COSBOA, Ombudsman back Rod Sims’ call for ‘unfair practices’ protection for small businesses against big tech

Employsure

ACCC chair Rod Sims.

Leading small business advocates have backed a call by consumer and competition boss Rod Sims to introduce an ‘unfair practices’ provision into the Australian Consumer Law to better protect small businesses in their interactions with the big tech platforms, including Google. 

Speaking to SmartCompany this morning, both Peter Strong, chief executive of the Council of Small Business Organisations Australia, and Small Business Ombudsman Bruce Billson say Sims’ proposal is a worthy one, as more needs to be done to tackle unfair practices across digital platforms that harm small businesses.

Sims tells SmartCompany he is focused on ensuring small businesses are not left out when it comes to any efforts to address the power of digital platforms, and others, but the current legal framework means there are “a broad range of practices we can’t deal with at the moment”. 

While Australian Consumer Law is primarily concerned with misleading and deceptive conduct towards consumers, the head of the Australian Competition and Consumer Commission (ACCC) believes the protections for small businesses need to be at least as strong as they are for consumers. 

“We think there needs to be a law against unfair practices where a key trigger would be that those practices led to significant detriment to the small business,” he explains. 

One such practice is happening within the Google Adwords landscape, Sims says, where essentially anyone is able to purchase an advertisement for a business name or trademark, even if they don’t own it. 

The business owner is then forced to pay more to Google to ensure their business is still seen. 

Sims gives the example of a restaurant that may have been used to “get a good look in” when someone searches for their business, but all of a sudden that position in the search results is taken by a food delivery platform, and the customer is led to believe they must order through that platform instead of visiting the restaurant’s website directly. 

Such a scenario is even more problematic when considering the greater number of people using now using mobile devices. 

“Mobile does make it worse,” says Sims. “On mobile devices, all you can see is the sponsored links.”

While the courts have previously examined the issue, and the High Court ruled in 2013 that consumers are not necessarily misled by Google ads, a new ‘fairness’ provision in the Australian Consumer Law could outlaw it.

Sims suggests an ‘unfair practices’ provision may also be able to address instances where Facebook suddenly changes how it diverts traffic to small businesses, or practices where a large company may be working with a small business supplier but then goes behind that supplier’s back and copies their products, effectively putting them out of business. 

“It doesn’t cure every problem, but it would be something to deal with unfair practices,” he says. 

Small businesses have “no control” over what the large digital platforms do, says Sims, and section 46 of the Competition and Consumer Act, which deals with the misuse of market power, does not necessarily cover situations where small businesses are not competitors to these large companies, but rather the recipients of the conduct. 

Google declined to comment when contacted by SmartCompany but referred to comments made by a judge when the Federal Court sided with Employsure in a case brought by the ACCC.

In that case, which dealt with the use of keywords in Google Ads, the judge said: “the bald proposition that a company cannot use keywords that are associated with a competitor’s brands is untenable, and would, if accepted, bring about a radical shift in search engine marketing”.

Urgent need for action

Changing the Australian Consumer Law would require support from the Commonwealth and state governments, a process that Billson points out would take some time. 

In the interim, Billson says there needs to be some other form of immediate redress for small businesses that are affected by the Google Adwords keyword issue. 

While Sims says it is hard to accurately estimate how many businesses are affected by the practice, the ACCC has received a number of complaints from businesses, as has Billson’s office. 

Billson says disputes with the big tech platforms are in the top five categories of disputes that small businesses come to the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) office with. 

This ranges from platforms overcharging for advertising and not explaining why, to businesses being locked out of their Facebook accounts, through to the Google Adwords issue, which he describes as advertising being “weaponised”.  

“The current toolkit is not fit for purpose,” Billson says of the need for change. 

“Just because a big digital platform can do something just because they can, it doesn’t make it the right and fair thing to do.”

In addition to Sims’ proposal, which has “considerable merit”, Billson says an external dispute resolution mechanism could also be established to help small businesses access quick remedies for these disputes.

Strong agrees that maintaining and ensuring transparency on the internet is becoming more urgent and at its heart, is an issue of fairness. 

“It’s a place of bullying, we know that. It’s a place of scams, we know that. It’s a place where competition is distorted, we know that,” he says. 

The ACCC is becoming a world-leading in its efforts to take on big tech, says Strong. “More power to them,” he adds. 

Private Media, the parent company of SmartCompany, is a current participant of the Google Showcase program. Content from SmartCompany and other Private Media brands will be featured on Showcase as part of a commercial partnership.

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