Key digital platforms run by a small number of very large companies have become pivotal to our daily lives, as all commerce increasingly becomes part of a ‘digital economy’. The Australian Government has formed the view that new competition laws are necessary for ‘the fast-moving, complex digital economy’, with narrow control over key digital platforms creating potential competition risks such as higher costs, lack of choice and barriers to switching.
The national debate has been driven in large part by findings of the Australian Competition and Consumer Commission (ACCC), which has identified the iOS App Store and the Google Play Store as prime examples of digital services where market power is concentrated. In the ACCC Digital Platform Services Inquiry 2021 interim report, it noted that the ‘duopoly in the market’ for mobile operating systems, allows Google and Apple to ‘control the key gateways through which app developers can access consumers on mobile devices’, providing them with ‘significant market power’.
Of particular concern to the ACCC are issues surrounding terms of access for developers to those marketplaces, the risk of platform vendors self-preferencing their own software and services, and rules which force all in-app payments for digital goods to use the marketplace’s payment systems, which take commissions typically of 30%. That latter requirement has rendered entire categories of apps unviable via the App Store and Play Store, such as apps which sell ebooks, comics, videos and music, where it is effectively impossible to reconcile royalties to artists and authors with commissions payable to the platform vendor.
In response, the Government has unveiled its proposal to introduce an ex-ante (‘before the event’) competition regime targeting digital platforms. Announced by the Assistant Treasurer in early December 2024, the consultation paper seeks to address limitations in existing ex post (‘after the event’) competition laws deemed inadequate to mitigate competition harms posed by dominant digital platforms, particularly in app stores and advertising technology (ad tec) services. The regime empowers the Minister, acting on ACCC advice, to designate platforms and services of critical economic or societal importance. Designated entities will face general conduct prohibitions and bespoke obligations tailored to specific platform services.
Australia is not alone in determining that new regulations are required to address digital platforms. Positioned as a ‘fast follower’ of global reforms, the Government’s initiative draws heavily on lessons from international regimes such as the European Union, United Kingdom, Germany, Japan, and India while tailoring its response to domestic market dynamics. Central to the Australian proposal are mandatory service-specific codes of conduct, echoing recommendations from the ACCC’s 2022 interim report. The proposed regime not only attempts to reinforce Australia’s competitiveness in a global digital landscape but also signals a harmonisation of international competition regimes toward entrenched digital platforms.
Public consultation on the proposal closes on 14 February 2025.
Scope and focus of the regime
Under the proposed framework, digital platform services with a critical influence on the Australian economy can be subject to designation. The consultation does not provide for a definition of the term digital platform services. However, likely candidates for designation include app marketplaces, ad tech services and social media platforms, as these are considered sectors of high economic significance with heightened risks of anti-competitive conduct. There is also scope to extend the regime to new and evolving services such as virtual assistants or cloud computing.
Designation
The designation mechanism prioritises sectors where entrenched market power and competition risks have been substantiated. App marketplaces, ad tech services, and social media platforms have been identified as key areas for immediate scrutiny based on their structural significance and competition concerns.
Criteria and investigative process
Designation decisions will be driven by quantitative thresholds and qualitative indicators, including:
- Quantitative thresholds: Metrics include Australian and/or global service-specific revenue, user or business user numbers, company-wide revenue, and market capitalisation.
- Qualitative factors: Considerations include market power, intermediary roles between users and businesses, and the platform’s influence on competitive dynamics. This qualitative analysis would allow for flexibility, particularly where quantitative data is unavailable or inconclusive.
The ACCC will be empowered to initiate designation investigations either at the direction of the Minister or on its own initiative, drawing on its information gathering powers to determine whether the relevant criteria are met.
Following a six-month investigation period (subject to limited extensions), the ACCC will provide its findings to the Minister, who will ultimately decide whether to designate a platform. That decision will be reflected in subordinate legislation. Designations are set to last for five years, with interim reviews permitted if there are material changes in relevant circumstances.
Governance of designation decisions
Treasury is examining whether the ACCC should publish non-confidential summaries of its findings, to improve transparency and stakeholder understanding. Designated status will be reassessed every five years, following a similar process to the initial designation inquiry. This approach reflects international practices such as the European Union’s Digital Markets Act, which requires periodic reassessment, and the United Kingdom’s approach through its Strategic Market Status investigations.
Obligations under the proposed regime
Once designated, platforms will be subject to two categories of obligations. First, broad obligations in primary legislation to address common forms of anti-competitive behaviour and second, service-specific obligations administered through subordinate legislation.
Broad obligations
These baseline obligations would apply uniformly across all designated services. They aim to tackle widespread conduct that hinders competition, such as self-preferencing, anti-competitive tying, impediments to switching, refusal to provide interoperability, unfair treatment of business users and a lack of transparency in terms and conditions.
Service-specific obligations
Service-specific obligations, introduced via subordinate legislation, would refine or supplement the broad obligations for particular market contexts. For example, obligations for app marketplaces might include rules prohibiting forced use of first party payment systems or requirements to maintain a fair app review process. Obligations for ad tech services may address preferential treatment in proprietary platforms auction processes, and rules for social media platforms may mandate data portability and transparency in advertising metrics.
These service-specific duties may extend to linked services where there is a crossover in competition concerns, such as mobile operating systems that can influence how app marketplace’s function.
Exemptions
The proposed regime allows the ACCC to grant exemptions when certain conduct, otherwise in breach of the new obligations, is justified by overriding benefits. These exemptions might be warranted for national security or public health considerations. Any exemption request must meet a threshold that exceeds the ‘net public benefit test’ in the Competition and Consumer Act 2010 (CCA). Conduct must be shown to be proportionate, essential and unlikely to undermine competition and platforms must comply with the obligations during the exemption assessment. If the conditions upon which the exemption was granted change or are breached, the ACCC may revoke or review that exemption. Consideration will also be given to exemptions granted under foreign regimes to ensure consistency with international practice.
Enforcement and governance
It is proposed that the ACCC will maintain oversight, drawing on its existing powers under section 155 of the CCA to request documents and information, including from overseas entities. The paper invites submissions on the best mechanisms for reviewing and appealing decisions under the new regime.
Monitoring and compliance
To detect and address emerging competition issues, the ACCC will monitor designated platforms, collaborate with international regulators and engage with stakeholders to encourage compliance. It will conduct ongoing assessments to determine whether additional services warrant designation and whether current obligations require updating.
Compliance proposals
Platforms that have already implemented compliance measures under comparable foreign regimes may submit those measures to the ACCC for recognition in Australia. If accepted, these measures will be deemed adequate for meeting Australian obligations. Any breach of the submitted compliance measures will attract penalties at the same level as if the platform had violated its Australian obligations directly.
Penalties and remedies
The new regime proposes to align monetary penalties with the highest sanctions already available under the CCA, including:
- AUD50 million
- Three times the benefit derived from the breach
- Thirty percent of the entity’s adjusted turnover during the period of the breach
Non-monetary remedies, such as injunctions, declarations, and disqualification orders, will also be available. While structural remedies are not proposed, the ACCC may require platforms to implement remedies enforced overseas under comparable regimes.
International context
Numerous overseas jurisdictions have introduced, or are actively considering, regulation of major digital platforms. The European Union’s Digital Markets Act (DMA) has garnered significant attention, with the first wave of designations taking effect in March 2024 and affecting companies such as Apple, Google, Amazon, Meta and Microsoft. Compliance measures have triggered substantial changes to platform operations in Europe, while also sparking further European Commission investigations into potential non-compliance in areas such as anti-steering provisions, self preferencing, default app settings, data portability and preferencing of proprietary products in search results.
One noteworthy example is the EU’s requirement under the DMA that Apple permit developers to distribute iPhone apps outside of the App Store. When implementing this change, Apple also introduced a ‘core technology fee’ for apps distributed outside of the App Store. The European Commission has raised concerns that this fee may replace the commission Apple would otherwise have received on any payments via its first party App Store, and in June 2024 launched a non-compliance procedure against Apple, examining whether these contractual measures comply with the requirements and spirit of the DMA.
A related outcome of the DMA is that many platforms have chosen to limit certain new features to jurisdictions not covered by these laws. Apple’s much advertised ‘Apple Intelligence’ features have been delayed in Europe (as at February 2025), ostensibly due to concerns over data protection and the interoperability obligations mandated by the DMA. Some commentators have suggested that if regulation becomes too onerous in smaller markets, major platforms might even choose to exit those jurisdictions altogether.
Additionally, in the UK, the Competition and Markets Authority (CMA) recently launched a new investigation into Apple and Google’s mobile platforms under the Digital Markets, Competition and Consumers Act. The CMA is examining whether iOS and Android should be subject to further obligations and whether either company favours its own products or treats developers unfairly. This second probe follows the CMA’s earlier review of Google’s dominance in search and advertising and signals continued scrutiny of large digital platforms. If designated as having ‘strategic market status,’ Apple or Google could face substantial fines and conduct requirements similar to those mandated by the DMA.
Existing Australian laws
The European experience above tends to suggest that enforcement will be a key part in ensuring the effectiveness of any new Australian laws. There is an argument to suggest that some conduct of concern to the Government may already be addressed through existing Australian competition laws. Where this is the case, greater ACCC enforcement of existing laws might arguably be a more effective course of action than creating new, specific regulations.
By way of non-exhaustive example:
- each of the platform vendors likely subject to the proposed new regime will presumably have a substantial degree of market power, and therefore already be subject to corresponding limitations on misuse of that market power under section 46 of the CCA;
- the recently strengthened unfair contract terms regime in the Australian Consumer Law is likely to apply to contractual terms imposed by those platform vendors on:
- consumer end users of their platforms; and
- small businesses such as app developers and advertisers;
- agreements between competing platform vendors, such as bundling apps on devices or setting default services like search engines, could be evaluated under section 45 of the CCA to determine if they substantially lessen competition. In cases involving direct competitors, such arrangements may even raise concerns under Part IV, Division 1 of the CCA regarding cartel conduct; and
- pre-installed apps, default services and bundling arrangements might warrant consideration under the exclusive dealing provisions set out in section 47 of the CCA.
This is not to say that any of these platform vendors are in breach of these provisions, merely that these arguments have not been fully tested by Australian courts before seeking to introduce a new tailored competition regime.
In a related development, Google is currently facing two proposed class actions in the Federal Court of Australia, alleging that it has misused its dominance in advertising technology to reduce the share of revenue paid to publishers. Smaller outlets, such as the regional newspaper Riverine Grazier and LGBTQ+ media outlet QNews, report negligible ad revenue from Google’s programmatic advertising auctions and claim this conduct undermines competition. Although Google disputes these allegations and maintains that its tools assist publishers, the ongoing proceedings highlight the possibility of using existing laws to tackle concerns around digital platforms, albeit on a more ex-post basis than the proposed ex-ante regime.
Next steps
While the proposal indicates a clear governmental stance on the need for more targeted regulation of dominant digital platforms, the timing of legislative change is uncertain. With consultation still open, any subsequent Bill would likely be introduced after the next Federal election.
If the proposal proceeds, it could prompt significant adjustments to the operations of major digital platforms in Australia, potentially opening new avenues for market entrants and fostering greater competition. Global experience, particularly in Europe, demonstrates that proactive enforcement will be critical to ensuring the effectiveness of such laws. The Government is positioning Australia as a fast follower, replicating successful international models while adapting them for the local market. Ultimately, although innovation remains the driving force behind the digital economy, the Government’s objective is to ensure that competition thrives alongside it, thereby distributing the benefits of technological advancement more equitably.
This article was written by Daniel Kiley, Partner and Christopher Power, Law Graduate.
