Competition watchdog to investigate social media issues impacting businesses and consumers

Digital & Innovation: An Inquiry sets to examine the state of competition for social media services in Australia.

As part of the sixth interim report of the ACCC’s five-year Digital Platform Services Inquiry, the competition watchdog will also 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 advertise to consumers.

Businesses, consumers and other stakeholders are encouraged to respond to an issues paper released yesterday, which will inform the sixth interim report.

The ACCC will examine competition issues involving social media services, including barriers to entry and expansion faced by new platforms, and hurdles and costs faced by consumers and businesses when they try to switch services. The ACCC will also consider consumers’ experiences with social media, including through the impact of scams and the risk of being exposed to misleading or deceptive content by businesses through social media.

“Social media has become an essential tool for many businesses as they seek to widen their customer bases and engage and communicate with consumers, and for individual consumers to connect and communicate with each other and access critical information,” ACCC Chair Gina Cass-Gottlieb said.

“We want to hear from businesses and consumers about their experiences with social media services, including with Facebook, Instagram, Twitter, TikTok and Snapchat. We hope to examine trends in user preferences and engagement over time, and consider how users choose social media services.”

In its Digital Platforms Inquiry, the ACCC concluded that Facebook (now Meta) had substantial market power in the provision of social media services in Australia. This report will update the ACCC’s assessment of these services and consider changes that have occurred since 2019.

“We are also eager to receive feedback on the barriers to entry and expansion for social media services in Australia, and if new entrants such as TikTok have changed the competitive landscape for social media services in Australia,” Ms Cass-Gottlieb said.

The ACCC is also seeking views on the use and abuse of social media services for scams and misleading or deceptive content. Australians lost more than $144 million to scams on social media in 2021, almost double the amount recorded in 2020 and four times the amount in 2017.

Views on the effectiveness of processes offered by social media platforms for consumers and business to report potentially misleading claims in social media advertising are also encouraged.

Submissions can be made to digitalmonitoring@accc.gov.au by 9 September 2022.