The scale and nature of acquisitions carried out by digital platform companies like Google and Facebook are posing new challenges to regulators, Australia’s competition tsar has warned.

Speaking at a gala event in Melbourne last night for a global merger workshop, the Australian Competition and Consumer Commission chairman Rod Sims called on global regulators to work together on new approaches to adjudicating acquisitions in digital markets, including Google’s current attempt to buy Fitbit, a deal the ACCC is currently reviewing.

“The rapid rise of a number of large digital platforms, involving many acquisitions, has caused competition authorities around the world to consider whether our traditional approach to mergers is able to meet the challenges presented by emerging markets,” Sims said. 

ACCC Chairman Rod Sims. Source: ACCC.gov.au

“It is easy to suggest our markets would be more competitive if YouTube and Double Click were separate to Google, and if Instagram and WhatsApp were separate to Facebook. But predicting the future competitive effect of such acquisitions before they occur is extremely difficult. This illustrates the difficulties when you have only nascent competitors, or competitors in related markets.”

Last year the ACCC released its report into digital platforms following an 18-month investigation, recommending more scrutiny of the American giants’ operating models. The government’s response to the inquiry included handing the regulator more powers to investigate platforms and ordering two long term inquiries into their services and digital supply chain.

Last night Sims said regulators still face many unknowns about the consequences of further consolidation by digital platform companies, noting traditional assessment methods may be inadequate in determining the true impact on competition and consumers.

He called on fellow global regulators to work together and share information to help asses how the global companies’ “complex and far-reaching operations” should be considered by competition authorities.

Google’s acquisition of Fitbit, which some authorities are currently considering, is a key example where we will all want to watch and learn from each other, and we are seeing clear signs of that already,” Sims said.

“It is a very important matter.”

ACCC eyes Google’s Fitbit bid

Sims is already wary of the Fitbit deal which will see Google gain access to the health data of millions of people. Both Google and Fitbit have stated that the data will not be used for targeted advertising, a claim Sims contested in November following the acquisition.

“Given the history of digital platforms making statements as to what they intend to do with data and what they actually do down the track, it is a stretch to believe any commitment Google makes in relation to Fitbit users’ data will still be in place five years from now,” Sims said at the time.

This week the ACCC began its formal consideration of the deal, calling on interested parties to make submissions on its impact on competition, in particular:

  • the impact of the proposed acquisition on prices and features of wearables including the wearable operating system
  • the ability to foreclose or otherwise frustrate the ability of other businesses to compete  
  • the impact that Google’s increased access to data will have on markets which rely on the collection of data, e.g. advertising markets and  
  • the impact of Google extending its “ecosystem” of products.
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