Consumers can benefit from personalization and recommendations in these marketplaces based on their data, but many are left in the dark about how much personal information these companies collect and share for other purposes.
We believe that consumers should be given more information and control over how online marketplaces collect and use their data.
The report echoes the ACCC’s previous calls for changes to Australia’s consumer law to address unfair data and practices. It also indicates that the government is considering proposals for major changes in privacy legislation†
However, none of these proposals will come into effect in the foreseeable future. In the meantime, we should also consider whether practices such as obtaining information about users from third-party data brokers are fully compliant with existing privacy laws.
Why did the ACCC investigate online marketplaces?
The ACCC explored competition and consumer issues related to “general online retail marketplaces” as part of its five-year research into digital platform services†
These marketplaces facilitate transactions between third-party sellers and consumers on a common platform. They do not include retailers that do not operate marketplaces, such as Kmart, or platforms such as Gumtree that offer classified ads but do not allow transactions.
The ACCC report focuses on the four largest online marketplaces in Australia: Amazon Australia, Catch, eBay Australia and Kogan. In 2020-21, these four had total revenues of $8.4 billion.
According to the report, eBay has the largest revenue of these companies. Amazon Australia is the second largest and the fastest growing, with an 87% increase in sales over the past two years.
The ACCC investigated:
- the state of competition in the relevant markets
- issues faced by sellers who rely on selling their products through these marketplaces
- consumer issues, including concerns about the collection, use, and sharing of personal information.
Consumers do not want their data to be used for other purposes
The ACCC expressed concern that in online marketplaces “the extent of data collection, use and disclosure … often does not match consumer preferences”.
The Commission pointed to surveys on: Attitudes of Australian consumers towards privacy which indicate:
- 94% were not comfortable with the way digital platforms, including online marketplaces, collect their personal information
- 92% agreed that companies should only collect information they need to deliver their product or service
- 60% found it very or somewhat unacceptable that their online behavior is monitored for targeted advertisements and offers.
The four online marketplaces analyzed:
- not proactively present privacy terms to consumers “during the purchase process”
- may allow advertisers or other third parties to place tracking cookies on users’ devices
- do not clearly state how consumers can opt out of cookies while still using the marketplace.
Some marketplaces also obtain additional data about individuals from third-party data brokers or advertisers.
The damage from more tracking and profiling of consumers includes reduced privacy; manipulation based on detailed profiling of properties and weaknesses; and discrimination or exclusion of opportunity.
Limited choices: you can’t just ‘walk out of a store’
Some might argue that consumers shouldn’t really care that much about privacy if they continue to use these companies, but the choice is not that simple.
The ACCC notes that the relevant privacy terms are often spread across multiple web pages and are provided on a “take it or leave it” basis.
The terms also use “bundled permissions”. This means that agreeing to the company that uses your data to fulfill your order, for example, may be combined with agreeing to the company to use your data for its separate advertising activities.
Furthermore, as my research has shown, there is so little competition on privacy between these marketplaces that consumers cannot simply find a better offer. The ACCC agrees:
While consumers in Australia have a choice of a number of online marketplaces, the common approaches and practices of the major online marketplaces for data collection and use mean that consumers have little effective choice in the amount of data they share.
Consumers also seem unable to compel these companies to delete their data. The situation is very different from conventional retail interactions, where a consumer can choose to “unsubscribe” or walk out of a store.
Does our privacy law currently allow all of these practices?
The ACCC has reiterated its previous calls to amend Australia’s consumer law to prohibit unfair practices and make unfair contract terms illegal. (At this point, unfair contract terms are simply void or unenforceable.)
The report also points out that the government is considering proposals for major changes to privacy legislation, but these changes are uncertain and may take more than a year to take effect.
In the meantime, we need to take a closer look at the practices of these marketplaces under current privacy laws.
For example under the federal privacy law the four markets
may collect personal information about an individual only from the individual unless… it is unreasonable or impractical to do so.
We don’t know the full details of what is collected, but demographic information may include our age range, income, or family information.
How is it “unreasonable or impractical” to obtain information about our demographics and interests directly from us? Consumers could ask this question to online marketplaces and file a complaint with the Office of the Australian Information Commissioner if there is no reasonable answer.