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02 July 2020

NMA Urges Government To ‘Act Swiftly’ Following CMA Digital Markets Report

The News Media Association has urged the Government to “act swiftly” to implement the recommendations of the Competition and Markets Authority’s final report of its online platforms and digital advertising market study in order to restore balance to a digital ecosystem.

In the report, the CMA cited NMA arguments in multiple instances, saying that the “exploitation” of commercial relationships with news media publishers by Google and Facebook was likely to lead to consumer harm as publishers were less likely to be able to monetise their content.

"Weak competition in digital advertising increases the prices of goods and services across the economy and undermines the ability of newspapers and others to produce valuable content, to the detriment of broader society," the report said. 

To address this, the CMA recommended the establishment of a pro-competitive digital regulatory regime, and a Digital Markets Unit which would be empowered to enforce a code of conduct to govern the behaviour of platforms with market power, as called for by the NMA.

Responding to the report yesterday, the NMA said: “The CMA has acknowledged and responded to many of the concerns of the News Media Association and the industry in this thoughtful report.

“We support the recommendations for a new regulatory regime for the tech platforms, a new code of conduct to govern their behaviour, and the establishment of a Digital Markets Unit to enforce this code. We also note that a full market investigation has not been ruled out if progress is not made.

“We hope that the Government will now act swiftly to implement these recommendations and restore balance to a digital ecosystem which for far too long has left news media publishers unable to realise the true value of their journalism.” 

The DMU should also have powers to tackle sources of market power and increase competition, including powers to increase interoperability and provide access to data, to increase consumer choice and to order the breakup of platforms where necessary.

The CMA recommended the code be structured around three broad principles - fair trading, open choices and trust and transparency – as called for by the NMA.

“All the publishers and many of the advertisers who responded supported our proposal for a statutory code of conduct to embed principles of fair trading, open choice and transparency in the relationship between SMS firms and their business users,” the CMA said.

“News Media Association commented that any code of conduct should be principles-based and capable of governing market players’ future conduct, as well as resolving specific issues that have already arisen.”

The CMA said: “The market power enjoyed by Google and Facebook on the user side has resulted in them becoming unavoidable trading partners and created the opportunity for them to exploit their commercial relationships with publishers.

“This exploitation is likely to lead to consumer harm as it may result in publishers being less able to monetise their content, reducing their incentives to produce valuable content for users, and to the broader detriment of society."

The report acknowledged that changes to algorithms would have a “significant impact” on publisher businesses and it was “reasonable” that publishers should have sufficient explanation of how these algorithms work and sufficient notification of changes to them where they might notably impact upon their businesses.

“The News Media Association (NMA) further suggested that ‘[c]omplaints about ranking practices should be referred to the digital markets unit, which must have the power to investigate and impose remedies,” the CMA said.  

“’This complaints process should be available to publishers which have concerns about the impact of existing ranking algorithms on their traffic.’”

Publishers should also be able to access user-level data for content hosted within the Google and Facebook ecosystems, the CMA said, and publishers should also have greater say in how platforms use their content.

“The most significant example of this is when Google generates snippets to appear next to hyperlinks in search results. If a publisher opts out of allowing snippets, it may be ranked lower in organic search results, reducing the publisher’s visibility to consumers and, accordingly, click-through rates, website traffic and monetisation opportunities.”

“However, where a snippet is produced by Google the relevant snippet may reveal the substance of the media business’ content. This could then have a direct impact on referral traffic by reducing click-through rates of organic search results,” the report said.

The CMA will be leading the work of the Digital Markets Taskforce, including a consultation on the design and implementation of the pro-competitive regulatory regime.