ACCC probe into tech titans considers ad market disruption and regulation

Arvind Hickman
By Arvind Hickman | 26 February 2018
 

Australia's competition watchdog has released an issues paper that frames its probe into the impact digital media platforms are having on the advertising market and journalism.

The Australian Competition and Consumer Commission's (ACCC) Digital Platforms Inquiry will focus specifically on the impact of tech giants on the supply of 'news and journalistic content' on several fronts, including whether existing regulation that applies to media and advertising services in Australia is sufficient.

It will look at how tech companies use consumer data to sell advertising and algorithms to filter news preferences and whether this is good or bad for a vibrant media and society.

“Digital platforms like Google and Facebook are part of the sweeping technological and cultural changes overhauling the media landscape in Australia and globally,” ACCC chairman Rod Sims says.

“While these technological changes have brought many benefits for consumers, this inquiry will have a particular focus on examining whether the changes affect the quality and range of news supplied to Australian consumers.

“Considering the longer term impacts of digital platforms and the ability of traditional media to remain financially viable will also be key to understanding the media and advertising markets.

“Our aim is also to understand better the digital platforms’ business models and how they operate behind the scenes, and the evolving nature of the way consumers search for and receive news in Australia. We are particularly interested in the extent to which digital platforms curate news and journalistic content.”

Tech titans under the scope

Although it isn't designed to focus on any specific players, it singled out the two largest digital media platforms, Facebook and Google, and referenced Twitter, Instagram, Snapchat and LinkedIn.

It noted that in Australia, Google provides 95% of digital search services, Facebook is estimated to have 15 million monthly users and both companies account for 40% of advertising revenue, including three quarters of online advertising revenue.

The inquiry will look at how these digital media platforms impact choice and quality of media being consumed, and their impact on the competition and supply of advertising services.

“Compared to traditional advertising channels (e.g. newspaper, TV, radio), digital platforms provide advertisers with significant reach and greater precision in targeting consumers with particular interests or purchasing patterns,” the paper states.

“Advertising has consequently become much more efficient. However, there are currently only a few platforms with the scale and data access to offer such services. A key issue for competition in the supply of advertising services is the alternatives available to advertisers.”

A lengthy senate inquiry into public interest journalism ruled there was insufficient evidence of Facebook and Google's impact on the local media sector, a decision that baffled many commentators in the media. In February, it deferred a further probe into the digital duopoly and digital media platforms to the ACCC's inquiry, which began on 4 December.

This makes the watchdog's inquiry particularly important for media companies that believe the tech titans benefit by distributing their professionally-curated journalism and are given an easy ride with very little regulation, oversight and contributing hardly any corporate tax.

The ACCC's issues paper provides clarity over the scope of its inquiry and key dates. Comments on the issues paper will be due by 3 April, a period that allows proponents and opponents time to lobby for the scope to be narrowed or broadened.

Public comments will then be sought from May to June with a preliminary report to the Treasurer due on 3 December.

This will be followed by a final report on 3 June 2019.

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The key questions

The probe is an opportunity for the ACCC to take a forensic look at the market power of global tech giants on the Australian media.

The questions relating to advertising services look at who the major players in digital advertising are and whether they engage in behaviour that indicates they are exercising market power.

The probe will look at whether there are reasonable alternatives available to users (including advertisers) and if digital platforms enhance their market position by excluding competitors or potential competitors through the acquisition of rivals or restrictive contract terms.

The inquiry will assess the impact of digital platforms on advertisers, such as whether their move into this market has changed the price, quality or choice for advertisers.

It will also look at the advantages and disadvantages of media companies using digital platforms to distribute content.

The probe will consider privacy issues and whether digital media platforms are sufficiently transparent about the data they collect from consumers. In the issues paper it notes that Facebook collects extensive user data on its platform as well as by monitoring consumer behaviour on partner websites off platform.

Importantly, the investigation will consider whether current regulation is sufficient. At present, digital media platforms are not bound by the same onerous regulations as traditional media companies when it comes to the type of content they can distribute, the cost of distribution to mass audiences or even the sports rights they can acquire and stream.

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