Title page 1

Contents 3

Executive summary 4

List of recommendations 22

Glossary 29

1. Introduction 37

1.1. Overview of the Digital Platform Services Inquiry 38

1.2. Focus of the Final Report 39

1.3. Structure of the Final Report 39

2. International developments 40

2.1. Digital competition regimes 43

2.1.1. Why is ex ante digital competition regulation needed? 43

2.1.2. There is international support for regulatory reform in digital markets 48

2.1.3. The DMA has increased consumer choice and may affect innovation 51

2.1.4. Australia's path towards a new ex ante digital competition regime 57

2.2. Unfair trading practices 60

2.2.1. Evolving digital markets continue to give rise to new consumer and small business harms 60

2.2.2. International jurisdictions already prohibit unfair trading practices in digital markets or are expanding consumer protections 63

2.2.3. Australia's path towards prohibiting unfair trading practices 69

2.3. Dispute resolution 71

2.3.1. Dispute resolution processes for consumer and business interactions with digital platforms are needed 71

2.3.2. International jurisdictions are providing mechanisms for external dispute resolution 74

2.4. Australia needs to keep pace 78

2.4.1. Australia needs to keep pace on addressing systemic competition concerns in digital markets 78

2.4.2. Australia needs to address unfair trading practices and provide an external dispute resolution body 80

3. Updates to previous reports 82

3.1. Online private messaging 83

3.1.1. The ACCC has previously identified competition issues in online private messaging 84

3.1.2. Recent developments in online private messaging 85

3.1.3. Potential competition issues in online private messaging 101

3.1.4. Online private messaging services continue to give rise to consumer harms 107

3.2. App marketplaces and mobile operating systems 114

3.2.1. ACCC's previous consideration of app marketplaces and mobile OS 115

3.2.2. Updates to app marketplaces and mobile OS, including following international regulatory reform and litigation 122

3.2.3. Harms arising from a lack of competition 132

3.2.4. Consumer issues 159

3.3. General online retail marketplaces 170

3.3.1. The ACCC has previously considered competition and consumer issues in general online retail marketplaces 172

3.3.2. Developments in general online retail marketplaces 172

3.3.3. Potential competition issues in general online retail marketplaces 179

3.3.4. Consumers continue to experience harms on general online retail marketplaces 182

3.4. Ad tech services 206

3.4.1. Significant competition harm in ad tech services 206

3.4.2. There is international momentum towards addressing competition harms in ad tech 210

4. Emerging issues 218

4.1. Cloud computing 219

4.1.1. Introduction to cloud computing services 220

4.1.2. Use of cloud infrastructure services is continuing to grow in Australia 227

4.1.3. Key providers of cloud infrastructure services 229

4.1.4. Dynamics and key trends in cloud infrastructure services 237

4.1.5. Potential risks to competition in the supply of cloud infrastructure services 243

4.1.6. A lack of competition in cloud infrastructure services could impact competition in the generative AI sector 261

4.2. Generative artificial intelligence 263

4.2.1. Introduction to generative AI 265

4.2.2. Key firms operating in the generative AI stack 280

4.2.3. Dynamics and key trends in generative AI 289

4.2.4. Potential risks to competition across the generative AI stack 305

4.2.5. Potential impacts of generative AI on competition in related markets 324

4.3. Online gaming 329

4.3.1. Online gaming in Australia 330

4.3.2. Potential harms to consumers 338

Appendix A - Competition cases or investigations involving major digital platforms in G20 jurisdictions 357

Appendix B - Status of ACCC recommendations from the Digital Platforms Inquiry and the Digital Platform Services Inquiry 384

Appendix C - Top 100 apps downloaded on the Google Play Store and the Apple App Store in Australia 396

Appendix D - Ministerial direction 399

Tables 52

Table 2.1. Changes in products and services in the EU/European Economic Area following the DMA 52

Table 3.1. Comparison of general online retail marketplaces' returns policies 201

Table 3.2. ACCC's estimates of Google's share of revenue and impressions for main ad tech services, Australia, 2020 207

Table 3.3. Potential application of service-specific code measures to ad tech concerns 210

Table 4.1. Examples of SaaS, PaaS, and IaaS 225

Table 4.2. Egress fees where customers are transferring data out of selected cloud providers in Australia to the internet, routing on the public internet, March 2025 257

Table 4.3. Types and examples of AI partnerships 306

Figures 55

Figure 2.1. Increased alternate browser downloads in Europe following the Digital Markets Act's effective date (6 March 2024) (iOS and Android devices) 55

Figure 2.2. Australians' support for an external dispute resolution body for digital services 73

Figure 3.1. Types and examples of online private messaging services 87

Figure 3.2. Change in daily active users of online private messaging services (excluding Apple iMessage and Facetime), June 2020 vs June 2024 90

Figure 3.3. Monthly active users and total time spent on online private messaging services (excluding iMessage and FaceTime), June 2024 90

Figure 3.4. Change in monthly active users of online private messaging services (excluding iMessage and FaceTime), June 2020 vs June 2024 92

Figure 3.5. Monthly active users and average time spent per month on online private messaging services (excluding iMessage and FaceTime), June 2024 93

Figure 3.6. Online private messaging services used by Australians for messaging, audio or video calling 94

Figure 3.7. Selected online private messaging services used by Australians, by age 95

Figure 3.8. Number of online private messaging services used by Australians for messaging, audio or video calling within the last month 96

Figure 3.9. Proportion of users of each service that used another messaging service within the last month, for select online messaging services 97

Figure 3.10. Messaging service used most often by consumers who multi-home, for select online messaging services 98

Figure 3.11. Usage of Instagram and TikTok by Australians for messaging, by age 99

Figure 3.12. Australian businesses' total financial losses from scams, 2020-2024 109

Figure 3.13. A view from the Apps Tab of both Apple's App Store and Google's Play Store 115

Figure 3.14. Potential avenues for consumers to access apps from third party app developers 117

Figure 3.15. Example of a warning prompt shown to users when attempting to enable the installation of apps from sources other than the Play Store 119

Figure 3.16. Number of app downloads in Australia, January 2016 to September 2024 124

Figure 3.17. Most popular apps in Australia by daily active users in October 2024 125

Figure 3.18. Average time (minutes per day) spent on the top 20 apps by daily active users in Australia, 1 May to 31 October 2024 126

Figure 3.19. Proportion of Australians who switched or considered switching to a smartphone with a different OS between their current and previous smartphone 128

Figure 3.20. Proportion of Australians who are likely to choose a phone with a different OS the next time they get a new smartphone 129

Figure 3.21. Stylised example of the choice screen shown to a user under Google's User Choice Billing System 134

Figure 3.22. Annual number of reported scams via mobile apps and total losses between 2020 and 2024 161

Figure 3.23. Monthly average users of general online retail marketplace apps, June 2020 to June 2024 174

Figure 3.24. Monthly average users of general online retail marketplace websites, October 2021 to October 2024 174

Figure 3.25. Use of general online retail marketplaces by Australian consumers 176

Figure 3.26. Australian consumer views on whether online marketplaces clearly explain how search results are sorted and displayed by default 180

Figure 3.27. Rates at which online marketplace shoppers have experienced certain potentially unfair practices 184

Figure 3.28. Influence of consumer product reviews on online marketplace shoppers' purchasing decisions 189

Figure 3.29. Frequency with which consumers encounter fake or suspected fake reviews 190

Figure 3.30. Example of reviews for 'similar items' being displayed on Temu 191

Figure 3.31. Consumer support for minimum standards to prevent fake reviews on online marketplaces 193

Figure 3.32. Consumers' levels of satisfaction when attempting to resolve disputes with online marketplaces 200

Figure 3.33. Consumer views on the importance of an independent, external dispute resolution body for general online retail marketplaces, compared to other types... 203

Figure 3.34. Consumer support for an external dispute resolution body by digital platform service 204

Figure 4.1. The cloud computing stack 223

Figure 4.2. An example of a streaming service in the SaaS, PaaS, and IaaS stack 225

Figure 4.3. Actual and forecast spending on IaaS and PaaS in Australia 228

Figure 4.4. Estimates of global and Australian IaaS market shares 231

Figure 4.5. Stylised representation of the vertical cloud stack 239

Figure 4.6. Global cloud revenue of Amazon Web Services, Google and Microsoft from Q3 2022 to Q4 2024 241

Figure 4.7. Usage frequency for selected generative AI tools 269

Figure 4.8. Purposes for using generative AI in the last 6 months, by age group 270

Figure 4.9. Consumers' views on whether Meta should allow Australians to opt out of having their data used to train its generative AI 271

Figure 4.10. Layers in the generative AI technology stack 272

Figure 4.11. Process for training and deploying a foundation model 274

Figure 4.12. The generative AI stack 280

Figure 4.13. Generative AI value chain examples 289

Figure 4.14. Vertical integration & integration of generative AI in digital markets 291

Figure 4.15. Screenshot of an email from Microsoft to a Microsoft 365 Personal subscriber regarding an upcoming price increase, received 9 January 2025 321

Figure 4.16. Use of games and gaming devices by Australians 330

Figure 4.17. Types of gaming devices in Australia 332

Figure 4.18. Australian game players' awareness and views on fairness of licensing of games 340

Figure 4.19. Australian game players' approach to reading terms of use of digital game stores where they access games 342

Boxes 49

Box 2.1. Stakeholders' views on international ex ante digital regimes 49

Box 2.2. Key elements of the Australian Government's proposal for a new digital competition regime 59

Box 2.3. Findings of the EU's Digital Fitness Check 61

Box 2.4. The EU's proposed Digital Fairness Act 65

Box 2.5. Enforcement action against digital platforms by the Italian Competition Authority 66

Box 2.6. Federal Trade Commission v Amazon (Prime) 67

Box 2.7. Australian Government consultation on unfair trading practices regulation 71

Box 2.8. Examples of external dispute resolution schemes in Australia 74

Box 2.9. Dispute resolution bodies appointed under the DMA and Digital Services Act 76

Box 3.1. European Commission's investigation into Microsoft Teams 104

Box 3.2. European Commission's designation of WhatsApp and Facebook Messenger under the DMA 105

Box 3.3. US Department of Justice's (US DOJ) consideration of cross-platform messaging interoperability on iOS 107

Box 3.4. International responses to children's safety and privacy issues 112

Box 3.5. Potential measures to address issues identified in the ACCC's Report on App Marketplaces 121

Box 3.6. International regulatory developments related to app payment terms 136

Box 3.7. International regulatory developments related to communication of payment options 138

Box 3.8. International regulatory developments related to third-party browser engines 146

Box 3.9. International developments relating to interoperability of hardware, software and functionality of mobile OS 149

Box 3.10. International regulatory developments in relation to self-preferencing 155

Box 3.11. Amazon's designation under the DMA 182

Box 3.12. International regulatory efforts to address manipulative practices on general online retail marketplaces 185

Box 3.13. Examples of international regulatory action on fake reviews 192

Box 3.14. Reports of product safety injury - hooded jumpers sold on Temu 195

Box 3.15. Australian Product Safety Pledge (the Pledge) 196

Box 3.16. International legislation and enforcement action regarding product safety concerns on general online retail marketplaces 197

Box 3.17. Examples of international legislation and regulatory action to establish dispute resolution mechanisms on online marketplaces 202

Box 3.18. Australian class actions in relation to competition harms in ad tech services 208

Box 3.19. Recommendations for service-specific rules in ad tech 209

Box 3.20. Action against alleged anti-competitive conduct in the US 211

Box 3.21. European Commission investigation into Google Ad Tech 213

Box 3.22. Canadian Competition Bureau case into Google ad tech 214

Box 3.23. Enforcement cases in France seeking to address self-preferencing conduct 215

Box 3.24. CMA investigation into ad tech 216

Box 3.25. Google's Privacy Sandbox proposal 217

Box 4.1. Previous ACCC consideration of cloud computing services 222

Box 4.2. What are 'hyperscalers'? 230

Box 4.3. Data centre investments by key cloud providers in Australia 232

Box 4.4. Vertical integration in cloud through agreement, joint venture or merger 238

Box 4.5. EU Data Act 255

Box 4.6. Previous consideration of work on AI and algorithms by the Digital Platform Regulators Forum 266

Box 4.7. Global shortages of AI chips 277

Box 4.8. Ongoing policy considerations outside of competition 304

Box 4.9. DeepSeek's 'low cost' foundation model 311

Box 4.10. Stakeholders are concerned about their intellectual property and copyrighted content being used to train AI models 312

Box 4.11. Privacy implications of using consumer data in generative AI training 313

Box 4.12. Consumer concerns from bundling or tying products - Microsoft 365 subscriptions with generative AI features 320

Box 4.13. Algorithmic collusion in other areas of the economy 328

Box 4.14. Gaming subscription services 334

Box 4.15. Cloud game streaming services 335

Box 4.16. Australian and international consideration of potential links between paid loot boxes and addiction 347

Box 4.17. Consumer guarantee provisions of the Australian Consumer Law 354

Box 4.18. Relevant overseas enforcement action against online gaming businesses 356

Appendix Figures 397

Figure C.1. Google Play Store - Top 100 apps by number of downloads in Australia, 31 July 2023-31 July 2024 397

Figure C.2. Apple App Store - Top 100 apps by number of downloads in Australia, 31 July 2023-31 July 2024 398