1. The Australian Government is proposing to reform the National Classification Scheme. While the National Classification Scheme covers material such as films, publications and computer games more broadly, the growth of online content is a key driver behind a number of the new reforms. Central to the first stage of proposed reforms is the expansion of options for industry self-classification of film and computer game content, supported by associated legislative updates such as refined and extended Classification Board powers, exemptions for low-risk cultural content, and provisions to embed a “classify once” principle. While these have been viewed as priority reforms, a second phase of more comprehensive reform to the National Classification Scheme is still anticipated.
2. The Government also recently concluded a consultation on a revised version of the Guidelines for the Classification of Computer Games to specifically address computer games that feature gambling-like content. The proposed changes would include factors such as simulated gambling, loot boxes and chance-based in-game purchases as classifiable elements.
3. The Government is also consulting on draft legislation to grant the Australian Communications and Media Authority (ACMA) new powers to address online misinformation and disinformation. The proposed new powers would give the ACMA enhanced information gathering and publishing powers, greater regulatory power to register and determine mandatory codes and standards and the power to impose significant financial penalties for non-compliance. Interested parties have until 6 August 2023 to comment.

Key takeaways

These reform proposals reflect the Australian Government’s current focus on modernising the Australian media and online content regulatory frameworks on a number of fronts.

The revised classification regime could provide welcome opportunities for content providers to expedite classification of their content and avoid double handling. However, a number of key recommendations from recent reviews into Australian classification laws have not yet been picked up in the draft legislation, with a second phase of reforms aimed at more comprehensive reform to the scheme still anticipated. It is likely that public comment on the second-phase reforms will commence later this year.

Gaming service providers will need to closely consider the ramifications of the proposed changes for gambling-like features.

The proposed expansion of the ACMA’s powers on misinformation and disinformation has the potential to bring significant changes. Digital platform providers should examine the potential implications of the proposed expansion of the ACMA’s powers for their business and the wider industry, and take the chance to have their say by contributing to the consultation no later than 6 August 2023.

In depth

1. Proposed classification regulatory changes

Background

For a number of years, Australia’s classification regime has been criticised by many who argued that it is in need of a revamp in light of changing patterns of content dissemination and consumption, and underlying uncertainties and inconsistencies arising from the application of a scheme established in the 1990s to a significantly changed media environment some 30 years later. However, change has been a long time coming.

A number of review processes have occurred over the last 15 years or so, including a significant Australian Law Reform Commission review. Most recently, from 2019 – 2020, the Government conducted a consultation and review of the current classification regime ("Stevens Review"). It was not until 29 March 2023 that the report on the Stevens Review, including various recommendations for reform, was released.

Between May and June 2023, the Government consulted on proposed discrete updates to the Guidelines for the Classification of Computer Games aimed at addressing growing community concerns around gambling-like features in computer games ("Loot Box Consultation").

On 22 June 2023, the Government introduced broader reform proposals to Parliament, in the shape of the Classification (Publications, Films and Computer Games) Amendment (Industry Self-Classification and Other Measures) Bill 2023 ("Classification Amendment Bill").

Outline of proposed reforms

To respond to concerns around harms associated with games which contain gambling-like elements, the Loot Box Consultation proposed updating the Guidelines for the Classification of Computer Games, to:

• Amend the list of classifiable elements so that:
  • If a game contains simulated gambling, it is an indicator of a classification of R 18+ (restricted to adults aged 18 and over).
  • If a game contains loot boxes that can be purchased or which have other in-game purchases that are linked to chance, it is an indicator of a classification of M (Mature – not recommended for persons under 15) or higher.
• Introduce new definitions to support the updated guidelines, i.e., “in-game purchases linked to elements of chance”, “loot box”, “real world currency” and “simulated gambling"

In the Classification Amendment Bill, the Government addresses several of the recommendations from the Stevens Review. The Bill makes a number of key changes:

• Expanded industry self-classification: industry will be permitted to self-classify film and computer game content, using accredited classifiers (either in-house or third party), as an alternative to the existing channels of submitting content to the Classification Board or using approved classification tools. The bill sets out the proposed accreditation regime, will update the existing legislation to contemplate self-classified content and will add a number of safeguards, including eligibility criteria for accredited classifiers. The bill will also add governance mechanisms allowing for suspension or revocation of accreditation for failure to classify content in accordance with the rules. Decisions around whether to classify content as RC (Refused Classification), X18+ (Restricted) or for law enforcement purposes will be reserved for the Classification Board.
• Expanded Classification Board powers: for quality assurance purposes, the Classification Board’s existing powers to conduct checks and, where needed, revoke classification decisions made by approved classification tools will be extended to the decisions of accredited self-classifiers. The Board’s powers to revoke industry self-classification decisions due to differences in consumer advice will also be clarified with a view to avoiding unnecessary revocations that result from minor subjective differences. The Board will also have to take into account technical limitations of self-classification tools, and may also publish a list of consumer advices and guidance on their appropriate use.
• Exemptions for low-risk cultural content: classification exemptions will be extended to foreign language films likely to be classified as G (General) or PG (Parental Guidance) which are imported on physical media in low volumes to be distributed through public and tertiary educational institution libraries. Existing conditional exemptions will also be amended to allow approved cultural institutions to display unclassified content as part of routine exhibitions, not just at designated events.
• ‘Classify once’ principle for films: certain films that have already been classified as R 18+ or lower under the Broadcasting Services Act 1992 will be deemed as classified for distribution on other platforms, where no substantial modifications have been made to the classifiable content.

However, a number of other major proposals from the Stevens review are yet to be addressed – including, for instance, recommendations to limit the scope of material subject to review under the National Classification Scheme (as opposed to the related Online Safety Act 2021 (Cth)) to professionally produced content that is distributed on a commercial basis and directed at an Australian audience. Minister Rowland has announced that a second phase of reforms to the National Classification Scheme will involve a more comprehensive reform process “including potential changes to clarify its purpose and scope, and establish fit-for-purpose regulatory and governance arrangements”. It is anticipated that public consultation on these broader reforms will commence later in 2023.

2. Proposed misinformation and disinformation regulatory changes

The Australian Government released its exposure draft of the Communications Legislation Amendment (Combatting Misinformation and Disinformation) Bill 2023, with an accompanying guidance note and fact sheet, on 24 June 2023 ("Draft Misinformation Bill").

Background

Many digital platforms are currently signatories to the voluntary Australian Code of Practice on Disinformation and Misinformation ("Disinformation Code"). Since its launch in February 2021, signatories to the Disinformation Code have committed to safeguards to protect Australian users from harm associated with misinformation and disinformation and promised to issue annual transparency reports on their progress.

In June 2021, the ACMA reported on the adequacy of digital platforms' disinformation and news quality measures, making a range of recommendations, including that the Government provide the ACMA with reserve regulatory powers in relation to digital platforms, such as code registration powers and the ability to set standards, so that the action could be taken quickly to address potential harms if platform responses were not adequate or timely. In the Draft Misinformation Bill, the government is putting forward proposals to implement this recommendation.

Key proposals

The Draft Misinformation Bill empowers the ACMA to:

• Introduce Digital Platform Rules which, notably, will require digital platform providers to keep records and report to the ACMA, as and when the ACMA requires or periodically, on matters relating to misinformation and disinformation on digital platform services, including measures implemented in response to such content and the effectiveness of those measures, as well as records regarding the prevalence of content containing false, misleading or deceptive information
• Obtain information and documents from digital platform providers relating to misinformation and disinformation and publish information on its website regarding various matters, including the measures taken by digital platform providers and their effectiveness
• Mandate the development of, and register, industry codes for the digital platform industry, with measures to prevent or respond to misinformation and disinformation on digital platform services. Such codes could deal with a broad range of matters – for example, the use of technology to combat mis/disinformation, preventing advertising and monetisation of mis/disinformation, supporting fact checking and providing sources for political or issues-based advertisement, end-user detection and reporting, and reporting and complaints procedures
• Determine mandatory standards to provide protection from misinformation or disinformation on digital platform services where there is no registered code, the code is deemed deficient or there are exceptional or urgent circumstances

Application and scope

The Draft Misinformation Bill would capture and apply to providers of “digital platform services”, covering content aggregation services, connective media services (with a primary function of enabling online interaction between two or more end-users), media sharing services and other digital services specified by the Minister. Notably, providers of internet carriage services, MMS services and SMS services would be excluded.

As to scope, the new regulatory regime relates specifically to content which is “misinformation” and “disinformation”. Broadly, misinformation contains information that is false, misleading or deceptive, is provided on a digital service to one or more end-users in Australia and is reasonably likely to cause or contribute to serious harm. Disinformation is misinformation which a person disseminates with the intention to deceive another person. Both definitions import important concepts of harm.   

Consequence of breach

Under the Draft Disinformation Bill, digital platforms which do not comply with applicable Digital Platform Rules, codes and/or standards could face a range of enforcement action, including formal warnings, remedial directions requiring the provider to take specified action and civil penalties which could be imposed via an infringement notice or a court. Contravention of a standard or associated remedial directions would attract the highest civil penalty, the greater of 25,000 penalty units – equating to AUD 7,825,000 as at the date of this alert – or 5% of the annual turnover of the contravening body corporate, which is calculated generously to include relevant group global revenues. Giving false or misleading information or evidence to the ACMA would be a criminal offence, subject to a penalty of imprisonment for 12 months.

Consideration and next steps

• The Classification Amendment Bill is before Parliament and progressing through the House of Representatives. The Government has indicated that this is only a first tranche of changes to the classification regime, and we therefore expect further amendments to be announced in the near future. Meanwhile, the Government has indicated that submissions to the Lootbox Consultation will inform the final Guidelines for the Classification of Computer Games 2023. The latter changes have significant implications for those in the gaming industry, who will need to consider how to take account of the new approach in operating their services. Stakeholders in the wider media and content industry will doubtless be following the evolution of Australia’s classification regime closely.
• The Draft Misinformation Bill, if introduced, could potentially mark a shift away from self-regulation to a stricter regime where, if the ACMA took up some of the powers available to it, it could introduce mandatory Digital Platform Rules, Codes and Standards and publicize details about digital platforms’ approach to misinformation and disinformation. These potential developments will be of interest to all in the industry. In the meantime, the ACMA is seeking feedback on the draft legislation, in writing, via video, or as an audio recording from stakeholders, experts and the community. Submissions can be made up to 6 August 2023 at 23:59PM AEST.

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With thanks to Milena Mitic (Junior Associate) and Liz Grimwood-Taylor (Senior Knowledge Lawyer) for preparing this alert.