On 17 March 2023, the Competition Commission in South Africa published a draft Terms of Reference (ToR) for a market inquiry into the distribution of media content on digital platforms – the Media and Digital Platforms Market Inquiry (“MDPMI”).
MDPMI will focus on the distribution of media content on digital platforms. It is based on the Competition Commission’s conviction that there may exist market features in digital platforms distributing news media content that impede, distort, or restrict competition, which may have adverse implications for South Africa’s news media sector.
The inquiry follows moves by regulators in other markets, such as Canada, France, and Australia, that have intervened to compel big technology companies, such as Meta Platforms and Google, to compensate media outlets for carrying their content and ensure the sustainability of local media outlets.
The main digital platforms on which the inquiry will focus, as referenced in the ToR, include search engines (Google Search and Microsoft Bing), social media sites (Meta), video-sharing platforms (YouTube and Tiktok), and news aggregation platforms (Google News and Apple News). The inquiry will also take a forward-looking approach by evaluating new technologies being adopted by digital platforms, such as generative artificial intelligence (AI) search support (e.g., ChatGPT), as well as the significance these technologies may have on business operations in the South African news media sector.
Key concerns highlighted and their impact on news media companies
Digital platform concerns and the use of a market inquiry: In its submission to the Competition Commission, Publishers Support Services (PSS) stated that the transition to digital news consumption and advertising had resulted in a massive decline in advertising revenue across all publishers, coupled with an increase in costs as newsrooms needed to devote resources to their digital presence. Other issues raised included anti-competitive behaviour, public interest, and the ability of publishers to enjoy the revenue benefits of their content in the news publishing sector. Google and Meta (formerly known as Facebook) were both mentioned in this regard for their dominance and expropriation of the copyright.
News media’s relationship with digital platforms and the implications for competition: Digital platforms are deemed critical channels through which the news media links with consumers. In the digital age, these companies rely on the user-facing services provided by Google and Meta (among others) to host content and drive traffic to their websites or apps. According to the Competition Commission, the dependency of news media businesses on digital platforms for referral traffic means the latter group enjoy significant bargaining power, in terms of both their intermediary relationship as gatekeepers and the asymmetric nature of the relationship between these parties.
A series of further concerns were raised, such as the inability of publishers to monetise their content (fair payment terms) through digital advertising on Facebook. The lack of transparency regarding how the algorithms employed by these digital platforms operate was also referenced in terms of how this impedes news media companies from monitoring the quality of their news content and the impact thereof.
The idea that digital platforms perform the same services as traditional publishers is contested; however, they are not subjected to the same set of laws and regulations as those applicable to news media companies.
Implications for the tech industry
The impact on the tech industry must be viewed in line with the overarching focus areas of the inquiry, which include the following:
(i) The interaction and dependency of South African news media businesses on relevant digital platforms, who act as an intermediary, distributor, and link to online users for the dissemination of news content online: Depending on the findings of the Competition Commission, tech companies may be compelled to compensate South African news media businesses for content. The creation of a structured engagement platform for bargaining and negotiation is anticipated to level the playing field between the big tech companies and local news media.
(ii) The impact, thereof, on news media businesses to aggregate, display, create, and monetise their news content online: To reiterate the point on revenue sharing based on fair payment terms that support small, medium, and micro enterprises (SMEs), a particular focus will likely require businesses owned by previously disadvantaged persons to explicitly benefit from these digital platforms.
The public is invited to submit comments on these draft ToRs by 16h00 on 20 April 2023. The market inquiry will commence 20 business days after the publication of the final ToR and the final report will be completed within 18 months, as per the statutory requirements of sections 43B(2) and 43B(4)(a) of the Competition Act respectively.
Access Partnership closely monitors the regulatory and policy development in the tech and digital space, as well as market inquiry reports and updates by various Competition Commission Authorities.
For more information, please contact Jan Magoro at firstname.lastname@example.org and Wydeman Coetzee at Wydeman.email@example.com.