Facebook and Google Algorithms Are Secret--But Australia Plans to Change That
July 26 2019 - 06:11AM
Dow Jones News
By Rob Taylor
CANBERRA, Australia--Tech giants Facebook Inc. and Alphabet
Inc.'s Google could have their secretive algorithms policed by a
beefed-up watchdog, under what Australia describes as world-first
limits to the power that they wield over news and advertising
markets.
The recommended changes--which include strengthening privacy
safeguards with steep penalties of up to 10% of annual domestic
turnover for the misuse of data--are made in a report by the
national competition regulator after a year-and-a-half
investigation into the impact such companies have had on the
country.
It comes after Facebook was hit with a $5 billion fine in the
U.S. this week after a Federal Trade Commission investigation found
the company had repeatedly used deceptive disclosures and account
settings to lure users into sharing personal information,
undermining their actual privacy preferences.
The report by the Australian Competition and Consumer
Commission, released Friday, concluded U.S. tech giants wielded too
much influence over Australia's news and advertising markets,
stifling competition. It also found many instances where companies
had deprived consumers of control over their personal
information.
The Australian government directed the commission in late 2017
to hold the inquiry, with a mind to modernize the country's media
and privacy laws.
"Make no mistake, these companies are among the most powerful
and valuable in the world. They need to be held to account and
their activities need to be more transparent," Treasurer Josh
Frydenberg said. "The world has never seen so much commercially
sensitive data collected and aggregated among two companies."
Among the 23 recommendations is a call for the government to set
up an office in the commission to scrutinize the algorithms used by
Google and Facebook to rank news and advertising. The report said
the office would have the power to order Facebook, Google and other
tech giants to hand information over to regulators.
"This particular branch of the [commission] will be able to be
approached by various companies who believe that the algorithms
have been misused," Mr. Frydenberg said. He promised the government
would "lift the veil" on how tech firms made money out of user data
they collect.
Other recommendations include: a change to
merger-and-acquisition laws to prevent large tech companies
siphoning up smaller rivals; the removal of Google as the default
search option on Android devices; and, a harmonized regulatory
framework covering digital markets--though the commission stopped
short of calls to break up Google and Facebook, or force them to
pay for news content.
In Europe, Google has been fined $5 billion for antitrust
violations for abusing the market dominance of its Android phone
system.
Facebook didn't immediately respond to the Australian
regulator's report. A spokeswoman for Google said the company had
worked closely with the commission throughout its investigation and
would "continue to engage with the government on the
recommendations."
Digital-industry group DIGI--which represents Google, Facebook,
Twitter and Verizon Media--said lawmakers need to think carefully
about unintended consequences that could affect competition and the
range of products available to Australian consumers.
Mr. Frydenberg said the government would hold a three-month
consultation before deciding later this year how it will respond to
the recommendations.
Since the Australian regulator launched its investigation, the
U.K. Parliament released a report calling for tighter regulation of
the digital world, warning of a "democratic crisis" being created
by the spread of misinformation, while the U.S. FTC launched a task
force in February to monitor technology markets, including
reviewing tech mergers.
Media organizations including News Corp have called for more
regulation of digital platforms to help to stem a decline in
advertising revenue and the loss of subscriptions. News Corp owns
Dow Jones & Co., publisher of The Wall Street Journal.
Campbell Reid, News Corp Australia's director of corporate
affairs, said Friday the commission had exposed the impact of tech
giants on Australia's media landscape, with Facebook and its
photo-sharing platform Instagram accounting for about 46% of
Australian advertising revenue.
"It's clear the government is going to do something about this,"
Mr. Reid said. "I think Google and Facebook in particular should
listen very carefully."
Write to Rob Taylor at rob.taylor@wsj.com
(END) Dow Jones Newswires
July 26, 2019 05:56 ET (09:56 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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