privacy. So, I think there’s still a good case for ongoing dialogue with Australia from Europe. So, to the audience, please let us know what you think of today’s discussion. We really appreciate any feedback you might have. There’s a short survey that a colleague will put in the chat and that just takes a minute to fill out. If you’re interested in receiving invites for more talks, please sign up for our newsletter. And thanks again, first and foremost to you, Rod. And also, to my colleagues supporting in the background, especially Andre. And please, join us again for our next background talk. Have a very nice evening, Rod. And a nice day, everyone here.

02. März 2021

Aline Blankertz