Check against delivery
Good morning, and thank you for inviting me to speak with you today regarding the consumer data right (CDR).
As all of you in this room know, big data is one of the defining megatrends affecting our present, and shaping our future.
We live in a world in which the importance and value of data has increased significantly for businesses, allowing them to target their consumers in ways that were previously unheard of, and the volume of data that is routinely harvested has become almost incomprehensible. The genie is out of the bottle, now we have to decide what to do with it.
The former executive chair of Google, Eric Schmidt, remarked in 2010 that:
There were five exabytes of information created between the dawn of civilisation through 2003, but that much information is now created every two days.
And that was eight years ago. An exabyte, for those not in the know, is one million terabytes of data. Whether or not it is hyperbole regarding how much data was created between our earliest civilisations and now is beside the point: as a concept it is illustrative of just how exponential the growth of data has been in the 21st century.
At the ACCC we are interested in how big data is changing the ways in which businesses compete against each other, what that means for markets more broadly, and how that intersects with consumer protection. These are all serious matters that have broad economic and social impact for Australians, and so are worthy of our close attention as a regulator.
There are three main points I will be discussing today.
- First, I will establish what the consumer data right is, how it came about, and what direction the government has given the ACCC regarding it.
- Second, I will discuss the benefits of the consumer data right for consumers.
- And third, I will describe the progress the ACCC has made with the consumer data right, including an update on our digital platforms inquiry which has even more to do with big data.
The government announced the introduction of the consumer data right in November last year. This followed a number of government reviews and inquiries which all recommended expanding consumers’ access to their data. A pivotal report was that of the Productivity Commission which recommended an economy-wide data right for consumers in its report on Data Availability and Use.
In budget week 2017 the Treasurer announced the government’s response to the Open Banking Review. In doing so he confirmed that banking would be the first sector to which the consumer data right would apply, where it will be known as ‘Open Banking’, and that the ACCC would have the lead role in overseeing its implementation.
The CDR will be rolled out sector-by-sector, with Open Banking being followed by energy and telecommunications.
What it is
Via Open Banking the consumer data right will enable customers to safely share data, including transaction and product data, with trusted service providers, if they choose to do so. The ACCC views this as a fundamental competition and consumer reform.
It is important that we begin by defining what the CDR is, and what it is not. The CDR will give consumers the right to safely access data about them, held by businesses, and direct this information be transferred to trusted third parties of their choice. It is essentially a data portability right. This will enable consumers to benefit from the data that businesses hold about them. For example, having portable data will allow consumers to make greater use of product or service comparison sites, and to more easily switch their supplier.
What it isn’t
Importantly, the CDR is not intended to be the one stop shop for regulation and control of consumer data. Privacy rules and frameworks will continue to be the primary tools to address current and emerging privacy issues. Many in this audience will be familiar with the recent introduction of the General Data Protection Regulation or GDPR in Europe or the Australian laws on personal data. The CDR is very different, addressing very different issues.
Robust privacy protection and information security will however be a core feature of the CDR. Ensuring trust and integrity in the CDR system are essential to its success. The Open Banking report made this plain, and we will work very closely with the Office of the Australian Information Commission, or OAIC, to ensure privacy considerations are recognised.
The CDR is also not an obligation to share data with third parties. The Open Banking report is abundantly clear on this – the right is about giving consumers more control, and data sharing is only to occur with the consumer’s express consent. Taking banking as an example, customers may still go on banking the same way without ever participating in Open Banking if they do not wish to.
Open Banking is also not Open Data. Open Banking will be a defined system whereby data holders will share specified data with trusted users, at the customer’s request, with the customer’s consent, and in accordance with uses the customer has specified. In contrast, Open Data is data that is freely available to everyone to access, use and republish as they wish, without restrictions (for example, the Australian Government makes thousands of datasets freely available to the public for download at data.gov.au).
The benefits to consumers
The ACCC has been a strong supporter of giving consumers more access to and control over their data, and we see it as a major competition and consumer reform that has the potential to deliver significant benefits.
International experience, especially in banking, has shown that giving consumers more control over their data increases competition as it gives consumers more scope to compare competing offers, make more informed choices and move their business.
Data portability increases competition, particularly for more complex products and services, and creates scope for businesses to make more tailored offerings, including to innovate new or different products that better meet their needs.
There is also a sound economic rationale for the CDR. Markets work more effectively when consumers are well informed about the price and quality of offers available to them; the costs consumers incur when switching between providers are small; and barriers to entry for new providers are low.
In mortgage markets this is not the case. As we observed in our Residential Mortgages Prices Inquiry, for example, it is often difficult and costly for borrowers to compare the offers of mortgage providers. Discounts off standard variable interest rates are opaque. Borrowers often have to lodge an application and provide substantial personal information in order to confirm the interest rate a mortgage provider is willing to offer. The consumer data right will cut through the hassle factor of making comparisons, and will reduce the cost to borrowers of discovering and comparing offers.
The way data is used within society is changing rapidly. Business is obtaining a benefit from this data but often consumers are not. Indeed, innovations that arguably benefit consumers such as targeted news or advertising are controlled almost exclusively by business interests rather than consumer decisions or choice. In this context, attempts to redress the balance and give more control to consumers, and to spur competition, are to be strongly welcomed.
Progress on the CDR, and the DPI
The government has proposed phasing in the commencement of Open Banking.
It has proposed that all major banks will make data available on credit and debit card, deposit and transaction accounts by 1 July 2019, and mortgages by 1 February 2020. Data on all products recommended by the Open Banking Review will be available by 1 July 2020. All remaining banks will be required to implement Open Banking with a 12-month delay on timelines compared to the major banks. The government has also proposed that the ACCC will be empowered to adjust timeframes if necessary.
The ACCC acknowledges the complexity of the proposal and the need for milestones to be met, including passage of legislation, to deliver by 1 July 2019. We also understand the need to get this right, and to ensure that there is trust and integrity in the CDR system in order for consumers to use it.
The ACCC supports the ambitious implementation timeframe and recognises the momentum and constructive engagement that has been built during the Open Banking review. We also recognise, and will learn from, the work undertaken in the UK in connection with its Open Banking regime and we will draw on that as appropriate.
As many of you will know, the CDR will be implemented via a multi-layered regulatory model.
As the regulator, we will have multiple roles under the CDR, including rule-making, accreditation of third party data receivers, enforcement, and consumer education, and we will work very closely with the OAIC.
A Data Standards Body will lead development of technical standards, including on data formats, transfer and security. This body comprises Mr Andrew Stevens as independent chair, an advisory committee of industry representatives (which held its first meeting on Wednesday last week), and is supported by Data 61.
Treasury also remains closely involved, and draft legislation to implement the CDR is expected to be released for public consultation soon.
This means that draft legislation, rules, and standards processes will all run in parallel, necessitating close collaboration between ACCC, Data61, the OAIC, and Treasury.
The ACCC has created a dedicated Consumer Data Right Branch and work is already underway. We expect to publish a framework paper on the rules for public consultation in August.
The digital platforms inquiry
I would now like to touch on the digital platforms inquiry, or DPI, as it also involves examining the effect of big data on our lives.
On 4 December 2017, the Australian Government directed the ACCC to conduct an inquiry into digital platforms to examine the effect that digital search engines, social media platforms and other digital content aggregation platforms have on competition in media and advertising services markets. More broadly, and perhaps somewhat indirectly, you may consider that our DPI is examining the impact of digital platforms on the lives of Australians.
The DPI covers a broad range of issues:
- the impact of digital platforms on choice and quality
- the extent to which the digital platforms are exercising market power in their dealings with media content creators and advertisers
- the extent to which the DPs may benefit from an unfair competitive advantage due to the unequal treatment of regulation
- and finally, the implications for consumers: are users of digital platforms adequately informed about the personal data collected and how it is being used?
It is this final issue that I would like to briefly discuss now.
As we set out in an issues paper released on 26 February 2018, the Inquiry will consider the impact of information asymmetry between digital platforms and consumers. This issue is important. While consumers don’t pay a fee to access the services of digital platforms, they do provide platforms with access to their personal data, which the platforms in turn monetise through targeted advertising. This is the platforms business model.
Accordingly, the Inquiry is considering how digital platforms collect and use the data of consumers, and whether consumers are adequately informed of those practices. We are also considering whether consumers are providing informed consent when they agree to conditions set by digital platforms, such as when they sign up to a digital platform or accept changes to privacy policies.
Under the terms of reference for the Inquiry, the ACCC is not empowered to consider all the issues related to privacy that arise from the collection and use of consumer data by digital platforms.
For example, while we recognise the potential for consumer detriment if advertisers are able to use the vast consumer data sets held by digital platforms to price discriminate or withhold certain products or services from different categories of consumers, these issues are generally outside the remit of the Inquiry. Rather we are largely interested in the extent to which the reasonable consumer agrees to the ‘bargain’ they make with digital platforms.
We are due to provide a preliminary report of our findings to the Treasurer by 3 December 2018, followed by a Final Report in June 2019.
There are a number of different outcomes that may eventuate, and part of what is exciting about this Inquiry is that we don’t yet know what our recommendations are likely to be.
Outcomes could be:
- Increased transparency. The Inquiry is already generating increased awareness about some of the ways digital platforms monetise information they collect about consumers, and will ultimately provide greater transparency around these practices.
- Recommendations to Government. The Inquiry may result in the ACCC making findings about relevant structural, competitive or behavioural issues relevant to digital platforms, and make practical recommendations for change to industry and government.
- Enforcement action. If the Inquiry identifies any behaviour that is causing consumer detriment and raises concerns under the Competition and Consumer Act 2010, the ACCC will also take action to address that behaviour.
CDR and DPI
At a time when the many uses of big data are increasingly affecting our daily lives the ACCC finds itself in the unique position of having a dual role both facilitating the sharing of data with companies through the CDR as well as examining information asymmetry between digital platforms and consumers in the sharing of data.
We view these roles as complementary.
At the heart of our role for both functions is a need to examine and ensure consumers benefit from the competitive provision of services and are adequately informed of, and agree to, the way in which their data is used and can be utilised to further their own interests. This in turn will assist in ensuring that consumers get a better deal in the value of their data and in turn promote an open and informed competitive market.
The Productivity Commission’s Data Availability and Use Report says it is essential that access to data, while underpinned by confidence in privacy, is considered through a competition and consumer lens, otherwise the full benefits won’t be realised. We strongly agree.
The consumer data right, and the digital platforms inquiry are two issues that concern themselves with how businesses and consumers are, and will be, interacting with the data that is increasingly collected about consumers as they go about their lives.
The ACCC has an important role to play as regulator, and we will continue to keep you informed of developments about the implementation of the consumer data right, and of the outcome of the digital platforms inquiry.
Thank you for your time today.