Whether consumers are properly informed about the data collected when they download an app will be examined in a new inquiry.
The Australian Competition and Consumer Commission has released a discussion paper as part of an examination of app marketplaces.
The two dominant app marketplaces are the Apple App Store and the Google Play Store.
In 2019, 30.6 billion apps were downloaded on the Apple App Store and 84.3 billion apps were downloaded on the Google Play Store, with worldwide users spending more than $1.5 billion a week.
More than 4000 apps are added to these marketplaces every day.
While the ACCC is interested in ways to improve competition and help develop the industry, it is also taking a close look at how data is collected by Apple, Google and app providers.
Data can be collected for a wide variety of purposes, including to monitor an app's performance, for research and development, or to tailor consumer experiences.
But it can also be shared with platforms such as Facebook and for serving targeted advertising to a user.
"Consumers are not always sufficiently informed about the amount and kinds of data collected (including from apps), and are not always given control over data collection, studies show," the ACCC said on Tuesday.
"These studies have also found that the risks of data collection include manipulation, discrimination and exclusion, loss of security, and consumer distrust of businesses."
A study by Privacy International found out of 36 apps, 61 per cent automatically transferred detailed and sensitive personal data to Facebook the moment a user opened the app.
This occurred whether or not the user had a personal Facebook account.
Feedback on the ACCC issues paper is open until October 2.
A final report and recommendations are expected to go to Treasurer Josh Frydenberg in March 2021.
Australian Associated Press