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ACCC release report on social influencers & advertising

Following the release of a new report into social media services, the ACCC reaffirms its support for reforms aimed at safeguarding consumers and businesses. The report highlights several issues occurring across social media platforms, including excessive data collection, lack of dispute resolution options, scams, lack of transparency for advertisers, and inadequate disclosure of sponsored content.

This report is the sixth in the ACCC's Digital Platform Services Inquiry and examines competition between social media services in Australia, as well as how consumers and businesses interact with them.

While social media platforms have brought numerous benefits to society, the ACCC is concerned about their level of influence over users and their critical role as intermediaries for businesses to reach customers. The limited competition in these services could lead to negative outcomes for consumers and small businesses. Therefore, the ACCC emphasizes the need for specific mandatory processes to report and remove scams, harmful apps, and fake reviews. They also call for the establishment of an external Digital Ombuds Scheme to address these issues.

In 2022, losses to scams originating from social media alone in Australia amounted to over $80 million, which is a significant increase from the reported losses of $56 million in 2021 and $27 million in 2020.

According to ACCC Chair, Ms Cass-Gottlieb, it is evident that social media companies are not doing enough to prevent their users from falling victim to scams on their platforms, particularly since only a fraction of those scammed report it.

Australian businesses rely heavily on social media platforms like Facebook and Instagram to promote their products and interact with consumers. Small and medium businesses, in particular, depend on these platforms for targeted, user-friendly, and cost-effective advertising solutions.

Ms Cass-Gottlieb has stated that advertisers are concerned about their inability to choose the best services that meet their requirements due to the lack of transparency and accuracy in the advertising performance data provided by social media platforms.

Moreover, the report highlights the growing influencer marketing sector and raises concerns about insufficient disclosure of sponsored posts by influencers and brands.

Ms Cass-Gottlieb has emphasized that consumers are unable to make informed purchase decisions when endorsements and sponsored posts are not clearly indicated.

According to the ACCC's report, Meta has considerable market power in social media services, even with the emergence of TikTok and smaller platforms like BeReal. Australians still spend more time on Facebook and Instagram than any other social media platform, and Meta has the most users and advertisers in Australia.

The report indicates that Meta's competitors do not pose a significant competitive threat since they differ in their characteristics, usage, size, and user demographics.

The ACCC remains in favour of introducing reforms to address the problems observed, including an economy-wide ban on unjust trading practices, targeted consumer protections, and service-specific codes of conduct for designated digital platforms. Similar regulatory reforms are also underway globally, such as the European Digital Markets Act, which is slated to take effect in March 2024, and the UK Digital Markets, Competition and Consumers Bill that was recently introduced to parliament.

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