E-commerce

ACCC warns tech giants are harming small businesses and competition

The ACCC has released its fifth and final report into digital platforms, warning global tech giants like Meta, Google, Apple, Amazon and Alibaba are acting as gatekeepers to digital markets. 

The owners of these large digital marketplaces and other online platforms are causing harm to consumers and small businesses through anti-competitive behaviour, unfair trading practices, and a lack of dispute resolution options, according to the ACCC.

“While digital markets can benefit consumers by providing convenient access to goods and services, information and bargaining power asymmetries can lead to business practices that increase the risk of small business and consumer harm,” the watchdog concluded in its final report.

While other countries have already moved to rein in these giants through regulation, the ACCC’s report signals growing urgency for Australia to do the same.

How large digital platforms are disadvantaging small businesses

The report found a number of concerning dynamics among online marketplaces that disadvantaged small-business users.

Anti-competitive behaviour: The report highlighted several forms of anti-competitive behaviour, including self-preferencing – where platforms give their own products better placement in search results – and the use of proprietary user data to gain an unfair advantage. These actions, the ACCC argued, distort competition and entrench the platforms’ “gatekeeper” roles.

Poor dispute resolution mechanisms: Small businesses have reported growing difficulties in dealing with account lockouts, payment delays, fake reviews and scam activity. According to the Australian Small Business and Family Enterprise Ombudsman, complaints involving digital platforms have doubled since July 2022.

Unfair terms and conditions: The ACCC found many small businesses are subject to unclear or misleading platform rules that restrict their ability to challenge decisions or even understand their obligations. These opaque conditions can limit a business’s ability to make informed decisions or enforce its legal rights.

Lack of interoperability: The report found that some platforms are restricting the ability of small businesses to use competing services alongside their own. Practices such as bundling multiple services together and limiting data portability effectively lock businesses into one ecosystem, making it harder to switch providers or maintain a flexible digital presence.

What can be done?

The report concluded with a suite of recommendations to improve the experiences of consumers and businesses using digital platforms. Some of the relevant recommendations include:

A new set of mandatory minimum internal dispute resolution standards: This would mean that digital platforms, including online retail marketplaces, would have to meet a minimum standard of dispute resolution standards internally. This would include the ability to escalate an issue to a human representative, something several small-business owners have expressed to ISB as an issue.

An independent external dispute resolution scheme: The ACCC recommends that an ombudsman be established to handle complaints that haven’t been adequately resolved by platforms’ internal dispute resolution mechanisms.

“Digital platform services are critically important to Australian consumers and businesses and are major drivers of productivity growth in our economy,” said ACCC Chair Gina Cass-Gottlieb.

“While these services have brought many benefits, they have also created harms that our current competition and consumer laws cannot adequately address. This is why we continue to recommend that targeted regulation of digital platform services is needed to increase competition and innovation, and protect consumers in digital markets.”

• This story was originally published on Inside Small Business.