Adtech, apps double down

The ACCC has doubled down on the adtech and mobile app industries as its top priority for hard regulatory intervention once the federal government legislates a new digital competition regime, pledged to land this year. 

Federal Treasury completed a public consultation review in February with a raft of proposed reforms that will for the first time allow the regulator to avoid slow, reactive lawsuits by designating certain platforms with specific rules and codes of conduct that attract fines of up to $50m or 30 per cent of revenues if breached. 

The ACCC considers itself a “fast follower” of more proactive “ex ante” or "up front" regulation already developed by other markets like the UK, EU, Germany and Japan. 

Its most urgent recommendation to the federal government – after it enacts a new digital competition regime with special powers for the ACCC – is to intervene in the adtech industry along with Apple and Google’s mobile app duopoly. 

But gaming, AI, cloud computing, mobile operating systems messaging apps, and the second wave of industry-biting privacy reforms are also in the line-up the ACCC wants an “expeditious implementation” by the Albanese government. 

Last December the government publicly committed to a whole-of-government approach to platform regulation and sweeping new powers for the ACCC in 2025, although no firm timetable has been announced. 

These reforms carry potentially significant impacts for all major platforms – and the market – in the ACCC’s ambition to rein in the decade-long global romp by a handful of platforms that have outpaced governments trying to tackle anti-competitive behaviour and uphold consumer protections. 

One of two new recommendations in the ACCC's final report is the continued role and five-year funding of a collaborative super regulator initiative - the Digital Platform Regulators Forum (DP-REG), established three years ago. Designed to facilitate a whole-of-government approach to digital platform policy and enforcement, DP-REG brings together the ACCC, the Australian Communications and Media Authority (ACMA), the eSafety Commissioner and the Office of the Australian Information Commissioner (OAIC) to "develop new expertise in digital markets" and to monitor and co-ordinate "cross-cutting" issues, promote efficiencies by undertaking joint research to inform government and the public on digital technology, media, online privacy and online safety regulation. The ACCC said it would ensure a "streamlined and cohesive approach to the regulation of digital environments with a view to minimising [the] regulatory burden on industry".    

Dark designs and designation

The ACCC identified circa 260 competition cases and investigations globally by G20 countries since 2010 spanning Google, Apple, Meta, Amazon, Microsoft, Alibaba, Baidu and Booking.com.

“Practices such as leveraging proprietary data, limiting consumer switching, bundling or tying access to services and self-preferencing conduct [i.e. favouring their own stacks and systems over competitors] stifle innovation by limiting opportunities for smaller firms and nascent competitive technologies,” the ACCC’s report said. “Furthermore, the ability of large platforms to copy and replicate their competitors new features can also serve to protect core markets, depriving smaller firms of the scale necessary to succeed. Concentrated market power creates high barriers to entry for new players, impeding smaller firms – even those with innovative solutions – from effectively competing. In these types of scenarios, regulation can increase innovation rather than hinder it. A number of US start-ups also support this view and have come out in support of digital competition regulation.”

Deceptive design features – often called dark patterns – is a consumer protection hot spot for the ACCC, potentially snaring a host of TV and other subscription-type services, ecommerce, retail marketplace and mobile operators, including Amazon. 

Ironically, much of the impetus for deceptive platform UX design is derived from the work of Daniel Kahneman. The first to win the Noble Prize for Economics as a non-economist, Kahneman proved people are not as rational as economists believe, responding to hundreds of mental shortcuts that ease decision making, known as heuristics.

Chandni Gupta, deputy CEO of a favoured ACCC consumer research NGO, the Consumer Policy Research Centre, and author of the recent Made to Manipulate report on the prevalent use of dark patterns by platforms and business, told Mi3 “some businesses were reverse engineering” Kahneman’s work to “profit off a particular [UX] design pathway”.

Prime time

The ACCC cites a case between the US Federal Trade Commission and Amazon Prime in which Amazon “allegedly” enrolled consumers in Amazon Prime subscriptions without their consent, “knowingly making it difficult” for them to cancel their subscription using “dark patterns”. In the Amazon case, the ACCC said the FTC detailed further allegations including excerpts from an Amazon document using the word “misdirect” to explain Amazon’s tactic of forcing consumers to find a small blue-text link to make a purchase without joining Prime while a bolder, more prominent button with “Get Free” in capitals signed users up for a Prime streaming subscription as part of their purchase.

Amazon disputes the FTC allegations but the ACCC note these practices are deployed by gaming, social and retail marketplaces and are of concern in emerging tech like generative AI and private messaging services.

“According to the OECD, digital markets may amplify the presence and severity of a range of consumer harms” the ACCC said, which included:

• Undisclosed influencer sponsorships
• Subscription traps
• Paying with personal data
• Obscure microtransactions
• Hurdles to obtain redress for problems

Here are some more details on the ACCC’s key concerns and countermeasures in its final report to the federal government:

Online retail marketplaces 

Despite ongoing predictions of Amazon’s takeover of online shopping in Australia, anti-competitive scale isn’t yet the worry for the ACCC in retail commerce but preferential practices, manipulative design, dark patterns, product safety and customer service are.

The growing might of global online retail marketplaces in the last three years – notably, an almost 90-degree growth curve in active monthly app users at Chinese juggernaut, Temu, since early 2023 – is equally under the watchful eye of the ACCC. 

While it doesn’t yet believe any one player holds enough of a dominant position in Australian for competition crackdown, rapid scaling-up and investment by Temu and Shein through direct-to-consumer shipping, plus Amazon’s gain as it continues to capture marketshare as the largest marketplace globally, are seen as near-term, possible competitive threats. 

Where the regulatory offensive is dialling right up, however, is around how owned products are being ranked and preferentially treated – most notably, owned goods – plus manipulative design practices and ongoing issues with fake and doctored reviews. 

In concert are product safety concerns plus overall dispute resolution practices to improve consumer support. 

Highlighting these signals is the ACCC’s growing concern around dark patterns and harmful consumer practices across digital platform realm more widely. 

The watchdog first raised these concerns specifically about retail marketplaces in its 2022 Report on General Online Retail Marketplaces, the fourth interim report delivered under the five-year Digital Platform Services Inquiry. It’s also following the lead of a number of other overseas regulators – UK, EU and US – when it comes to dark patterns and manipulative behaviour, product safety and dispute resolution. 

“While some practices consumers find concerning may be addressed through existing provisions of the ACL [Australian Consumer Law], not all of them are likely to be covered by these existing laws." 

The ACCC submission to the Treasury’s Unfair Trading Practices: Consultation Regulation Impact Statement noted existing provisions “may not cover conduct that distorts consumer and small business choice without being misleading (e.g. obfuscating relevant information),” the latest report notes. “Provisions also do not apply to conduct that is significantly harmful but does not meet the threshold of unconscionability. However, these practices are likely to result in significant consumer detriment.”

Key points on retail marketplace regulation: 

• Global regulators are going after product self-preferencing: As the algorithms take over, it’s critical for the ACCC that consumers are able to transparently gauge how such product rankings came about. Right now, only 29 per cent of recent online marketplace users believe online marketplaces clearly explained how product search results were sorted and displayed by default. That figure drops to 20 per cent across those who rate their tech know-how 5 or lower out of 10. It’s not a new regulatory worry globally. Two ongoing, separate class actions filed against Amazon in the UK’s Competition Appeal Tribunal in 2022 and 2023 allege Amazon unlawfully abused its dominance in online marketplace services in relation to its ‘Buy Box’ shopping function, using self-preferential algorithms to ensure the Buy Box featured goods sold directly by Amazon or a third-party retailer paying storage and delivery fees to Amazon. It follows a 2020 investigation by the EU into these same business practices, which led to Amazon making legally binding commitments under EU antitrust rules. It also saw Amazon designated a gatekeeper under the EU Digital Markets Act, alongside five other digital platforms (Alphabet, Apple, ByteDance, Meta and Microsoft) for online marketplace and online advertising services. 
• Manipulative design, dark patterns are in the firing line: Even more worrying for the ACCC is manipulative design and dark patterns. Its consumer survey found 72 per cent of respondents who’d purchased through a general online retail marketplace in the prior 12 months experienced at least one of the following practices: Clicking on a product or service they didn’t realise was an advertisement (20 per cent); receiving repeated reminders to sign up for communications (18 per cent), or to purchase additional services at the checkout (19 per cent), marketing emails about things they didn’t not purchase (42 per cent); discovering fees or charges at the checkout not disclosed beforehand (21 per cent); accidentally signing up for a paid subscription because of the way the option was worded (10 per cent); or being required to sign up to marketing communications to complete a purchase (16 per cent) or being tricked into doing so because of the wording (23 per cent). 
• EU, UK and US regulators are after dark patterns too: The ACCC is joining a growing global movement against such manipulative practices. Take the European Commission and national consumer authorities (the Consumer Protection Cooperation or ‘CPC’ network) case against Temu in November 2024, citing several ‘problematic practices’ on its marketplace considered to infringe EU consumer protection laws: Fake discounts, pressure selling, forced gamification, missing and misleading information, fake reviews, and hidden contact details. Temu was given one month to reply to the findings and propose commitments to address them. The action is currently ongoing and the CPC network advised that ‘national authorities can take enforcement measures’ if Temu fails to address the concerns. The notification followed allegations of Temu breaching Article 25 of the Digital Services Act. A year earlier, India’s Central Consumer Protection Authority published Guidelines for Prevention and Regulation of Dark Patterns, which apply to any ‘platforms systematically offering goods or services in India, advertisers, and sellers’. Guidelines prohibit 13 practices including subscription traps, drip pricing, disguised advertisements, nagging and trick questions.
• Fake reviews and manipulation remain a concern: The ACCC has also highlighted fake reviews and review manipulation on general online retail marketplaces as an ongoing concern because of their influence on purchasing behaviour. More than half (54 per cent) of respondents to the ACCC’s consumer survey who had made a purchase in the last 12 months said product reviews had either a large or very large influence on their decision to purchase a product. Against this, 45 per cent believed they had encountered what they suspected was a fake review in an online retail marketplace at least half the time. Again, the ACCC isn’t alone here: The EU, UK and US regulators have all taken regulatory action on fake reviews. 
• Product safety is being scrutinised: In complement is a call for better product safety standards. The ACCC’s latest report notes the example of hooded jumpers sold on Temu last year, which led to a child being seriously injured with burns after sparks from a bonfire blew onto the jumping, causing it to ignite. The product was recalled because it did not include comply with mandatory standards for children’s nightwear and limited daywear. In its 2022 report, the ACCC suggested a general safety provision law be rolled out to traders.
• Dispute mechanisms need a rethink: According to ACCC consumer survey data, 91 per cent of surveyed consumers consider it important to have an independent and external dispute resolution body to resolve disputes with general online retail marketplaces. Again, the ACCC has already recommended several dispute mechanisms including minimum resolution requirements for digital platforms under an ombudsmen scheme. 
• Consumer-facing AI is rapidly rolling out: Meanwhile, the ACCC report highlights how retail marketplaces are quickly rolling out AI products for buyers and sellers. Examples include:
  • Ebay: Plugin generative AI allowing sellers to auto-generate item descriptions based on existing information on the Internet
  • Shein: Machine learning is reportedly in play to predict demand and give real-time updates on consumer preferences to suppliers;
  • Amazon: Chatbot service, Rufus, debuted in the US in September last year allowing customers to ask about searched-for products and what other customers have said about them. There’s also ‘Project Amelia’, a tool for sellers to help retrieve information about customer traffic and sales data for a store or specific product.

Generative AI, gaming and Clouds

The ACCC’s final report also flags new and “emerging risks” in the areas of anti-competitive behaviour and consumer protection that it could barely have conceived of when the first of the Digital Platforms Review Reports were first published.

The emergence of generative AI and the rise of gaming as an entertainment medium are new considerations for the ACCC and even cloud computing, now deep into its third decade, is replete with new challenges.

The report paints a nuanced picture of generative AI: it’s a transformative technology with clear benefits for Australian consumers and businesses, but one that could entrench the market power of the digital giants who also happen to have entrenched themselves as the developers and owners of foundation models.

Consumer attitudes

Australians are embracing generative AI – but not without reservations. According to the ACCC’s latest consumer survey, 96 per cent of respondents expressed at least one concern about the technology. Top of mind are fears around scams and data misuse: 65 per cent worry generative AI could be exploited by scammers or used in ways that compromise personal privacy. Another 59 per cent are concerned about its potential to generate harmful content, such as misinformation and deepfakes.

These concerns are intensifying as tech firms increasingly mine user data from their existing platforms to train AI models. 

The ACCC found that 83 per cent of consumers believe companies should be required to seek consent before using personal data for AI training.

Some platforms, like Microsoft-owned LinkedIn, currently allow users to opt out though this doesn’t apply retroactively to data already used. 

Meta, meanwhile, is training its AI models using public Facebook and Instagram content dating back to 2007. While users in the EU can opt out thanks to stronger privacy laws, that option is not currently available in Australia.

The ACCC’s research indicated 89 per cent of Australian consumers believe it should be.

While generative AI may be an emerging area of innovation and ultimately regulation, the big beasts are the same companies that first caught the attention of the ACCC in its early Digital Platforms reports;  Microsoft, Amazon, Google, Meta, and Apple. 

These are companies that are also consolidating power in the generative AI age through vertical integration by embedding generative AI into their core products and investing heavily to maintain leadership. 

The report reveals that expenditure on generative AI by major platforms is expected to exceed US$250 billion in 2025. 

However, with meaningful revenue still years away, the report raises questions about how those costs will eventually be recovered – and whether monetisation models will affect competition or consumer rights.

The ACCC flags several emerging trends that could reshape the landscape:

• A pivot toward smaller, more efficient models capable of running on mobile devices may lower barriers for new developers.
• A mix of open-source and proprietary models is fostering some level of competition, with open models potentially enabling more players to build generative AI tools.
• Developers are now exploring alternative training methods beyond scaling data and compute, which could further diversify the field.

But it also warns that the risks are significant. Regulators and submissions flagged numerous concerns:

• Mergers and partnerships between firms across the stack may improve access to resources for smaller players but also risk increasing market concentration.
• High barriers to entry– especially access to data, compute, and skilled talent – could prevent new foundation model developers from emerging.
• Integrated platforms could engage in self-preferencing, bundling, tying, or limiting interoperability, with knock-on effects in adjacent digital markets like social media or app stores.
• Generative AI algorithms could enable collusive or anti-competitive behaviours, including algorithmic price-fixing.

But these risks are also tempered by the emergence of new, rapidly growing digital platforms born into the generative era. 

While ChatGPT (which will eventually be 50 per cent owned by Microsoft under an agreed funding arrangement) may be the most recognisable face of generative AI, the competition among large language model (LLM) developers is expanding rapidly not just in model performance, but in the breadth of services and capabilities they offer. The report highlights some of the key offerings from newer market entrants.

• Anthropic: It released Claude 3.7 Sonnet in February 2025 and this was described as a hybrid reasoning model that toggles between fast responses and step-by-step analytical thinking.
• DeepSeek (China): Tech entrepreneur and VC Marc Andreessen called it AI’s Sputnik moment. The Chinese firm launched V3 and R1, with performance said to rival GPT-4 and Claude 3.5, throwing Silicon Valley’s royalty into a panic.
• ByteDance: TikTok’s owner released Doubao 1.5 Pro, claiming superior performance in coding and reasoning while optimising for lower compute costs.
• Hugging Face: Continues to promote open science with Bloom, a freely available foundation model trained on a public supercomputer.
• Mistral AI (France): Making waves with high-performance open-weight models including Mistral 7B, 8x7B, 8x22B, and Mistral Large.

Gaming goes mainstream

The ACCC notes that gaming is now a mainstream digital activity for Australians, with nearly seven in ten (69 per cent) respondents in the ACCC’s national consumer survey reporting they had played games on at least one device in the previous six months.

When it surveyed consumers, the ACCC found that men were slightly more likely to game than women (71 per cent compared to 67 per cent), but the most striking divide was generational. Among Australians aged 14 to 17 almost everyone (96 per cent) identified as gamers, followed by 86 per cent of those aged 18 to 29. In contrast, gaming participation dropped sharply among older Australians, with just over half (52 per cent) of those aged 60 to 74 playing games, and only 42 per cent among those aged 75 and above.

The data points to a generational shift in how Australians engage with digital entertainment – one that is likely to shape platform strategy, advertising, and the broader digital economy in years to come.

It is also increasingly a key advertising channel, and as Mi3 reported in December last year, gaming advertising in Australia overtook news media's ad revenues for the first time, and by 2028, PwC believes those revenues will climb north of $2bn.

Behind flashy game titles

However, while the report cements gaming’s status as one of Australia’s dominant digital pastimes, the ACCC is sounding the alarm on consumer risks hidden behind flashy game titles and slick in-app offers.

In its latest report, the competition watchdog highlights a series of concerns around how games are monetised, and how consumers, particularly younger players, may be exposed to financial harm without even realising it.

Many popular games are no longer just one-off purchases. 

Developers increasingly rely on a mix of business models: downloadable content, in-game advertising, microtransactions, and subscription services that grant access to game libraries. But in many cases, when players “buy” a game online, they’re not purchasing ownership. Instead, they receive a revocable, non-transferable licence to access the game – meaning that access can be withdrawn by the platform or publisher at any time.

That’s a detail most players aren’t aware of. 

According to the ACCC’s national survey, 56 per cent of gamers didn’t know their paid games could be removed without recourse. 

The ACCC suggests this lack of transparency could be unfair and says platforms and developers need to clearly disclose these terms upfront.

The report also takes aim at 'loot boxes' – in-game purchases where players pay for a chance to unlock random rewards. While these are usually optional, the ACCC warns that they can contribute to overspending or even addiction, particularly when game mechanics exploit psychological nudges. The Commission is urging developers to disclose the odds of winning specific loot box items, to help players make informed decisions.

Beyond loot boxes, the ACCC raises concerns about manipulative design features baked into some games – like hard-to-cancel subscriptions, poorly labelled purchase buttons, or pressure tactics that push players to spend without realising it. While these practices often fall into grey areas of the law, the ACCC argues they underscore the need for a broader unfair trading practices prohibition in the Australian Consumer Law, to crack down on digital businesses that exploit consumer behaviour.

Cloud Computing

While cloud computing has already emerged as the increasing mainstay of business applications since the turn of the century, the explosion of generative AI is driving a surge in demand for cloud services, as hyperscalers race to provide the computing power needed to train and run massive AI models.

Training foundation models which are the backbone of generative AI tools, requires enormous computing capacity and specialised infrastructure, making cloud services an essential input. That demand is translating into eye-watering levels of investment.

Between January and August 2024 alone, Microsoft, Meta, Google, and Amazon collectively spent an estimated US$125 billion building and operating AI-optimised data centres. 

Microsoft President Brad Smith has projected that the company will invest US$80 billion in AI data centre infrastructure across FY24/25, while Meta CEO Mark Zuckerberg has flagged up to US$65 billion in capital spending next year, calling 2025 "a defining year for AI."

The cost and complexity of these investments highlight just how central, and capital-intensive cloud infrastructure has become in the generative AI arms race.

Opaque clouds and pricing

The report suggests that opaque pricing, limited data, and complex billing leave regulators somewhat in the dark about real cost trends. The ACCC, for instance, reports that major cloud providers say their prices are going down, but the competition watchdog admits it can’t really verify precisely what’s happening

The ACCC flags that the pricing structures themselves are difficult to untangle. The pay-as-you-go models, bundled licensing fees, and hundreds of service options across providers make it nearly impossible to compare current or historical costs in any meaningful way.

A working paper from the Toulouse School of Economics backs that up, calling cloud pricing “peculiar,” “extremely complicated,” and hard to compare across similar services.

In short: cloud providers say the market is working. But from a consumer protection point of view, the true price of cloud remains cloudy.

Cloud competition risks

The report identifies several significant barriers to entry and expansion in the cloud computing sector, including economies of scale and scope, strong network effects, and hefty upfront investment costs. These challenges vary across different layers of the cloud stack, meaning the obstacles new entrants or smaller providers face depend on which part of the market they’re targeting.

It also flags things like data egress fees, a particular concern for marketers who rely increasingly on CDPs, and cloud data warehouses are key infrastructure.

Brands can face high charges for transferring data out of cloud platforms, which deters switching and multi-cloud adoption. For instance, regulators note fees can represent up to 20 per cent of monthly cloud costs when moving just a portion of data.

In the UK, as the report notes, the CMA suggested these charges often exceed providers’ actual costs and act as a strategic barrier to churn.

What next?

The ACCC's massive initial scoping of the competition and consumer threats from global digital platforms is complete. Now it's on policymakers to act. The federal government last December pledged 2025 was the year for the rollout of a new competition and consumer regulatory regime to tame the might of global platforms.

Who blinks?