Peter A Clarke

Yesterday the Australian Competition and Consumer Commission (“ACCC”) yesterday released Interim Report No s – General online retail marketplaces.

In broad compass the report covers, as its brief description states:

• intensity of competition in the relevant markets
• trends in online shopping and general online retail marketplaces
• the conduct of marketplaces in their roles as platforms to facilitate interaction between third party sellers and consumers; including, where marketplaces also supply their own products on their platform, the impact that these sales and associated practices may have on competition with third-party sellers
• relationships between marketplaces and third party sellers
• relationships between marketplaces and consumers, as well as third party sellers and consumers.

The report necessarily deals with the issue of data collection and privacy.  It does not contain any new insight or previously unknown fact or issue however it does synthesise and summarise the relevant issues.  All too often these issues are not considered with this level of focus.  In that regard it relevantly states, absent footnotes:

The ACCC considers, as always, that consumers should be given both sufficient information and adequate control to allow them to make informed choices about what data is collected and used by the digital platform.

The Attorney General is currently undertaking a review of the Privacy Act 1988 (Cth) as part of the Australian Government’s response to the DPI Final Report. In addition, the Privacy Legislation Amendment (Enhancing Online Privacy and Other Measures) Bill 2021 (Cth) proposes to introduce a binding privacy code to address the particular privacy challenges posed by online platforms that collect a high volume of personal information or trade in personal information, by adapting and expanding upon the requirements under the Australian Privacy Principles.

This Code, which will be overseen by the Office of the Australian Information Commissioner, as well as any reform resulting from the Privacy Act review, are expected to address some of the specific privacy concerns that arise from a lack of consumer awareness or control over digital platforms’ data practices.

Online marketplaces collect data beyond what is necessary to fulfil an order to better target products and services to consumers

Online marketplaces may use data to inform search and product recommendation algorithms to ‘personalise’ results based on known, or inferred, consumer preferences. They may also use and share consumer data with third parties to serve targeted advertising to consumers. The data used for these activities can include data that may have been collected in the process of fulfilling an order, such as a consumer’s purchase history.

Demographic data such as age and gender can also be used by online marketplaces to provide initial product recommendations to a new consumer. By identifying products purchased by pools of similar consumers, products can be recommended to a new consumer even though they don’t’ have a purchase history or previous engagement with the platform. Demographic data from third-party sources can be used to enrich in-house data collected by the marketplace.

Consumer data can also be used to tailor search algorithm results to better personalise the products shown to a consumer. Based on information provided to the ACCC, an online marketplace may use behavioural and engagement data to influence the order of products returned in a consumer’s search query.

Online marketplaces have access to significant amounts of rich data on consumers and sellers which can enable them to make product inventory decisions based on data-driven demand forecasts. Detailed consumer behavioural and engagement data can prove instrumental in identifying new products and services consumers may engage with,while real-time and historical purchase data may assist online marketplaces promote best-selling items during anticipated periods of high sales volume.

Online marketplaces can create profiles for individual consumers using data inputs (such as browsing and search history on online marketplaces, engagement with online marketplaces and associated online advertising, and demographic information such as their age and gender). If consumers return to the marketplace, online marketplaces can consolidate the data collected upon each visit, increasing the data attached to a consumer’s profile. This refined pool of data can be used to infer likely preferences for particular goods, and feed product recommendation algorithms to infer likely preferences for particular goods, increasing the chance of relevance of products shown to consumers (see Figure 2.6).

Online marketplaces can also use this data to engage in retargeting – a form of digital advertising. That is, when an online marketplace targets advertisements to consumers on other websites and apps such as Facebook or Google based on their viewing history on the marketplace. Retargeting aims to capture the consumer’s interest in the product or service and potentially close a sale. The types of data used for retargeting include a consumer’s browsing history as well as behavioural and engagement data, which is shared with the digital advertising providers that the marketplace uses. Online marketplaces can facilitate the sharing of consumer data by allowing an advertising provider to place a cookie, pixel or tracking technology on the marketplace that cultivates a unique identifier for a consumer and tracks their browsing and engagement on other websites.

The data collection policies of online marketplaces also enable them to collect or purchase data from third parties including data brokers and digital advertising providers and combine it with their first party data. In some instances, the data collection policies also allow a third- party to collect data held by an online marketplace and combine it with their own third-party data:

• • eBay’s User Privacy Notice states that eBay collects consumer data from data brokers and data providers (including demographic and online advertising related data), and that it may combine consumer data it collects with data from external
  • By contrast, the AliExpress Privacy Policy states that third-party advertising publishers are permitted to combine consumer data collected by AliExpress (through tracking technology) with any additional data held by the advertising publisher.

The exchange of consumer data with external parties, such as advertising providers, can increase the overall pool of consumer data held by an online marketplace and allow it to ‘build a more detailed profile on the consumer’ for advertising purposes.’  Where an online marketplace allows third-party sellers to advertise on the platform, this consumer data assists the seller to bid for prominence using sponsored search terms that would most effectively capture the target audience.

External parties also benefit from obtaining more data on consumers and being able to track their browsing history through an online marketplace.

Online marketplaces can also use consumer data for other purposes. Previous analysis undertaken by the ACCC found that platforms can obtain user data through their role in providing advertising and other services to websites and mobile applications. In particular, the ACCC has previously found Amazon’s third-party scripts (which are embedded into websites to provide certain functionality, such as for analytics or advertising purposes) were present on nearly 30% of the top 1000 popular websites in Australia.Amazon also has a demand-side platform (DSP) which allows third-party advertisers to identify consumer groups or audiences on Amazon, and then use the Amazon DSP to target ads to the consumer group on either Amazon websites or third-party websites. As noted in the Ad Tech report, Amazon’s DSP has a substantially smaller market presence than Google’s DSP services (which accounted for approximately 60–70% of the expenditure on DSP services in Australia in 2019).

• • 60% of consumers considering it very or somewhat unacceptable for their online behaviour to be monitored for targeted ads and

In its submission to the ACCC, the Australia Institute noted concerns about the extent of data collected by online marketplaces.

The ACCC considers that the extent of data collection, use and disclosure by digital platforms, including online marketplaces, as described above often does not align with consumer preferences regarding data collection. The Office of the Australian Information Commissioner’s (OAIC) recent Australian Community Attitudes to Privacy Survey 2020 found that at least half of Australians are uncomfortable (and 3 in 10 very uncomfortable) with digital platforms and other online businesses tracking their location, keeping databases of information on what they have said and done online, and targeting advertising based on what they have said and done online (see Figure 2.7).

This survey also found that ‘commercial profiling activities generally drive higher levels of discomfort’, with 55% of consumers uncomfortable with digital platforms creating consumer profiles based on data.

A 2020 Data and Technology Consumer Survey undertaken by the Consumer Policy Research Centre also highlighted consumers concerns with platform data collection and use, with:

• • 94% of consumers indicating that they did not feel comfortable with how their personal information is collected’ by platform including online marketplaces
  • 92% of consumers agreeing that companies should only collect information they need for providing their product/service

Consumers are not being given the opportunity to make a fully informed choice about how their data is collected and used

The ACCC recognises that consumers have different levels of comfort regarding the collection and use of their data. Regardless of the level of comfort, it is important that consumers are fully informed of and fully understand the data that will be collected when they use an online marketplace. It is also important for consumers to have control over the type and extent of data collected by online marketplaces. Without these, consumers will not be able to make a fully informed decision about the collection of their data that aligns with their own preferences.

As part of this review, the ACCC reviewed how certain online marketplaces in Australia disclose their data practices and seek consent from consumers regarding their terms and conditions and privacy policies before being able to sign-up or make a purchase. This review found that none of the online marketplaces reviewed, except for Wish.com, proactively presented terms and conditions and privacy policies to consumers throughout the purchasing journey.

The ACCC also reviewed the terms and conditions and privacy policies offered by four key online marketplaces in Australia. The ACCC found several elements of online marketplaces’ presentation of privacy policies and terms that may prevent consumers from selecting their preferred data collection settings (see Table 2.1).

Table 2.1: Terms and conditions offered by key online marketplaces

Term or condition	Example of term’s use on an online marketplace
Unclear terms	Kogan Privacy Policy ·       It is unclear from section 3 of ‘Collection’, Kogan’s Privacy Policy whether Kogan only collects personal information from consumers directly or whether it also collects personal information about consumers from third parties. ‘Kogan will only collect personal information about you directly from you. Kogan may collect your personal information from reputable third-party lead generation sources….’
Take-it-or- leave-it terms regarding data collection	Amazon Australia Privacy Notice ‘…You can choose not to provide certain information, but then you might not be able to take advantage of many of our Amazon Services.’ Kogan Privacy Policy ·       ‘If you use a pseudonym when dealing with us or you do not provide identifiable information Kogan may not be able to provide you with any or all of our services as requested. If you wish to remain anonymous when you use our website do not sign into it or provide any information that might identify you.’

Term or condition	Example of term’s use on an online marketplace
Terms across multiple documents	eBay Australia User Cookie Notice eBay’s terms regarding their use of data collected through cookies, and specific information related to consumer choices for cookie settings, is in a separate Cookie Notice separate to the terms and conditions.
Omission of information	Kogan Privacy Policy The ACCC understands that Kogan collects browser history (within the Kogan marketplace) and behavioural data on consumers on an aggregated basis through generic Google Analytics software. Kogan’s Privacy Policy does not explicitly state that browser history (within the Kogan marketplace) and behavioural data is collected.

Without the provision of clear, transparent and readily accessible information for consumers to understand and act upon, information asymmetries are likely to persist between online marketplaces and consumers.

Further, information asymmetries due to the lack of transparency about data practices are likely to limit the ability of online marketplaces to effectively compete on the basis of the strength of their privacy protections. This may in turn contribute to ‘a race to the bottom’ with respect to data collection.

While consumers in Australia can choose between a number of online marketplaces, the common approaches and practices of the major online marketplaces to data collection and use mean that consumers have little effective choice in the amount of data they share. This limits the bargaining power that consumers have with any individual marketplace in regard to the collection, use and disclosure of their personal data. As summarised by Dr Kemp‘s submission to the ACCC, ‘consumers wishing to browse or purchase…should not be forced to ‘consent’ to third parties unnecessarily sharing data about them.’

The concerns identified in marketplace terms and conditions are similar to the issues identified in relation to other digital platforms terms and conditions, including the use of take- it-or-leave-it terms and terms split across multiple documents. While take-it-or-leave-it terms may be offered for a range of reasons, including because the cost of customising terms for each user may be prohibitive relative to the amount of value generated from each user, they may also reflect a stronger bargaining position held by an online marketplace compared with its consumers.

In addition, the ACCC’s review of marketplace privacy policies found the use of bundled consents, whereby the relevant terms of use for an online marketplace require consumers to agree to the terms and conditions of relevant privacy policies in order to use the service and complete their purchase. In this context, bundled consents have the potential to take advantage of the behavioural biases of consumers to provide their consent before being shown any relevant terms and conditions.

The ACCC also notes the use of terms in Privacy Policies that present a limited choice set to consumers concerning data collection settings. As noted in Table 2.2, some terms suggest that actions taken to opt out of cookie data collection will limit a consumer’s ability to use the marketplace. They do not clearly identify actions that consumers can take to opt out of cookie data collection while retaining the ability to use the marketplace.

Table 2.2: Examples of terms that outline the risks of opting out of cookie data collection

Amazon Australia Privacy Notice	eBay Cookie Notice	Kogan Privacy Policy
‘Because cookies and identifiers allow you to take advantage of some essential features of Amazon Services, we recommend that you leave them turned on. For instance, if you block or otherwise reject our cookies, you will not be able to add items to your Shopping Cart, proceed to Checkout, or use any Services that require you to Sign in.’	‘If you delete all cookies on your device, any opt-out cookies that have already been set will be deleted, so that you will have to declare again any opt-outs that have already been declared.’	You have the ability to accept or decline cookies. If you choose to decline cookies, you may not be able to fully experience the interactive features of the Kogan Group websites…’

The ACCC also observed that the terms of use for an online marketplace often appeared in:

• • ‘browse-wrap agreements’, in which a consumer is said to provide ‘consent’ to all terms (including the privacy policy) by simply accessing or browsing the marketplace, and
  • ‘click-wrap agreements’, which are online agreements using digital prompts that request users to provide their consent to online terms and policies without requiring them to fully engage with the terms and policies of

Where relevant information on the terms of use is not provided to consumers clearly and in a readily accessible format, and where this information is difficult to find and comprehend, it is likely that consumers will not be adequately informed about an online marketplace’s data collection practices.

Behavioural biases may also be exploited through the presentation of click-wrap agreements for the purchase of products in the virtual checkout, requiring consent to a range of broad terms and conditions (often set out in multiple separate documents) in order to place an order. Seeking agreement in this way is particularly concerning when the terms and conditions are presented in greyed out, small font under the final button to place a final order (see Figure 2.8). Behavioural biases may also be used to create a sense of urgency for consumers to complete a purchase (and accept the terms). For example, Catch’s below presentation of its Privacy Policy and Collection Statement at the ‘Submit Order’ page. By this point a consumer may be pressing to complete their transaction quickly, especially where there is limited stock available as indicated in the below message.

Box 2.3: Consumer concerns around engagement with privacy terms

Surveys conducted by the Consumer Policy Research Centre on consumer engagement with the privacy and data collection terms of digital platforms noted the following:

• • 91% of respondents did not read all data and privacy terms and conditions that applied to them
  • of the consumers that did read data and privacy terms and conditions, 69% reported accepting unfavourable terms, with most saying they accepted them as it was the only way to access an online product or
• While online marketplaces enable consumers to obtain copies of data collected about them by the online marketplaces, consumers appear unable to compel the erasure of that data. It would appear difficult for online marketplaces to comply with any such request, given the widespread disclosure of consumer data to third parties (particularly in the context of targeted advertising). Unlike more conventional retail relationships in which a consumer can walk out of a store or select ‘unsubscribe’ to direct marketing, an online marketplace user may find it more difficult to extract themselves from a relationship with an online marketplace that stores and shares their consumer data.
  

  Consumers should be given the opportunity to make meaningful choices regarding their data

  The concerns identified in this report regarding the data practices of online marketplaces are similar to the concerns that the ACCC has previously raised in respect of other digital platforms.

  Many Australian consumers express strong preferences for limits on tracking, contrary to the data practices of multiple leading digital platforms. The ACCC considers that consumers of online marketplaces, like users of other digital platforms, should be provided with adequate and clear information about what data is being collected and used to enable them to make a meaningful choice about the extent of that collection and use.

  The ACCC continues to support recommendations from the original DPI Final Report regarding amending the Australian Consumer Law (ACL) to prohibit unfair contract terms (recommendation 20) and certain unfair trading practices (recommendation 21). These recommendations could address some of the concerns identified above. In particular:

  • • recommendation 20 regarding amending the ACL so that unfair contract terms are prohibited (not just voidable) and subject to civil pecuniary penalties, which would help address information asymmetries between online marketplaces and consumers with respect to the collection, use and disclosure of their personal data
    • recommendation 21 regarding amending the ACL to include a prohibition on certain unfair trading practices which are not expressly prohibited by the Australian Consumer Law, including certain practices that are significantly detrimental to consumers.

The ACCC notes that ongoing processes are already in place in relation to these recommendations. Regarding recommendation 20, a bill was introduced on 9 February 2022. The ACCC also notes that we will continue to examine these issues as part of the upcoming September 2022 interim report.

The ACCC notes the ongoing Privacy Act review by the Attorney-General’s Department, which is considering options for range of issues including the need for strengthened privacy protections and consent requirements including default privacy settings. As noted in the DPI Final Report, the current privacy framework does not adequately address the harm arising from information asymmetries and choice architecture that discourage, or make it harder for consumers to select settings that reflect their preferences.

The ACCC has laid out the problems.  The real issue, as it has always been, is getting Governments to properly tackle those problems.

The media release provides:

An ACCC report examining general online retail marketplaces, such as Amazon Australia, Catch, eBay Australia and Kogan, has highlighted a range of concerns about how they operate as well as the significant benefits they provide to consumers and sellers.

Online marketplaces provide a low-cost way for sellers to enter the market and give consumers a greater choice of goods.

Concerns include the use of algorithms to decide how products are ranked and displayed (including some marketplaces giving preference to their own products), the collection and use of consumer data, inadequate dispute resolution processes and a need for more consumer protections.

The ACCC’s fourth report in its Digital Platform Services Inquiry examined whether online marketplaces are promoting fair and competitive markets for consumers and sellers. It found that online marketplaces have a high level of control and involvement in transactions between consumers and sellers on their platforms.

“Online marketplaces have an important role in connecting Australian consumers and sellers, and make up a growing share of consumer sales. But we are concerned about their impact on both consumers and third-party sellers who rely on online marketplaces to reach their customers,” ACCC Chair Gina Cass-Gottlieb said. 

The report highlights consumers’ and sellers’ concerns about the way online marketplaces display and rank products to consumers on the platform.

“Online marketplaces need to be more transparent with consumers and sellers about how they operate. For example, they should explain to consumers and sellers why their search functions and other tools promote some products over others,” Ms Cass-Gottlieb said.

“We are particularly concerned about so-called hybrid marketplaces, which sell their own products in competition with third-party sellers that use their platform. Hybrid marketplaces, like other vertically-integrated digital platforms, face conflicts of interest and may act in ways that advantage their own products with potentially adverse effects for third-party sellers and consumers.”

Marketplaces have deployed ranking algorithms and other practices which have a significant impact on the purchasing decisions of consumers. These algorithms and practices can be used to provide preferential treatment to the hybrid marketplaces’ own products.

“We have concerns about particular examples of self-preferencing by hybrid marketplaces in Australia, which mirror similar concerns raised by overseas regulators,” Ms Cass-Gottlieb said.

The report highlights the large amounts of consumer data collected and used by online marketplaces, which may not align with the privacy preferences or expectations of many consumers.

“We believe consumers should be given more information about, and control over, how online marketplaces collect and use their data,” Ms Cass-Gottlieb said.

“Given the important intermediary role performed by online marketplaces between consumers and sellers, it is also important that marketplaces have protections in place for consumers using their services.”

For example, some marketplaces have joined the voluntary Product Safety Pledge which provides consumers with additional protections including commitments from signatories to remove listings of unsafe products within two business days. The ACCC encourages other online marketplaces to join the Product Safety Pledge to further strengthen online marketplace safety.

The report also raised concerns about the lack of dispute resolution mechanisms.

“We continue to support a minimum internal dispute resolution requirement for digital platforms and the establishment of an ombudsman scheme to resolve consumer and business complaints, as recommended by our original Digital platforms inquiry final report,” Ms Cass-Gottlieb said.

“Other measures supported by the ACCC, including a prohibition on certain unfair trading practices, introducing a general safety provision, and making unfair contract terms illegal, could help address other issues identified in this report.”

The report notes that none of the online marketplaces has reached a dominant position in Australia, unlike in other countries, but that there is potential for the market to ‘tip’ in favour of a single dominant marketplace. The ACCC would have significant concerns if tipping leads to a dominant marketplace behaving anti-competitively or reducing the benefits consumers and sellers would otherwise gain from competition.

The report notes that Amazon Australia’s sales remains significantly lower than eBay Australia’s and also well below the sales of many large Australian online retailers such as Big W, David Jones, Kmart, Myer or Target. But while sales through all four leading online marketplaces in Australia are growing, Amazon Australia’s sales are growing faster than the other platforms. In its fifth Digital Platform Services Inquiry report, the ACCC is considering whether Australia needs a new regulatory framework to address competition and consumer concerns with digital platform services more broadly.

“Any such framework should be able to be applied to an online marketplace if it reaches a position where it is could exercise a certain level of market power or, potentially, act as a gatekeeper between businesses and consumers,” Ms Cass-Gottlieb said.