According to a report in the Australian Financial Review (AFR) today, Facebook (NASDAQ: FB) will assist policymakers in the regulation of its news and advertising algorithms.
Why the regulations?
Late last year the Australian Competition and Consumer Commission (ACCC) found that Facebook and Google owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) earned more than half of Australia's $8 billion in revenue from digital advertising. As the two largest and fastest growing participants of the advertising market, Google and Facebook have a combined share that is larger than the influence of free-to-air television.
Backed by Australian Consumer Law, the ACCC issued a Digital Platforms Inquiry to investigate how Facebook and Google algorithms regulate the news and advertising directed to their users. In addition, the inquiry looked to investigate how data is used and collected from consumers.
Findings of the interim report
A draft report of the ACCC's Digital Platforms Inquiry was released late last year and outlined 11 recommendation to reduce the market power of Facebook and Google. One of these recommendations was to instill a regulatory authority responsible for monitoring the algorithms used by Facebook and Google. The authority would essentially police how the companies operate their algorithms and monitor and investigate any commercial arrangements and factors that could influence advertising and news directed to users.
Facebook was quick to rubbish the ACCC's recommendation to monitor advertising, claiming that a regulator would be unnecessary and unworkable. Facebook remained adamant that the ranking of news and advertising on its 'Newsfeed' is personalised to individuals and not biased by the company.
According to the ACCC, the regulations imposed have the intention of preventing Facebook and Google from abusing their growing market dominance. The regulations aim to gain more transparency on ambiguous privacy and data collection and how this information is used.
Why has Facebook changed its tune?
According to the AFR, the ACCC handed its final report of the Digital Platforms Inquiry to federal treasurer Josh Frydenberg today. Despite lobbying against the regulations, Facebook has changed its tune and will engage constructively with policymakers and the regulatory authorities. The AFR reported that Facebook is more open to explaining how news media is distributed through its services and will be more transparent on how data is collected and used.
This change in tune comes as both Facebook and Google face increasing scrutiny and threats of regulation from around the globe. A myriad of events such as the Christchurch Massacre and election interferences have forced governments around the world to issue tighter guidelines on the regulation of digital platforms.
