Meta’s market domination raises red flags for ACCC

Meta’s market domination raises red flags for ACCC

April 28, 2023

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Meta, the parent company of Facebook, is the poster child for the Australian Competition and Consumer Commission’s concerns around competition in social media services after its latest inquiry revealed the US tech giant continues to dominate its rivals.

Despite the growing popularity of TikTok among younger Australians and the emergence of apps such as BeReal, the ACCC said Meta’s platforms – including Facebook and Instagram – remained the most widely used in the country.

Facebook, owned by Meta, has 21 million monthly active users in Australia.Credit: Bloomberg

The ACCC’s report comes as Meta this week exceeded expectations, reporting revenue in the first quarter of $US28.6 billion ($43.1 billion) – up 3 per cent over the year – and a return to sales growth after three quarters of declines. The subsequent 14 per cent lift in Meta’s share price helped boost Meta founder Mark Zuckerberg’s wealth by more than $US10 billion ($15 billion).

Meta has the most users on its apps, the most advertisers and the largest amount of advertising revenue, according to the report. Of the time spent by users on mobile apps, Meta’s platforms claim the biggest share – 60 per cent – with users spending about 27 hours a month on Facebook and Instagram in 2022.

Facebook, which has 21 million monthly active users in Australia – more than 80 per cent of the population – has the most users of any single platform.

The ACCC said small-to-medium-sized businesses relied heavily on social media advertising because of its targeting capabilities, ease of use and cost-effectiveness, but that Meta was clearly the dominant player.

Advertising revenue for Meta far outstripped that of any other social media platform in Australia in the 2021 financial year, accounting for up to $5.1 billion, compared to a combined $830 million across YouTube, TikTok, Snapchat and Twitter.

“Meta’s consumer reach and targeting capabilities make it the most important social media platform for advertisers,” the ACCC said.

However, the regulator added that Meta faced weak competitive constraints from other social media services, which could reduce innovation and consumer choice. It noted that despite Meta serving a higher volume of advertisements per hour of time than some other social media platforms, and having increased ad impressions across its platforms, the number of users has continued to increase.

The watchdog has also flagged concerns around the growing cohort of influencers – who cultivate an audience and earn revenue, often by promoting brands and products – saying they needed to improve disclosure of sponsored posts to ensure consumers were making informed choices when purchasing products online.

“Lack of disclosure may mislead consumers who may be unaware that endorsements by influencers are paid for,” it said. “In early 2023, the ACCC launched a sweep which identified 81 per cent of influencer posts as potentially misleading endorsements and testimonials.”

In its report, the ACCC recommended measures such as an economy-wide prohibition against unfair trading practices, and a new power to make mandatory codes of conduct for designated digital platforms to protect and promote competition.

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