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07 December 2017

Australian Authorities Commence Inquiry Into Digital Platforms

Competition authorities in Australia have launched an inquiry to examine the effect digital content aggregation platforms such as Facebook and Google are having on competition in media and advertising services markets.

The Federal Government has formally directed the Australian Competition and Consumer Commission to commence an inquiry into digital platform providers such as Facebook and Google, the ACCC announced.

The ACCC said its inquiry will look at the effect that digital search engines, social media platforms and other digital content aggregation platforms are having on competition in media and advertising services markets.

In the UK, the News Media Association has called for an urgent investigation into the impact of Google, Facebook, and the digital advertising supply chain, in order to ensure the news media sector’s quality, agenda-setting journalism can survive and thrive in the digital environment.  

Giving evidence on behalf of the NMA to the House of Lords Communications Committee’s enquiry into advertising last week, Newsquest chief executive Henry Faure Walker said the dominance of Google and Facebook in the UK was creating a problem in the digital advertising marketplace. 

“We think there is a case for the CMA to review the digital advertising market and make some recommendations as to how it can foster a more competitive marketplace,” Mr Faure Walker said. “I think unless something changes significantly to the revenue outlook, and what we’re seeing is still steep revenue decline, then more local newspapers will close and hit the wall.”

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

“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,” Mr Sims added. “We will also consider the impact of information asymmetry between digital platform providers and advertisers and consumers.”

Advertising expenditure in print newspapers has been in decline for a number of years. Recent ACCC merger reviews have shown that most advertisers are spending less on print newspapers and finding alternative ways of reaching target audiences, including through digital media, the ACCC said.

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

“We are keen to hear the views of content creators, mainstream media outlets and smaller media operators, platform providers, advertisers, journalists, consumers and small business interest groups,” Mr Sims said.

The ACCC is expected to produce a preliminary report early December next year, with a final report due early June 2019.