With scams becoming more prevalent across multiple channels, protecting individuals from harm is high on the policy agenda
ACCC to review social media’s competitive landscape: As part of the sixth interim report of its five-year Digital Platform Services Inquiry, the Australian Competition and Consumer Commission (ACCC) has announced plans to examine the state of competition in social media services. The authority will investigate issues such as: barriers to entry and expansion; the degree of differentiation between services (e.g. Facebook, Snapchat and Twitter); the type and magnitude of switching costs faced by consumers and business users; and the extent to which ‘multi-homing’, i.e. the use of more than one social network, affects competition. The ACCC will also explore trends in and the implications of mergers and acquisitions by social media platforms – an area that has come under scrutiny by many competition bodies around the world, especially in the case of so-called killer acquisitions.
The consumer perspective is key to the authority’s work: The ACCC is also aiming to understand consumers’ experiences with social media and changes in user preferences and engagement over time (particularly in light of the emergence of new entrants like BeReal and TikTok), and to gain insight into how users choose social media services. In addition, the ACCC’s analysis will consider potential consumer issues, including the way that businesses are using social media advertising services such as display advertising, sponsored posts and paid influencers to engage with and market products to consumers. With Australia’s online advertising market estimated to be worth A$13bn ($9bn) in 2021, the ACCC is investigating whether advertising via social media is presenting users with potentially misleading and/or deceptive claims, and the extent to which the practice has led to specific consumer harms.
Scams are not only an issue on social networks: While social media platforms have become a valuable tool for many firms to widen their customer bases and communicate directly with consumers, they have also given rise to new instances of fraudulent activity, which have resulted in significant emotional and financial impacts for victims. According to the ACCC, Australians lost more than A$144m ($99m) to scams on social media in 2021, almost double the amount recorded in 2020 and four times the loss in 2017. However, the problem is not limited to social networks, with scam calls and texts on the rise in Australia and various other countries, including the US. While the ACCC is committed to making Australia the world’s “hardest target for scams”, stopping fraud incidents at source and ensuring effective protection for consumers will require collaboration with key industries, namely banking, technology and telecoms.
