Australia wants a regulator for Google, Facebook

Australia's competition watchdog on Monday recommended tougher scrutiny and a new regulatory body to check the dominance of tech giants Facebook Inc and Alphabet Inc's Google in the country's online advertising and news markets.

The recommendation, in a preliminary report on the US firms' market power, is being closely watched around the world as lawmakers wrestle with the powerful tech firms' large and growing influence in public life, from privacy to publishing.

It comes days after Australia passed laws forcing tech companies to help police access private user data, and amid growing concern from authorities worldwide about the giants' commercial behavior and distribution of so-called “fake news”.

“When you get to a certain stage and you get market power, which both Google and Facebook have, with that comes special responsibilities and that means, also, additional scrutiny,” Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims told reporters in Sydney.

He said the companies' enormous market share - Google has a 94 percent share of web searches in Australia - and opaque methods for ranking advertisements gave the firms the ability and incentive to favor their businesses over advertisers'.

“The idea of the regulator role would be to keep an eye on that and proactively bring some transparency,” he said, adding the two firms also had outsized influence over news distribution.

Drafting the report had also spurred five investigations into possible consumer or privacy law breaches in Australia, Sims said, without disclosing which firms they concerned. Facebook and Google, in separate statements, both said they will continue to work with the ACCC while the regulator prepares its final report due in June.

The two firms have already promised to do more to tackle the spread of fake news and, in submissions to the ACCC, said they provided users access to global news articles while providing advertisers a cheap way of reaching big audiences.