Digital Platforms Inquiry - Submission in response to the ACCC’s preliminary report (10 December 2018) Joint Submission 1 March 2019

1 About us

1 The Australian Film & TV Bodies include the Australia New Zealand Screen Association (ANZSA), the Australian Home Entertainment Distributors Association (AHEDA), the Motion Picture Distributors Association of Australia (MPDAA), the National Association of Cinema Operators-Australasia (NACO), the Australian Independent Distributors Association (AIDA) and Independent Cinemas Australia (ICA).1 They represent the widest range of film and TV interests in Australia.

2 Our aim is to support, protect and promote the safe and legal consumption of movie and TV content across all platforms, allowing creators to get compensated fairly for their work. We work together to promote this aim through education, public awareness and research programs. Our members represent a large cross-section of the film and television industry that contributed $5.8 billion to the Australian economy and supported an estimated 46,600 FTE workers in 2012-13.2

2 General Comments

3 The Australian Film & TV Bodies welcome the opportunity to provide a submission in response to the ACCC’s preliminary report in its Digital Platforms Inquiry (the Preliminary Report).

4 We note that under the Terms of Reference, this inquiry examines ‘digital platforms’ that may impact on competition in media and advertising services markets, particularly in relation to the supply of news and journalistic content. The Terms of Reference explicitly mention three types of platforms: ‘digital search engines’, ‘social media platforms’ and ‘other digital content aggregation platforms’. We note that curated, licensed digital platforms are outside the scope of this inquiry. In this submission, references to “digital platforms” adopt the meaning given in section 1.1 of the Preliminary Report, i.e. search engines, social media platforms and digital content aggregation platforms.

5 Digital platforms have come to occupy an outsized place in the online ecosystem. Over the last decade they have developed massive user bases, attracted large volumes of online activity, acquired unprecedented access to information about their users, and they have substantial market power in the markets in which they operate. They have few commercial threats, have largely opaque internal processes and enjoy remarkably low levels of regulation given their size, reach and impact. The Australian Film & TV Bodies commend the Commission for its thoughtful investigation of the digital platforms and its insightful findings and recommendations.

6 The Australian Film & TV Bodies generally support the objectives of this Inquiry, including the appropriate regulation of digital platforms, but focus this submission on the following issues:

(a) Review of media regulatory frameworks (preliminary recommendation 6);

(b) Copyright enforcement and proposed take down standard (preliminary recommendation 7);

1 See Appendix A for details for each of the organisations comprising the Australian Film & TV Bodies. 2 Access Economics, Economic Contribution of the Film and Television Industry (February 2015) Australian Screen Association iv.

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(c) Unfair contract terms (preliminary recommendation 11) and prohibition against unfair practices (area for further analysis and assessment 9);

(d) Verification of advertisements on digital platforms (area for further analysis and assessment 6); and

(e) Preventing the misuse of privacy as a shield against investigation of infringing activity (preliminary recommendation 8)

3 Review of media regulatory frameworks (preliminary recommendation 6)

7 The Australian Film & TV Bodies support this recommendation, both generally regarding an overall review of media regulatory frameworks in Australia, and specifically in relation to a modern uniform classification scheme. Comments directed to the copyright-specific recommendations in section 4.7 are contained in the next section (Section 4) of this submission.

3.1 Review of media regulatory frameworks generally

8 Given that the focus of the Inquiry is on news and journalistic content, sections 4.5 and 4.6 of the Preliminary Report do not consider the activities of the film and television industry in Australia, i.e. the creation of entertainment content and the distribution of that content to the public for viewing in cinemas, on television or via licensed online download and streaming services.

9 These activities are principally regulated by State and Federal Statutes, including Federal copyright law, broadcasting laws and State defamation laws, and the cooperative Federal and State content classification system. This regulatory framework was devised for a pre-digital environment and is not fit for purpose for the 21st century. The Australian Film & TV Bodies support an investigation into platform neutral framework recommended by the ACCC in the Preliminary Report and consideration of how best to calibrate the regulatory environment to set the creative content sector up for future success.

3.2 Classification scheme

10 The Australian Film & TV Bodies support the subsidiary recommendation to preliminary recommendation 6 that a nationally uniform classification scheme be created to classify content, regardless of its format or method of delivery, and where possible, consider industry self-regulation for online services for curated content, a practice adopted in many jurisdictions (e.g., Singapore and the USA).

11 As key stakeholders in this issue (with a history of working with successive Governments to make the Classification Act more responsive to previous developments in technology, including the DVD), the Australian Film & TV Bodies have consistently advocated for a technology and platform neutral classification system, in formal consultations and reviews.

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12 In 2012, the Australian Law Reform Commission’s report “Classification – Content Regulation and Convergent Media” (the ALRC Report) considered the impact on the existing Australian classification system of media convergence and the volume of content now available to Australians over the internet. It made 57 recommendations for the creation of a new classification scheme applying consistent rules to media content on all platforms.

13 The Australian Film & TV Bodies support the majority of the recommendations of the ALRC Report, as being as relevant today as when the report was delivered in 2012, which included:

(a) replacing the current cooperative scheme involving both Commonwealth and State and Territory regulation, and multiple regulators, with harmonised Commonwealth classification laws, managed by a single regulator;

(b) platform-neutral regulation, with one set of laws establishing classification obligations across all media platforms to avoid ‘double handling’ of media content for different platforms (e.g., broadcast television, DVD, electronic sell-through, or video on demand); and

(c) reducing the overall regulatory burden on media content industries by providing clarity about the scope of what must be classified in the online environment to meet community expectations, focusing on the nature of the content rather than the delivery platform.

14 Some reforms were implemented in 2014 (via the Classification (Publications, Film and Computer Games) Amendment (Classification Tools and Other Measures) Act 2014 (Cth)), including empowering the Minister to approve all classification tools. However, these reforms were made within the existing regulatory framework, and did not extend to the implementation of the ALRC’s recommendation to modernise the structure of the entire classification scheme.

15 Since 2014, automated classification tools have been developed for some industry stakeholders who have to comply with the Classifications Act (noting that free and pay TV are governed by industry codes and don't fall under the Act). The Minister recently approved the Netflix classification tool and the Games industry has been successfully using an approved authorisation tool for some time. A tool for classification of all home entertainment (online and DVD) as well as theatrical content seems the logical step forward and is supported by the sector.

16 Modernising the classification scheme as a whole remains a priority, however. The 2017-18 Classification Annual Report from the Director of the Classification Board, Margaret Anderson, indicates that classification reform is being considered. The Australian Film & TV Bodies support a review and reform process on the basis that it leads to the implementation of a modern jurisdictionally harmonised Commonwealth classification framework that enables efficient and cost-effective classification of content.

17 Such a modern classification framework would have the following features:

(a) platform-neutral regulation, allowing content to be classified once across formats and platforms;

(b) consistency across all Australian States and Territories;

(c) a single regulator with oversight and enforcement powers, such as ACMA;

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(d) use of automated classification tools for the efficient and effective classification of film and television content (Netflix has an automated classification tool that has been approved by the Minister, and the Australian Film & TV Bodies are currently piloting a tool that is expected to be ready for approval within 6 months); and

(e) ratings of film trailers to be based on the actual content of the trailer rather than the rating, or likely rating, of the film being advertised (in order to bring Australia into line with the approach in comparable markets such as the United Kingdom, the United States, New Zealand and Singapore).

18 A modern classification framework will be more cost effective to operate, reduce the burden of compliance when compared to the current classification system, and will be more flexible and capable of adapting to the proper and efficient administration of film classification into the future.

19 Achieving classification reform is a key priority for the Australian Film & TV Bodies.

4 Copyright enforcement and proposed take down standard (preliminary recommendation 7)

20 The Australian Film & TV Bodies strongly support the findings and recommendations made in section 4.7 of the Preliminary Report.

21 Online copyright infringement in Australia is a substantial problem causing significant damage to creators of content (including film and television content). The problem is greater in Australia than in other comparable countries: as noted in the Preliminary Report (p 152), the 2018 survey carried out by the Department of Communications and the Arts demonstrated that more Australians are infringing copyright online (33 per cent) than in the UK (25 per cent).3

22 To draw a finer point on the potential damage of piracy, a 2016 peer-reviewed study at Carnegie Mellon4 found that in the USA, from 2006 to 2008 if piracy could be eliminated from the theatrical window, then box-office revenues would have increased by 15% or $1.3b per year. An analysis for the time period from 2011 to 2013 showed a similar increase of 14% per year.

23 The extent of online copyright infringement and its adverse impact on rightsholders and creators has been recognised by the Australian Government and has provided the catalyst for the introduction and recent extension5 of s 115A of the Copyright Act 1968 (Cth) (the Copyright Act), which allows the Federal Court to issue site blocking orders requiring ISPs (and now a new category of online search

3 https://www.communications.gov.au/departmental-news/new-online-copyright-research-released-2018, and paragraph 2.5 of e corresponding UK report available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/729184/oci-tracker.pdf. 4 Ma, Liye and Montgomery, Alan and Smith, Michael D., The Dual Impact of Movie Piracy on Box-Office Revenue: Cannibalization and Promotion (February 24, 2016). Available at https://www.cmu.edu/entertainment-analytics/documents/impact-of-piracy-on-sales-and- creativity/the-dual-impact-of-movie-piracy.pdf . 5 The Copyright Amendment (Online Infringement) Act 2018 received Royal Assent on 10 December 2018 (2018 Bill).

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engine providers) to block access by Australian internet users to foreign websites that have the primary purpose or effect of infringing copyright.

24 In reviewing and recommending that the Senate pass the 2018 Bill, extending s 115A of the Copyright Act to online search engine providers, the Senate Environment and Communications Legislation Committee recognised “the significant role that [online search engine] providers may play in both the infringement and enforcement of copyright” (emphasis added) and that “the measures in the bill provide an important ‘backstop’ in the event that voluntary arrangements [between copyright holders and search engines to restrict access to infringing content] are ineffective”.6

25 Section 115A, however, only deals with the specific problem of large foreign-based pirate websites. Other digital platforms also have a significant role in enabling copyright infringement occurring on or via their services through other means, including by providing links to other types of infringing content (e.g., content shared directly by internet users via WhatsApp, or posted on smaller or domestic websites), as well as infringing content uploaded to their platforms by users, and shared by those users (e.g., movies or TV shows uploaded to YouTube or Facebook).

26 Digital platforms are uniquely placed to take action to discourage these types of online copyright infringement.

27 The rapid reappearance and subsequent distribution of pirate material online inevitably means an immediate and significant damage to rightsholders (especially in the case of a new release blockbuster film or television show). While taking down infringing content does not completely address the issue of online infringement, digital platforms have the unique power to reduce this harm by acting quickly to respond to requests to remove known (and suspected) infringements and ensuring that they stay down. The fact that the infringing content does not stay down after an infringement notification has been submitted and processed has resulted in our members sending numerous take down notices on the same copyrighted content, with limited effect on the continued availability of infringing copies of that content on the Internet. In the USA, Google processed over 70 million copyright take down notices in March 2018 – or more than 1,500 per minute – for all types of infringing content. 7

28 Exacerbated by their concentrated market power, digital platforms currently have inadequate incentives to take steps to improve their take down processes. They often obtain advertising revenue from the availability of infringing content on their platforms and while established platforms do by and large respond to notices, it is clear digital platforms will not be proactive in the absence of a legal incentive. As noted in the Preliminary Report, Australian copyright law does not impose any specific legal obligations on digital platforms to proactively address copyright infringing content (p 154) and there is no legal consequence for failing to remove such content (particularly where the content is stored on servers outside Australia, or where the location of the stored content is uncertain).

6 Report of the Senate Environment and Communications Legislation Committee, Copyright Amendment (Online Infringement) Bill 2018, November 2018. 7 See https://transparencyreport.google.com/copyright/overview.

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29 As the Preliminary Report finds, there are a number of problems with the current ‘notice and takedown’ mechanisms available to rightsholders in Australia who have identified infringing content on digital platforms and seek to have it removed. These problems include the following:

(a) inadequate platform processes to respond to infringement. Voluntary mechanisms governed by the digital platforms’ own terms of service give the platforms the discretion to take down content or not (without right of external review), at a time of their choosing (in practice the process usually takes between one and several weeks) and to impose procedural pre-conditions (e.g., the condition that a content owner must issue individual notices for each infringing item);

(b) ineffective content filtering systems. While services such as Google’s ContentID are offered by some digital platforms to some rightsholders (at the unilateral discretion of these platforms) in an attempt to address infringements, these platforms lack the incentive to make them more effective:

(i) small differences between uploaded and original content (e.g., adding a frame or border) often meaning there is no “match” (i.e., the “hash value” is different) and as a result no action is taken by the platform to track or block the content. This leaves a good deal of the monitoring and enforcement burden in relation to infringing content on rightsholders;

(ii) the very low rate of compensation paid to rightsholders selecting a particular platform’s “monetise” option, if that is an option, and no back payment for content that has been taken down on the basis of copyright infringement;

(c) inadequate and unbalanced financial compensation, where digital platforms make that available. In those cases, rightsholders and creators receive only a nominal payment or no payment per stream of infringing content, while the platform continues to earn advertising revenue from all traffic to the platform, including to the infringing content;

(d) inadequate measures to keep infringing content down. Ensuring that removed content remains down is critical; most often, infringing content is quickly re-uploaded or relocated, and the rightsholder is required to go through the original process with no recognition of the content already the subject of a successful take down request; an adverse presumption to keep such content down should be applied by the platform.

30 As identified in the Preliminary Report, filing copyright infringement proceedings to remove infringing content from the internet is often not a practical or a proportionate option, given that:

(a) the significant time and cost to obtain court orders in Australia is disproportionate to the speed and ease with which infringing content is distributed. Even obtaining a fast-track interlocutory injunction in a straightforward infringement matter in the Federal Circuit Court (using the new Intellectual Property Practice Direction) takes one to several weeks,8 and the costs are substantial (as discussed at page 156 of the Preliminary Report);9

8 Federal Circuit Court Practice Direction No. 1 of 2018 (Intellectual Property), 20 August 2018, available at http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/gfl/intellectual-property/pd/ 9 Note that the costs of copyright litigation can be substantially more than the high estimates referred to on page 156 in complex cases.

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(b) it may not be practical or desirable to bring proceedings against the user (given their age or financial circumstances);

(c) initiating proceedings against the digital platform for authorisation of copyright infringement is likely to be complex, as indicated in the summary of authorisation liability on page 143 of the Preliminary Report;

(d) the time, resources and complexity involved in enforcement are often exacerbated in this context by complex private international law factors (see paragraphs 40 to 44 below); and

(e) as identified in the Preliminary Report, damages available for copyright infringement are often low when compared to the cost of the (successful) litigation, and as such “can potentially lead to a substantial net loss for the plaintiff” (page 144) (see further paragraphs 45 to 48 below).

31 As noted on page 158 of the Preliminary Report, the challenges of enforcing copyright on the internet (including against digital platforms) means that rightsholders and creators are often left to rely on the take down processes of the digital platforms as one of the only practical options for removing infringements. The inefficacy of those processes, discussed above, is contributing to the ongoing significant damage to rightsholders and creators.

32 Online piracy of copyright content deprives rightsholders of their right to control the distribution of their content. The film and television industry is always looking for ways to reach existing and new audiences with their content. Online piracy erodes the market for copyright content in the online space. It also negates the development of new methods of delivering content to wider audiences at competitive rates by the film and television industry.

33 In addition, whenever online pirate content is viewed, the local film and television industry may lose the income that could otherwise have been received from the legitimate purchase or streaming of that content (or other licensed content that could have been viewed in the same window of time) 10. Given that many Australians now access their films and television programs exclusively online and on demand, online digital business is now more important to the Australian Film & TV Bodies than ever, and the damage caused by online infringement is even more substantial when such business opportunities are undermined by readily accessible infringing content on digital platforms.

34 The Preliminary Report also correctly identifies that attribution and other moral rights infringement issues are also a substantial concern associated with online copyright infringement for creators and rightsholders. Digital platforms have been slow to protect the integrity of content from widespread user misuse.

35 In this context, the Australian Film & TV Bodies support the recommendation that ACMA develop a mandatory standard to reform digital platforms’ take-down procedures and create appropriate incentives for the prompt and efficient removal of infringing content (preliminary recommendation 7). In

10 Some research has estimated the “substitution rate” (i.e., the percentage of piracy that is substituting for legal consumption) = the portion of piracy that would have been consumed legally. Research shows that substitution rates vary, but that a 30-40% “substitution rate” is generally reasonable. See, e.g., Herz, Kiljanski, “Movie Piracy and Displaced Sales in Europe: Evidence from Six Countries,” MPRA Paper No. 80817, 22 September 2016, at https://mpra.ub.uni-muenchen.de/80817/ (An overall 37% rate of cannibalization of paid consumption from first unpaid viewings).

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the High Court case of Roadshow Films Pty Ltd v iiNet Limited [2012] HCA 16, the Court found that the Copyright Act, and in particular s101(1A), did not impose a positive obligation on ISPs to prevent P2P infringing activity by subscribers, that the current statutory framework was inadequate to deal with widespread online/P2P infringement of copyright and that this was a role for legislation not the Court11. The High Court’s reasoning was significantly based on the absence of an industry code12. The introduction of a code13 covering relevant categories of intermediaries is likely to correct the issue, particularly as non-compliance with a code will overtake other factors under s 101(1A) and constitute authorisation.

36 In order for the proposed mandatory take-down standard to be effective, the Australian Film & TV Bodies consider that will need to have the following features, at a minimum:

(a) a data gathering phase from relevant stakeholders via an industry consultation process, both to determine what is needed for effective takedowns, and to understand the technology that the digital platforms have available to keep titles previously identified for take down off their platforms, and also to share the burden of continuously identifying infringing content;

(b) in addition to the matters identified on page 163 of the Preliminary Report to be covered in the mandatory standard, the standard should include procedures for urgent take downs (extending to pre-release or new-release films and TV shows as well as live entertainment content), as well as “stay down” obligations to ensure that content already identified as infringing does not quickly re-appear. The Australian Film & TV Bodies would also support an approach whereby the standard prescribed reasonable and appropriate steps for digital platforms to take to prevent distribution of infringing content (based on analysis of the information gathered during the consultation), and otherwise divide the burden of enforcement, as suggested on page 160 of the Preliminary Report;

(c) ACMA to have the power to immediately issue the mandatory standard following consultation (to avoid the deadlock situation caused by the failure to agree on an industry code that has occurred in the context of safe harbours for ISPs under Division 2AA of the Copyright Act, as well as the limitations of a self-regulatory code to enable proper enforcement). The proposed ministerial direction to ACMA is appropriate in this context;

(d) the mandatory standard will need to be clearly applicable to, and enforceable against, digital platforms, including digital platforms based overseas or where the relevant infringing content is stored overseas or its place of storage is unknown;

11 See the conclusion of French CJ, Crennan and Kiefel JJ at [79] and also Gummow and Hayne JJ at [20]. 12 See [71], [73], [75] and [139]. 13 The introduction of a mandatory code with non-compliance resulting in liability for the platforms was also recommended in the UK House of Commons Final Report on Disinformation and Fake News (published on Feb 14, 2019, available at https://publications.parliament.uk/pa/cm201719/cmselect/cmcumeds/1791/1791.pdf). In its proposal, the Code of Ethics will set down in writing acceptable and unacceptable content on social media, including harmful and illegal content, with legal liability for tech companies to act against agreed harmful and illegal content on their platforms. It also recommends that an independent regulator be appointed, with the power to launch legal proceedings against tech companies, and the power to impose large fines as the penalty for non-compliance with the Code.

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(e) creation of incentives for digital platforms to remove content based on clarification of the application of authorisation liability under section 36 and 101 of the Copyright Act to their activities. In this context:

(i) in line with s 36(1A) and s 101(1A) of the Copyright Act, the mandatory standard should make clear that compliance with the standard is only one factor to be taken into account in determining whether the digital platform took any reasonable steps to prevent or avoid the doing of the act (which in turn is only one factor in determining authorisation liability). A lack of clarity in this area, and in particular, any implication that complying with the mandatory standard operated as any form of ‘safe harbour’, excusing the platforms from all risk of carrying infringing content if it is complied with, would significantly undermine the entire scheme of copyright protection for digital works under the Copyright Act. As identified below, there are safe harbour provisions in the Copyright Act which do not apply to digital platforms (based on a sound policy decision not to extend them);

(ii) the mandatory standard will need to be clearly distinguished from the industry codes (none of which are currently in force) that are relevant to the safe harbours under Division 2AA of the Copyright Act. Following extensive consultation, Div 2AA has recently been extended from “carriage service providers” (ISPs) to certain other “service providers”, but not to digital platforms (see s 116ABA of the Copyright Act). The Australian Film & TV Bodies strongly oppose any further extension of the safe harbour regime to digital platforms. The level of involvement of digital platforms in infringement and enforcement of copyright online is not analogous to the role played by the service providers captured by s 116ABA of the Act.14 The appropriate balance is that proposed in the Preliminary Report, i.e. enactment of a mandatory standard that can serve as an “industry code” for the purposes of considering the liability of digital platforms for authorisation of copyright infringement under s 101 of the Act. In this context, an industry code does not create or remove liability for authorisation, but is a factor to be taken into account. In contrast and in the context of the safe harbour regime, compliance with an industry code, as well as the conditions in Subdivision D, entitles the service provider to automatically benefit from a limitation on the remedies available in a copyright infringement action against them. This is not appropriate given the more active role of digital platforms in infringement, as noted above and in Section 4.7 of the Preliminary Report. Allowing digital platforms to benefit from an automatic limitation on liability for copyright infringement is likely to create the reverse incentives to those that have been identified in the Preliminary Report as being desirable. As a result, ACMA will need to ensure that the digital platforms are not able to undermine the scheme of the Copyright Act and the recent consultations by the Government on the scope of the safe harbours by arguing that the mandatory standard brings them under Division 2AA of the Copyright Act;

14 The scope of the potential beneficiaries of the safe harbour regime is prescribed and limited by Australia’s international obligations, including Art 17 of the Australia-US Free Trade Agreement (see in particular the definition of “service provider” in Art 17.11.29(b)(xii)

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(f) breaches of the mandatory standard should carry meaningful civil penalties as proposed on page 163 of the Preliminary Report, thereby ensuring that the burden of enforcement is not solely left with rightsholders and creators (who face the many challenges identified above in seeking to enforce their rights in Australia);

(g) amendments to Part 6 of the Telecommunications Act, as proposed on page 161 of the Preliminary Report, to ensure that the mandatory standard is within ACMA’s power.

37 Whilst we strongly support the ACCC’s recommendation to introduce an ACMA-developed mandatory code, the Australian Film and TV Bodies also support a comprehensive review of authorisation liability.

4.2 Other copyright enforcement issues: jurisdictional challenges and remedies

38 The recognition in the Preliminary Report of the challenges identified for Australian rightsholders in enforcing copyright against overseas-based digital platforms, and digital platforms with data storage for infringing content located overseas) and the low value of remedies for copyright infringement is an important (and overdue) step in Australia to recognise the legal and practical obstacles to an effective copyright enforcement in connection with digital platforms.

39 However, the Australian Film & TV Bodies would encourage the ACCC to give further consideration to these issues with a view to making appropriate recommendations in the final report that are more granular and directed to how to overcome these obstacles, both through the implementation of new legal processes to facilitate enforcement against digital platforms (wherever they or their content is located) and the enhancement of existing legal avenues, such as through the Courts.

Enforcement against foreign defendants

40 The Australian Film & TV Bodies support the summary of the difficulties in pursuing overseas-based defendants, contained on page 156 of the Preliminary Report.

41 In relation to service outside the jurisdiction, the leave of the Court is required unless the person served waives any objection to the service (Federal Court Rules 2011(Cth), r 10.43).15 As outlined in that Rule, such an application is complex – it must be supported by an affidavit and service must be in accordance with the Hague Convention, another convention or the law of the foreign country. The applicant must be able to prove that the Court has jurisdiction, and that it has a prima facie case for the relief claimed, but the Court has residual discretion to refuse leave even if these requirements have been met.16 In practice, the Court will not permit service out of the jurisdiction if it appears that the respondent will deny that the Court has jurisdiction, or refuse to appear before it.

42 Consequently, a party wishing to bring infringement proceedings in Australia against a foreign defendant is required to incur the time and costs of seeking to serve the defendant out of the jurisdiction, and the outcome (i.e. successful service) is not guaranteed, particularly if the defendant seeks to avoid or deny the jurisdiction of the Australian Courts. The alternative course (bringing proceedings against the defendant in its home jurisdiction) is invariably uneconomical or impracticable

15 The Court may also confirm service that has already taken place, but this will require the applicant to satisfy the Court that there is a proper explanation for service taking place without leave in the first instance. 16 Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd (2015) 331 ALR 108 at [66] per Edelman J and cases there cited

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for the applicant. There are also other difficulties and risks (e.g., inability to recover for damage suffered in Australia, inability to recover costs under US litigation rules and practices).

43 Even if a judgment can be obtained, enforcement of the judgment against a foreign defendant is not straightforward. A relevant example is the Equustek case in Canada, where Equustek Solutions Pty Ltd, a Canadian technology company that had obtained an injunction against a former distributor (Datalink) for breach of confidence but was unable to enforce the order directly, obtained global orders against Google requiring Google to de-list Datalink’s websites, following appeals by Google to the Court of Appeal of British Columbia and to the Supreme Court of Canada.17 Key to the decision was that global orders were required as the only practical way to prevent continuing breaches of Canadian Court orders by Datalink, and the absence of any material inconvenience to Google. However, Google sought and obtained an anti-suit injunction in the US District Court, preventing the orders from operating in the United States.18 On April 16, 2018, the British Columbia Supreme Court dismissed Google’s motion to vary or set aside the global injunction against it.

44 The Australian Film & TV Bodies request the ACCC to more thoroughly investigate these issues and take them into account in its final report, to ensure that its recommendations cover practical enforcement against overseas-based platform providers. Any recommendations for the improvement of the enforceability of copyright against foreign defendants would be particularly welcome as a way of improving the imbalance identified in Section 4.7 of the Preliminary Report.

Low value of remedies for infringement

45 The Australian Film & TV Bodies agree with the concerns expressed in the Preliminary Report that the basis for calculation of civil damages for copyright infringement can often have the impact of successful copyright litigation resulting in low or nominal damages, as illustrated in Pokémon Company International, Inc v Redbubble Ltd (2017) 351 ALR 676 (Pokémon case).

46 In general, awards of damages for copyright infringement in Australia are low, especially when compared to the high costs of litigation (and the costs associated with enforcement against foreign businesses who supply services that are used to infringe copyright in Australia). Improving the likelihood that rightsholders may recover amounts at least equivalent to the financial harm suffered and litigation costs overall would go some way towards redressing the balance in favour of Australia’s copyright industries.

47 Additional damages or an alternative form of statutory damages may have a role to play here. As indicated in the Pokémon case, while low or nominal actual damages are not a bar to the award of additional damages, the matters to be taken into account by a Court in determining whether to exercise the discretion to award additional damages set a high bar, such that additional damages were not awarded in that case (see [75]-[76]), resulting in the “substantial net loss for the plaintiff” noted in the Preliminary Report (p 144).

17 Google Inc v Equustek Solutions Inc 2017 SCC 34. 18 Google Inc v Equustek Solutions Inc, Case No 5:17-cv-04207-NC: Order granting Plaintiff’s Motion for Preliminary Injunctive Relief, 2 November 2017.

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48 The Australian Film & TV Bodies encourage the ACCC to consider potential ways to remedy these problems and to include recommendations relating to the remedies available for infringing or authorising infringements of copyright in its final report.

5 Unfair contract terms (preliminary recommendation 11) and prohibition against unfair practices (area for further analysis and assessment no. 9)

49 The Australian Film & TV Bodies are committed to complying with Australia’s consumer protection laws in all dealings with consumers and small businesses and support appropriate and proportionate developments of those laws.

50 The Preliminary Report recommends the introduction of a general prohibition on unfair contract terms, and raises a general prohibition against unfair practices for further consideration. These recommendations are generally applicable to all businesses. However, the Preliminary Report predominantly discusses the rationale for and application of the amendments in the context of digital platforms and other businesses that collect, use and sell consumer data. This is consistent with the ACCC’s Terms of Reference in this inquiry.

51 While the Australian Film & TV Bodies are not opposed to further consultation in this area, it would be more appropriate, and more consistent with the Terms of Reference, for such significant changes to be the subject of broader analysis and assessment than is possible in the context of the present inquiry, if they are to apply to businesses other than digital platforms and the data collection industry.

6 Verification of advertisements on digital platforms (area for further analysis and assessment 6)

52 Members of the Australian Film & TV Bodies are significant advertisers on all platforms, including digital platforms. Based on this experience, the Australian Film & TV Bodies agree with the concerns raised in section 3.2.2 of the Preliminary Report regarding the difficulties of verifying that advertisements on Google and Facebook are in fact delivered to the intended audience (as paid for by the advertiser) or delivered in the way the advertiser expects they will be.

53 Currently the digital platforms each provide different metrics to advertisers, making it hard for advertisers to make decisions on capital allocation, to have the certainty advertisers receive what they paid for, and to determine with certainty what percentage of the target demographic is reached at what frequency across the overall campaign. The metrics provided are platform specific and limited in scope.

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54 Advertisers require independently verified data on the following metrics (which should take account of factors such as load times, verification that views are human and not bots or other ad fraud):

(a) Delivery verification – How many impressions were delivered? Relatively speaking these are very basic in terms of outputs, with a focus on impressions, clicks, geo location and unique users. Facebook are currently the only partner who do not allow the ability to implement 3rd party ad-serving tags on their campaigns, having removed this functionality post the recent Cambridge Analytica scandal and tighter global restriction around data usage due to the specificity of the data collected when running a campaign via Facebook. Google have recently tightened up their restrictions as well, specifically on YouTube. Advertisers who are using non- Google owned ad servers (i.e. Sizmek or Atlas) are unable to append a 3rd party ad-serving tracking pixels to all YouTube activity.

(b) View-ability verification – Did my impression have the opportunity to be seen? For an ad to be deemed viewable, 50% of pixels must be in view continuously for 2 secs or more as defined by the IAB. This is an elevated measure of an impression which attempts to include a measure of quality and potential impact. Both Facebook & Google have direct integration with for instance MOAT19, allowing 3rd party reporting but this is not considered “verified” as both platforms pass back owned internal data.

(c) Audience verification – Did my campaign reach who I set out to reach? (limited to basic demographics). This service is offered by Nielsen and is an attempt to replicate for digital Nielsen TV rating. Similar to TV it is limited to basic demographic and gender splits. These ratings are created by reviewing each impression against Facebooks’ 1st party login data (the largest source of its kind in Australia) to verify the demo profile of that impression. It’s worth noting that Facebook only see the impression they don’t see any additional information about its delivery such as device, location, platform, site etc. Currently YouTube does not have an integration with Nielsen to offer 3rd party verification, but do offer a similar service via its Google logged in data.

55 In addition to the above metrics our members also express a concern about the inability to control the environment in which their advertisements are shown, or at the very minimum to prevent its advertisements from appearing alongside inappropriate content. This is caused by the fact that the digital platforms, unlike other media owners, are not subject to regulation that ensures community standards are upheld with regards to the content it makes available to be viewed.

56 Even where Digital Platforms enable third party verification, the discrepancies between the Digital Platforms reported impressions and those provided by third parties on even impressions, which is the most basic metric, are a cause of concern. The below table shows the data for two movie titles advertised on Google and Facebook.20 This discrepancy could be caused by the point at which each

19 MOAT Analytics, 20 Data provided by a major theatrical distribution company, data on file with ANZSA.

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methodology registers a view (what percentage of pixels of the advertisements needs to be seen by the viewer for how long before a view is counted).

Google Movie A Movie B Impressions from AdWords 19,185,123 3,743,075 Impressions from Nielsen (TrueView) 15,341,992 3,470,468 Discrepancy -25% -8% Facebook Movie A Movie B Impressions from Business Manager 21,141,955 17,664,990 Impressions from Nielsen (Facebook) 18,099,206 12,753,119 Discrepancy -17% -39%

57 Greater transparency is required: advertising on digital platforms operates in a particularly opaque way, a position which should not be allowed to continue given that the advanced technology of digital platforms should enable advertisers to obtain highly accurate data about the performance of their advertising spend with those platforms.

58 The key problem with current verification mechanisms appears to be that the data used by third parties to measure outcomes for advertising on digital platforms is limited to data that has been sourced from, and compiled by, the platforms themselves, complemented by data that relies on consumer panel input to compensate for the data that is not shared by these platforms. The platforms have no incentives to submit its data for independent review. An “independent” measurement process that merely audits internal data does not meet the common understanding of an independent third- party verification system.

59 The Australian Film & TV Bodies support the introduction of new regulations to address this issue by increasing transparency. In particular, the regulations should require digital platforms to grant verification agencies access to the raw data on the delivery and effectiveness of advertisements, and to provide advertisers with regular accurate reporting (i.e. adjusting for the impact of known ad fraud). Self-regulation by digital platforms in this area is unlikely to be effective, given the significant financial interest that the digital platforms have in controlling the data that they use to earn revenue.

7 Minimising misuse of privacy

60 The Australian Film & TV Bodies are committed to ensuring the privacy and personal information of Australians is respected and protected through the enactment, development and enforcement of appropriate laws and regulations covering both the offline and online environments.

61 While the Preliminary Report identifies problems and potential solutions to online data privacy and personal information issues associated with the use of digital platforms by ordinary Australians, the ACCC should also consider how privacy issues play out in the context of infringing activity. It is well known that the performance of the digital platforms in recognising where and when user privacy should be protected, and when other competing objectives (such as copyright enforcement) should

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prevail, has been poor. Too often, in an apparent attempt to protect their own interests, digital platforms have inverted the balance: failing to adequately protect the personal information and data of ordinary users, but refusing to provide assistance to rightsholders seeking to identify and contact people responsible for significant infringements taking place on the relevant platform, on privacy grounds.

62 Rightsholders have a legitimate need to accurately identify and contact people engaged in infringing activity. The countervailing legitimate focus on the protection of privacy should not be able to be used by digital platforms as a basis for not cooperating with rightsholders in this context. This current approach allows platforms, and infringing users, to use privacy as a cloak for their illegal activities. This type of anonymous illegal behaviour must be treated differently to the personal information and data of ordinary internet users.

63 The Australian Film & TV Bodies encourage the ACCC to investigate this issue and take it into account in the final report of this Inquiry.

The Australian Film & TV Bodies appreciate the opportunity to participate in this Inquiry and are available to provide further information on request.

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Appendix A: Full descriptions of members of the Australian Film & TV Bodies

The Australian Film & TV Bodies are made up of the Australia New Zealand Screen Association (ANZSA), the Australian Home Entertainment Distributors Association (AHEDA), the Motion Picture Distributors Association of Australia (MPDAA), the National Association of Cinema Operators-Australasia (NACO), the Australian Independent Distributors Association (AIDA) and Independent Cinemas Australia (ICA). These associations represent a large cross-section of the film and television industry that contributed $5.8 billion to the Australian economy and supported an estimated 46,600 FTE workers in 2012-13.21

a) The ANZSA represents the film and television content and distribution industry in Australia and New Zealand. Its core mission is to advance the business and art of film making, increasing its enjoyment around the world and to support, protect and promote the safe and legal consumption of movie and TV content across all platforms. This is achieved through education, public awareness and research programs, to highlight to movie fans the importance and benefits of content protection. The ASA has operated in Australia since 2004 (and was previously known as the Australian Federation Against Copyright Theft). The ASA works on promoting and protecting the creative works of its members. Members include: Village Roadshow Limited; Motion Picture Association; Walt Disney Studios Motion Pictures Australia; Netflix Inc.; Paramount Pictures Australia; Sony Pictures Releasing International Corporation; Twentieth Century Fox International; Universal International Films, Inc.; and Warner Bros. Pictures International, a division of Warner Bros. Pictures Inc., and Fetch TV.

b) AHEDA represents the $1.1 billion Australian film and TV home entertainment industry covering both packaged goods (DVD and Blu-ray Discs) and digital content. AHEDA speaks and acts on behalf of its members on issues that affect the industry as a whole such as intellectual property theft and enforcement, classification; media access, technology challenges, copyright, and media convergence. AHEDA currently has 13 members and associate members including all the major Hollywood film distribution companies through to wholly-owned Australian companies such as Roadshow Entertainment, Madman Entertainment and Defiant Entertainment. Associate Members include Foxtel and Telstra.

c) The MPDAA is a non-profit organisation representing the interests of theatrical film distributors before Government, media, industry and other stakeholders on issues such as classification, accessible cinema and copyright. The MPDAA also collects and distributes cinema box office information including admission prices, release schedule details and classifications. The MPDAA represents Fox Film Distributors, Paramount Pictures Australia, Sony Pictures Releasing, Universal Pictures International, Walt Disney Studios Motion Pictures Australia and Warner Bros. Entertainment Australia.

d) NACO is a national organisation established to act in the interests of all cinema operators. It hosts the Australian International Movie Convention on the Gold Coast, 2018 being its 72nd year. NACO members include the major cinema exhibitors Amalgamated Holdings Ltd, Hoyts Cinemas Pty Ltd, Village Roadshow Ltd, as well as the prominent independent exhibitors Reading Cinemas, Palace Cinemas, Dendy Cinemas, Grand Cinemas, Ace Cinemas, Nova Cinemas, Cineplex, Wallis Cinemas and other independent cinema owners which together represent over 1400 cinema screens.

e) AIDA is a not-for-profit association representing independent film distributors in Australia, being film distributors who are not owned or controlled by a major Australian film exhibitor or a major US film studio or a non-Australian person. Collectively, AIDA’s members are responsible for releasing to the Australian public approximately 75% of Australian feature films which are produced with direct

21 Access Economics, Economic Contribution of the Film and Television Industry (February 2015) Australian Screen Association iv.

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and/or indirect assistance from the Australian Government (excluding those films that receive the Refundable Film Tax Offset). f) ICA develops, supports and represents the interests of independent cinemas and their affiliates across Australia and New Zealand. ICA’s members range from single screens in rural areas through to metropolitan multiplex circuits and iconic arthouse cinemas including Palace Cinemas, Dendy Cinemas, Grand Cinemas, Ace Cinemas, Nova Cinemas, Cineplex, Wallis Cinemas and Majestic Cinemas. ICA’s members are located in every state and territory in Australia, representing over 560 screens across 144 cinema locations.

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