SYDNEY - Australia has become the latest country to take on the might of the technology giants, flagging proposals that could force Google and Facebook to reveal their mystical "algorithms" for determining search results and news feeds.
Following a year-long inquiry ordered by the federal government, Australia's competition watchdog expressed concern about the market power of the two firms and the impact this was having on news outlets and the broader economy. It said the firms are often the window onto the world and the online marketplace, but their method of determining the order in which content appears on their websites was "opaque".
The concerns were expressed in a wide-ranging report by the Australian Competition and Consumer Commission, which released its preliminary findings earlier this month. In a 374-page report, the commission called for the creation of a new regulator which would scrutinise the algorithms used by Google and Facebook. The commission said the firms could provide information about algorithms to the regulator but it would not be made publicly available.
"(This) would provide assurances to both businesses and consumers that algorithms are not being used to favour certain businesses or, in the case of news stories, are operating in such a way as to cause significant detriment to the production of news and journalistic content or media markets," the report said.
Facebook and Google said they will consider the report and engage with the commission ahead of its final report next year. But both firms are expected to staunchly resist the push for tougher scrutiny of their algorithms.
A senior executive at Facebook, Mr Andy O'Connell, attacked the "unprecedented" proposal, saying it appeared to be a world-first and risked undermining the attempt to ensure content feeds were based on the user's choices. He said the attempt to police algorithms would be "unworkable".
"I am not aware of any other country seriously looking at this idea of an algorithm regulator," he told The Sydney Morning Herald on Dec 13.
"These algorithms are personalised feeds based on choices individual people have made, so it is really hard to conceive how a government body can intervene in those choices."
Facebook announced changes to its news feed earlier this year after it came under attack following revelations about Russian operatives disseminating false reports on the site during the presidential campaign in the United States in 2016. The changes included prioritising posts from news outlets deemed trustworthy and increasing the proportion of public posts from family and friends compared with those from advertisers and media outlets.
Earlier this year, Google was hit by a €4.34 billion (S$6.79 billion) fine by European Union regulators over concerns the firm's Android mobile operating system was used to block rivals. Google is challenging the fine.
The inquiry in Australia followed concerns about the market share of the two firms and their impact on the news media. It found 94 per cent of searches in Australia were conducted on Google.
Of the almost A$8 billion (S$7.73 billion) spent on online advertising last year, Google received 38 per cent and Facebook 17 per cent. Meanwhile, traditional media outlets have struggled to compete for online advertising revenue as their print advertising revenue has declined. The commission said this is posing a threat to media outlets and leading to "a reduction in certain forms of journalism which are beneficial to society".
In its report, the commission made various recommendations to promote competition, including requiring that mobile devices, computers and tablets provide consumers with options for Internet browsers and search engines rather than being installed with defaults such as Google's Chrome. It also proposed that an ombudsman be established to deal with public and commercial complaints about digital platforms such as Google and Facebook.
Responding to the report, Australian Prime Minister Scott Morrison said he and other leaders around the world needed to "stand up" to large technology firms.
"There are responsibilities and accountabilities and where I don't think they're being honoured then I will act," he told Sydney's Daily Telegraph earlier this month.
The commission signalled it wants to push for a coordinated international approach to regulating the technology giants. It plans to discuss its proposals with regulators around the world as well as bodies such as the Organisation for Economic Cooperation and Development.
"The issues Australia is facing with digital platforms are not unique," it said. "Many other countries face similar concerns and are also taking steps to explore these issues."
The commission will seek feedback on its proposals from the technology firms and the media sector. It is due to complete a final report by June 2019.