Denham Sadler
December 4, 2017

ACCC targets tech platforms

Policy

ACCC targets tech platforms

Rod Sims: Trying to understanding the influence of Google and Facebook in Australia

Australia’s competition watchdog has launched an inquiry into the impact digital platforms like Facebook and Google are having on media and advertising disruption.

The federal government has formally instructed the Australian Competition and Consumer Commission to investigate the impact of digital search engines, social media platforms and other digital content aggregators on competition in the media and advertising worlds.

“The ACCC goes into this inquiry with an open mind and will study how digital platforms such as Facebook and Google operate to fully understand their influence in Australia,” ACCC chair Rod Sims said.

“We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers.”

“The ACCC will look closely at longer-term trends and the effect of technological change on competition in media and advertising. We will also consider the impact of information asymmetry between digital platform providers and advertisers and consumers.”

The inquiry was a condition demanded by the Nick Xenophon Team in exchange for its support for the Turnbull government’s media reforms. Its announcement was welcomed by NXT senator Stirling Griff.

“This inquiry will be important as it will expose the tactics search engines and social media platforms have employed to hoard advertising dollars, the conditions they have forced media organisations to accept and the part they have played in the gradual erosion of the media’s bottom line,” Senator Griff said.

“They need to be called to account for their behaviour and lack of transparency, which is irrefutably having an impact on Australian media organisations.”

Digital advertising now accounts for nearly half of all of the Australian advertising market, while Facebook and Google parent company Alphabet are expected to take half of the world’s internet advertising revenue this year.

Silicon Valley tech giants would have to take some responsibility for the issues the media industry is currently facing in Australia, with a decline in advertising spending, Senator Griff said.

“The digital duopoly do not bear all the responsibility for the media’s current woes, but they also need to accept that their hands are not clean."

“This inquiry will mean they will no longer be able to claim, with a straight face, that their actions have all been fair play in an open competitive market, and that the problem lies solely with the traditional media business model.”

“In the end, the inquiry should tell us if the market is being distorted and dominated, the fairness and need for better commercial terms for content providers, whether advertisers are getting a good deal and what the future holds with innovation and technological change.”

The ACCC’s inquiry will zero in on how tech giants like Facebook and Google use their market power in commercial dealings with media and advertising bodies, and the impact this has on journalistic content.

“As the media sector evolves, there are growing concerns that digital platforms are affecting traditional media’s ability to fund the development of content,” the ACCC’s Mr Sims said.

“Through our inquiry, the ACCC will look closely at the impact of digital platforms on the level of choice and quality of news and content being produced by Australian journalists.”

The ACCC would use its compulsory information gathering powers throughout the inquiry, and will hold public and private hearings on the media.

It is looking for submissions from content creators, mainstream media outlets and smaller operators, platform providers, advertisers, journalists, consumers and small business interest groups.

It will soon be releasing an issues paper, before completing a preliminary report by the end of next year. The inquiry will issue its final report by June 2019.

The terms of reference for the ACCC’s inquiry are:

  • The extent to which platform service providers are exercising market power in commercial dealings with the creators of journalistic content and advertisers
  • The impact of platform service providers on the level of choice and quality of news and journalistic content to consumers
  • The impact of platform service providers on media and advertising markets
  • The impact of longer-term trends, including innovation and technological change, on competition in media and advertising markets
  • The impact of information asymmetry between platform service providers, advertisers and consumers and the effect on competition in media and advertising markets

While the federal government’s announcement of the inquiry didn’t mention Google or Facebook by name, it’s believed that they will be the main focus of discussions.

Representatives for both companies said they will be cooperating with the ACCC on its inquiry.

“We look forward to engaging with this process as relevant,” A Google spokesperson said.

A Facebook spokesperson looked to downplay its role in content creation and promotion.

“People come to Facebook primarily to connect with friends and family, share around communities of interest through Facebook Groups and connect with the organisations and public figures that matter to them,” the spokesperson said.

“Whilst the sharing of news and entertainment content is only a small part of the content shared on our services, we take our role in the media ecosystem very seriously and invest significantly in products that support publishers.

“We look forward to a thorough inquiry into the Australian media market.”

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