25 September 2023

ACCC has sights on online giants

Start the conversation

The Australian Competition and Consumer Commission (ACCC) has raised the possibility of widening competition laws to prevent giant digital platforms such as Facebook and Google buying start-up businesses which could have the potential to become competitors in the future.

In a speech in Sydney this week, Chair of ACCC, Rod Sims said there was a global discussion among anti-trust authorities on how they should respond to such acquisitions.

Mr Sims said Google and Facebook had commercial incentives to strategically acquire nascent firms, even if the chance of those firms ultimately posing a competitive threat was small.

“Facebook’s acquisition of Instagram eliminated the threat of a substantial potential competitor,” Mr Sims said.

“Over the past 12 years, Facebook has acquired 66 companies for a value of about $33 billion.”

He said between 2004 and 2014, Google had acquired 145 companies for a similar total value.

“The challenges involved for competition authorities in dealing with such issues should not be understated,” Mr Sims said.

“Some have argued that preventing large digital platforms acquiring small start-ups interferes with the incentives to innovate in the first instance,” he said.

“This perspective appears to be based on a view that large digital platforms are uniquely placed to develop and monetise the innovations of small start-ups.”

He said merger laws should focus on whether the acquisition interfered with the competitive process and recognise that the process of competition for the market was not the same as the process of competition within the market.

“If the prospect that the target will become an effective competitor is small, but the potential increase in competition and consumer welfare is large, greater weight should be put on the potential for competition,” Mr Sims said.

He said the ACCC would circulate its views on the importance of potential competition in the final report of its Digital Platforms Inquiry, to be provided to the Government on 30 June.

Mr Sims’ full speech can be accessed on the ACCC website at this PS News link.

Start the conversation

Be among the first to get all the Public Sector and Defence news and views that matter.

Subscribe now and receive the latest news, delivered free to your inbox.

By submitting your email address you are agreeing to Region Group's terms and conditions and privacy policy.