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ACCC v Google: All you need to know here as Rod Sims lays into alleged 'deceptive' Google on user tracking consent in Federal Court case

By Paul McIntyre - Executive Editor

27 July 2020

Game on: ACCC chairman Rod Sims and Google Australia MD Mel Silva

By Paul McIntyre - Executive Editor

27 July 2020

At midday yesterday, the Australian Competition and Consumer Commission's (ACCC) chairman Rod Sims laid out to journalists why the ACCC was taking Google to court on alleged breaches to online consumer tracking and privacy - and the use of deceptive mechanics to gain user 'consent'. Brands, marketers, personalisation proponents and digital advertising and data specialists better get up to speed. Sims says more is coming. Here's a full, lightly edited transcript of Sims briefing to journalists on the Google litigation and his responses to questions. It's serious. Nearly everything you need to know is here.   

Press briefing: Rod Sims opening remarks  

Here's Rod Sims' briefing to media on why the ACCC alleges deceptive conduct in its Federal Court Case against Google  

"I just thought I'd provide a bit of context for this matter. On the one hand, it's a simple matter. On the other hand, it's a very complicated matter.

"So a bit of historical context: DoubleClick was a large provider of technology for digital advertising before it was acquired by Google in 2008. Before that, you'd actually have contracts in place that said it couldn't use the data that its advertising technology got. It [DoubleClick] couldn't. It had contracts prior to 2008 that said it couldn't use the data it gathered through its advertising technology for any purpose. Of course, they didn't have any market power. That, of course, changed when Google took it over.

"Indeed when the competition authorities in Europe and US were looking at this acquisition in 2008, they noted these contracts that were in place which prevented Google getting access to the DoubleClick or combining the DoubleClick information with its own information. They knew those contracts would unwind. It's not as if there was any false statements made, but it was very much noted that at the time of the acquisition, Google could not combine the DoubleClick ad tech information with its own personal identifiable information.

 
Google and the DoubleClick problem 

"When the acquisition was complete, Google's privacy policy said that it would keep the DoubleClick data separate. Indeed, its policy said Google will not combine DoubleClick cookie information with Google's personally identifiable information unless we have your opt in consent. Now, in 2016, Google changed this privacy policy. The previous statement I've just read out, it's gone. And it said, 'we may combine your personal information from one Google service to another to improve Google services and give you more control of your data'.

"Now, as people know, DoubleClick, or Google through the DoubleClick technology is used on virtually all apps, websites, so the reach of this is just enormous.

"What we're alleging is that Google had and still does have a policy that it won't decrease consumer or user rights without their explicit consent. We argue they did that with this change. They said the changes were about more information being available, making it easy to control your data. In fact, what they got was user consent to combine the personally identifiable information with all the third party websites and apps -  information where DoubleClick technology is being used and that's virtually everywhere, or now, Google technology. And thirdly it said, look, just click 'I agree here' and it didn't explain the significance of what was changing when you did click, 'I agree'.

 
Consumers don't want tracking

"This is really a vital change that Google made through, we allege misleading consumers. Before 2016 Google only collected and used information for advertising purposes. The personally identifiable information and data from Google owned services post 2016,  could combine that data with all the data people had when they were roaming the web or using apps where Google ad tech technology, formerly DoubleClick technology, was being used, which is the vast majority of websites and apps, so that they could actually combine through this agreement your personally identifiable information, your name, your email address, whatever, with your Internet browsing activity that you did on a whole range of non-Google websites and apps.

"So it massively increased the data that they got and massively increased the power of their advertising and therefore their profitability. The harm we're alleging here is that in our surveys during the digital platform inquiry, we found that over 80 percent of people did not want their browsing and web crawling activity and the data generated from that to be combined with their personally identifiable information so they could be profiled on the web, they could be the target of targeted advertising.

"So our view is, had people been given a real choice, had they really known what's going on, had they not been deceived, many of them would not have clicked on 'I agree'. I mean, some internationally use the term that this is an agreement for deception.

 
Misleading behaviour on user consent

"We're certainly alleging that there was misleading behavior that got consumers to agree to this. Google spent a lot of time planning this to get people to give their agreement. And, as I say, it has benefited Google's advertising, its profile and its understanding of the effectiveness of ads. It's really important for Google.

"Our point is that consumers should make informed consent on these matters. They should, if the Internet's going to work as it should, if data is going to work as it should, people need to be given access to,  they need to know what's going on, they need to give their informed consent to those things. I've also mentioned different people - I'm sure people on this teams event would have different privacy preferences, some don't care at all. Others care a lot. And so, again, that harm being that people were consenting to things without knowing what they were consenting to in circumstances where, had they known, they might not have agreed to it.

"So, as we know, Google's business model is all about monetising data. That's that's why they exist. And this change greatly increased their ability to do this - it's worth a lot of money to Google. We allege they achieved it through misleading behaviour. And so that's why we're concerned about this. I think the other thing I'd say is the ACCC is probably unique in the world in combining its competition and its consumer work.

"And so where we see harm in a broader way, we can use our consumer enforcement to do things a lot of other agencies can't. So we think there is harm here. We think there's significant harm here brought about by misleading behaviour. And so we're taking action both to get penalties and deterrence here, but also to send messages about how consumers should be treated on the Internet.

 

Media Q&A: Sims responds to journalist questions 

 

David Swan, Technology Editor, The Australian

"It sounds like you uncovered this information during the digital platforms inquiry. Can we expect anything more to come from that in terms of similar actions? And secondly, are you expecting to take this to trial?"

"Well, this is certainly going to trial. We've instituted proceedings in the Federal Court, so there's no doubt about that. That will take some time to come about. Look, in relation to the digital platforms inquiry, at the end of that, we said there were five matters that we were looking at in detail; the Google location matter and this matter were two of those, so they are now coming to court. We've got, since we've been working on this, more issues coming up, so we'll make judgments about them either under competition law or consumer law and again, that's the benefit we have. Where we think there's real harm, where we think they matter . we're not going to take on everything, we're just taking on things we think that really matter. So I think it's fair to say that there will be more. I can't give you the timing of those and I can't tell you how many. It's a judgment call on what else is going on in the world. We've only got so many resources but where we think it's important, we'll certainly be taking on more matters."

 

Cara Waters, Technology and Startups Editor, The Age and The Sydney Morning Herald

"How many consumers do you think this has impacted? My second one is you mentioned how this is being viewed internationally - are you working with other jurisdictions or are you aware of actions internationally in relation to this issue?"

Rod Sims: "Firstly, I think millions are being affected. It's hard to put a number on. It's hard to know how many would not have agreed had they known, had they not been misled, as we're alleging. But I think there's no doubt it's millions of Australians because there's so many affected by this behaviour that you'd have to think that some millions would not have clicked 'I agree', had they known.

"So the impact on Australians is, we think, very significant. We keep in very close contact with our international counterparts on so many digital collateral issues. They have things they are pursuing. We have things we're pursuing. Again, as I said, what's really almost unique with us is that our teams can take competition or consumer matters - most competition agencies don't have that consumer power. The ones that do segregate it and don't use their consumer laws in this way to take on such large companies.

"So I think we're probably the only ones taking on this matter. But there's a whole range of harms that are going on that we're working on with those players internationally. But we won't take on everything they do and they won't take on everything we do. I think provided we know what each other's doing, this is a matter of getting some case law that limits what the platforms can do so that they and the Internet are a benefit to society and not a detriment."

 

John Durie, Business Columnist, The Australian:

"What does this case tell you about whether Google can be trusted in its undertakings for things like your Fitbit inquiry and other investigations you're doing? Secondly, this week the government's due to release the media industry code of conduct. What does this case tell you about that?

Rod Sims: "Google has not misled any competition authorities when it acquired DoubleClick in 2008. Those authorities were aware that DoubleClick had contracts in place. That said, it could not use that data. But they are also aware those contracts would unwind at some stage, which they obviously did.

"And of course, when Google took over DoubleClick it then had the market power to completely up end the arrangements, where the publishers and advertisers really had no choice but to allow Google to do what it wanted to do. So it's really just an issue of getting the consent of consumers. I think what this shows for mergers is how quickly the world can change, how when you're assessing mergers, you've got to take into account what could happen in the future and in approving mergers, try and do no harm trying to anticipate how things could happen.

"The fact that certain things are said now, those things may be right, but they'll unwind at some stage and it doesn't take too much time to elapse for these things to unwind. And then you're in a completely different ball game so I think this says competition agencies need to look ahead and see what can happen. 

"In relation to the code, look, it's just complete circumstance that we're taking this issue to court today. Enforcement matters have their own time trajectory. I'm always impatient to try to get these things to court, would have been nice to get it to court a while ago, but you can't rush these things.  The team's done a great job in what they've done in getting this to court. You can't rush these things. You've got to do them correctly. On the other hand, when we're ready to go, we can't say, oh, let's hold off for a month while we get the bargaining code out. So it's just circumstance. It has no implications for the bargaining code, which we assume will come out this week. That's really in the hands of the government."

 

Laurel Henning, Senior Correspondent, MLex:

"In terms of the five matters that you were originally looking at, at the end of the digital platforms inquiry in detail - what's that number now that you're looking at?"

Rod Sims: "We're always prioritising matters that we take because we only have limited resources. So some of those five matters have fallen away just because either the evidence didn't stack up as we expected it would or we judge they weren't high enough priorities. Look, it's hard to know how many. We've probably got five to 10 matters we are looking at in relation to platforms but certainly not all of those will not get to court. These matters take time. We've had a Google location matter, now, this one; there's been a decent gap between the two. These things take time but probably five to 10."

 

Paul McIntyre, Executive Editor, Mi3:

"What does the ACCC want to achieve from this case? Do you want to see Google unbundle its current policy, unwind it? Or is it is it just a fine and a slap? The second question is I'm sure you're aware that Google is moving very quickly in 2021 to put new restrictions around the use of third-party cookies, moving to first party data and logged-in user data. Do you think the big tech players are moving faster than the market, and even perhaps the ACCC -  can you keep up with adjusting to what they see as potential threats?

Rod Sims: "What we would point out is that consumers can - it's very complicated -  but they can go back into Google to take out the 'I agree' consent.  To reverse that - it's complicated and I'm not the person to explain how to do that. But I'm sure if one gets on the web, one can find out but I'll get my people to put it up on the web. But it is complicated to do that. And by the way, if you did that, it wouldn't affect your use of Google, right. I mean, this was an agreement that was already for Google's benefit.

"We allege consumers use of Google services was pretty unaffected.  In terms of its consequences, these cases set boundaries around what can and can't be done, and over time they do shape the operating environment of the platforms.

"I think people perhaps underplay that.  They say, well, yes they get a fine but they move on. But it's basically establishing what I call essentially the common law about what they can and can't do in various jurisdictions. So I think it does all add up. It means that next time if we win the case and get appropriate declarations, they'll have to be much more, well, make these changes without misleading consumers to make sure consumers give their informed consent.

"Look, in terms of the third party cookies, that's a rapidly changing environment.  For those who aren't aware,  Google is trying to restrict what information others can get from third party cookies under a privacy heading. Of course, it can still use the information. So that's an issue. A number of agencies are looking at it from a competition point of view. I agree very much, this is a thoroughly dynamic operating environment. But I think we're all watching where this goes.

"Whether we can keep up with Google and Facebook and others on the net and all the changes they're making - I don't know. But that they won't be too far ahead of us, I can assure you of that. We will keep taking action, as will agencies overseas. And it will shape how these agents, how these platforms behave to make sure that the Internet is a benefit to use, not a detriment. That does have consequences."

Paul McIntyre, Mi3:

"When do you expect some sort of resolution or decision?"

Rod Sims: "Normally that's hard to judge anyway because you've got to get the matter to court, which by the time you do all the case management can take months. Then you have a hearing, then you wait for decisions. So, look, these things can take a certain amount of time. At the moment with COVID, the courts are probably operating at less than one hundred percent pace because sometimes things just can't be done as well on Microsoft Teams, even though that's what the court is trying to use. So I think it's some way off, but I think the benefit is immediate in the sense that Google understands that this is behavior that is going to be looked at extremely carefully by regulatory agencies. But the final court outcome is many, many months away."

 

Paulina Duran, Senior Financial Correspondent, Reuters:

"It sounds like to your understanding, there's no precedent for this and this is the first thing you are going to be doing - setting a precedent. Is that correct?

Rod Sims: "That's right. But I don't want to overblow that. I mean, the European Commission is taking cases that also set precedents. The Federal Trade Commission in the US has taken a big case with a $5 billion fine in relation to Facebook on privacy issues. So there's all sorts of institutions around the world taking action.  Yes, this one is an action we're taking that others have not. This sort of issue is being much-watched by competition agencies as a competition issue. But it's one that doesn't quite fit under that heading, in our view. It hits on and fits under the heading of misleading and deceptive conduct, which is the basis on which we've taken it under consumer law. It's easier for us to do that than most other jurisdictions. So that's why we are where we are."

Paulina Duran, Reuters:

"Could you give us some kind of expectations around what kind of penalty you're seeking? Are we talking about just a very symbolic few thousand one hundred thousand dollars? Or are we talking about a significant penalty?

Rod Sims: "Two things. Firstly, we've got to get the case to court and win it, which we may do or may not do. You can never tell those things but we obviously think we're on fairly solid ground. But we have to win the case. If we win it, that's impossible to put numbers on it until you see the basis of the judgement. We're talking millions of dollars. We're not talking about thousands of dollars. So no, this is - under consumer law in Australia - we have quite significant penalties which have only recently been increased further. So while this is under the old penalty regime, it's still a case where the penalties, if we're successful, will run into the many millions of dollars.  I'll just add though there's importance  also in the declarations about what Google can and cannot do, what other platforms can and cannot do when they are seeking consumer consent. This is this notion of 'deception by design', where things are set up to get people to agree to something that will be affected already by this action. And certainly if we win even more so."

Paulina Duran, Reuters:

"What would be, in effect, setting precedent?"

Rod Sims: It would set a precedent for how consumers are informed about things; that the information they're given when they're asked to agree to things on the Internet. So it certainly will set a precedent in that regard."

Paulina Duran, Reuters: "Internationally?"

Rod Sims: "I see where you're going. I think if we take the case then there are other agencies that can do the same thing that don't have the same integration as we do. But certainly some Europeans and the Federal Trade Commission in the US could do it. So I think us having done it, if there were this sort of behaviuor, again, that might well encourage other agencies to do that or do the same thing. So it could well set a precedent internationally."

 

Jennifer Dudley-Nicholson, National Technology Editor, News Corp Australia: 

"Is this about the declaration? As you say, is this about having Google change its behaviour? Or is it about the monetary fine?

Rod Sims: "It's both a monetary fine for deterrence if we are successful. And it's also declarations about what they can and can't do in the future. It doesn't unwind what's happened in the past, it's declarations about the future. As I say, consumers can go back and disallow that previous agreement. It's complicated, but they can do it. This is a declaration about how Google and indeed other platforms behave in the future and how well they inform consumers that what it is they're being asked to agree to."

 

Yolanda Redrup, Technology and Healthcare Reporter, Australian Financial Review

"It does very much feel like you know, just in conversations you have with your friends and family, that most people didn't know that this was how Google's policy worked. Do you think that's sort of just the sticking point in of itself? That there just wasn't enough consumer awareness and that the notification wasn't showing informed consent? Secondly, Is there an update on the location data case?"

Rod Sims: "With the first point. I mean, yes, the importance of knowing is crucial. I believe you are quite right that people didn't.  I mean, we believe that people were misled into agreeing to this. That had they known had they known that their Google services would stay the same, but agreeing to this meant they're tracked across the Internet, many would not have agreed to it. I'm certainly in conversations as you are, Yolanda, all the time where people say they don't like it, they didn't know about it. So I think stopping them doing this sort of thing is important. I think, secondly, letting people know what's going on is important. This case will bring attention to what's actually happened and why it's happened and to stop it happening in future. So that's why we've taken this case - to bring this out and to try and stop it happening again and to inform consumers because if the Internet and the use of data is going to work properly, we all need to know what's going on and to give informed consent. So that's why it's so important."

Note: The ACCC's location data case, commenced last October, is set for a November hearing in the Federal Court. 

 

John Durie, Business Columnist, The Australian:

"Could you tell us what you think about the state of competition in the adtech market?

Rod Sims: "We are very interested in the adtech market. It's one that where there’s a lot of advertising going on in. A massive amount - billions of dollars a year. We have an inquiry going on into the ad tech market.

"Competition issues are crucial, both because it's a really complicated and fascinating market. You go onto a website, you might be looking for running shoes and within second, nanoseconds, fractions of a second, there's an auction going on about who's going to advertise to you when you make a search inquiry for whatever you do inquire about. And that technology is much dominated by Google technology, which they got through DoubleClick. They're not the only player; they're by far the biggest and involved with by far the most transactions.

"And there's issues around how much of the money do the middle people take; that is, say that if you spend a hundred dollars on ad, you're an advertiser, you want to advertise on smh.com.au, how much money do the middle people take? That's money that they, the advertiser doesn't get, smh.com.au doesn't get. And also, how much self-referencing, how much really at the end of the day must you use Google?

"So these are issues that we're looking very closely at. And this case does play into those issues and again, shows the link between consumer law and competition law, which is why this matter very much took our attention and why we're using consumer law to deal with the size of the market." 

 

Paul McIntyre, Mi3:

"Do you have any messages for those big companies, those brands and advertisers that buy and use this sort of technology?"

Rod Sims: "What's interesting is that when all this was being done by DoubleClick over 10 years ago, DoubleClick didn't have market power. That data stayed with the publishers or the advertisers. But usually the publishers, because they had power. When Google got involved and bought DoubleClick, the market power just completely shifted to Google so that when those contracts ran out, Google were in a very strong position to insist that they do have access to that data. I think the market power issue is really important and that's why that acquisition was so important to Google. Way before competition authorities could really understand the importance of it -  I think that's a fair statement. We cleared it twelve years ago, as did the Europeans and the Americans. We all get the same thing in terms of implications for companies. I guess that's what our ad tech inquiry is trying to do. It's going to try and bring out what's actually going on in adtech, how much money is being lost to people in the middle, that's money that could go to either the advertisers or the publishers. This is a really serious issue. I know that news media businesses, in the context of our COVID discussions, have been really interested in adtech as much as they have been in the media code - trying to understand transparency, trying to be a more competitive ad tech environment, which is what we're aiming to do with this inquiry. It is of profound importance to all those who advertise on all their sites in which they advertise."

Paul McIntyre, Mi3:

"Are there secondary implications to brands and advertisers around the privacy issue and disclosure?"

Rod Sims: "This case is a consumer law case, a misleading conduct case.  Obviously it has privacy implications. The fact that you are on the web, you are getting personal - your web browsing activity, which could be around quite sensitive matters, health related, for example, is getting linked back to your personal identifiable information is something that many people do have concerns with.

"And as I say, they may not have consented had they known what they were consenting to. But it also affects who gets what data. And at the moment, Google's getting that data from people's browsing and activity on Google web sites. Certainly the publishers, the advertisers would like a bit of that data. So that's another issue that needs to be dealt with and is being looked at throughout the adtech inquiry."

 

James Thomson, Chanticleer Columnist, Australian Financial Review:

"What would your ideal presentation of informed consent look like?

Rod Sims: "It's a fairly complex change to explain. I know a lot of online businesses use the sort of box with 2000 words and two hundred clauses in it with 'I accept" coming up you scroll for a bit. That doesn't feel like informed consent. 

"You saw some of the captions of what Google said. I think you could quite simply say, 'if you agree to this, we are going to combine the information, personally identifiable information we have on your Google account with your browsing activity on non-Google sites. If you agree to that, here's the benefits here's the issues for you'.

"But make it really clear that's what you're agreeing to. I think you could do that in a few sentences if you wanted to provide that clarity. I often think some of those very long statements are meant to confuse people rather than help them.  Short, clear statements would make the world of difference if you really want to. So as I say, deception by design is being used many times by many people. I think if you really want to give people full information, it is so easy to do it. If you don't want to do it, that's a fair bit of what's going on now by platforms on the web to make to basically mislead consumers into agreeing to all sorts of things. That's why this is such a fundamental issue that we're taking on today."

Let's go. Click here to comment.

By Paul McIntyre - Executive Editor

27 July 2020