The Limits of Australia’s Digital Platforms Inquiry

By Dirk Auer (International Center for Law and Economics)1

In July of 2019, the Australian Competition and Consumer Commission (“ACCC”) concluded its high-profile 1.5-year investigation into the effect of digital platforms on competition in media and advertising markets.2

The ACCC’s Final Report3 claims that competition is “not working” in the media, communications, advertising and other markets it investigated,4 and that substantial regulatory and legislative changes are necessary to solve — and would solve — the problems caused by ineffective competition.5 These changes include mandated “platform neutrality” obligations,6 tighter merger rules,7 firm- and industry-level codes of conduct over which the ACCC would have a discretionary oversight,8 and the adoption of more stringent privacy rules.9 The ACCC’s proposals would thus tilt the scales of competition and regulatory enforcement in its favor.

However, as discussed below, the premise that markets are failing is not well supported by the ACCC’s report.10 Moreover, even if the ACCC’s premise were accurate, its conclusions miss the bigger picture:: Government intervention is appropriate only if it produces net social benefits. The fact that a market does not satisfy some idealized benchmark (for instance, because firms have some degree of market power) is irrelevant if regulation merely exacerbates the perceived failure or creates new and greater costs.11 Yet the ACCC Final Report almost entirely o…

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