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31 October 2019

Ofcom: Platforms ‘Do Not Consider’ Their Impact On Newspapers

The tech platforms “do not consider” the impact of their activities on newspaper publishers, as their market power and use of news media content erodes news providers’ revenues and damages high quality journalism, a new report from Ofcom has found.

In its ‘Online market failures and harms’ report, designed to assist policymakers and regulators considering the “unique challenges” associated with developing effective regulation in this area, Ofcom sets out some of the key market failures and harms that can occur online.

It cited risks to media plurality as one of eight harms saying that the increase in digital ad spend had produced a range of challenges for news media providers because of the increased role of the platforms in the distribution of news online.

Ofcom said: “Intermediaries have an increasing audience reach. In some cases, they can aim to keep audiences within their own space, rather than referring people on to visit a news provider’s website directly.

“Reducing traffic to news websites exacerbates the challenges to newspaper revenues set out above and limits the ability of the news provider to collect valuable data about its audience. Externalities may mean that intermediaries do not fully consider this impact on newspapers, and the societal benefits of plurality or sustainable high-quality journalism.

“Furthermore, if these intermediaries have market power, they may be able to set their own terms to advertisers and publishers in a way which further erodes news providers’ revenues.”

Ofcom added: “These challenges have raised concerns for the longer-term sustainability of news providers, which may have implications for plurality in terms of the availability of news.

“The Cairncross review expressed particular concerns for the sustainability of high-quality journalism and local news and noted their role in informing citizens and in turn allowing them to hold government and business to account.”

A recent research piece from Euclid Law found that Google’s dominance of the ad tech marketplace is having a significant negative impact on news media publishers and damaging journalism

The paper acknowledged that news media publishers had responded to the challenges by diversifying their revenue streams and evolving their digital strategies, with notable successes such as the Guardian’s donation strategy which has seen it break even for the financial year 2018/19.

Ofcom added that interventions to address these issues should be “carefully designed to overcome these challenges and avoid undesirable unintended consequences.”