Technology giants eat media’s cash
Politicians must follow overseas and curb Google and Facebook
t’s one thing for the Commerce Commission to kick another media merger into touch. It’s quite another to stand by observing the destructive impact of the global digital giants who are disrupting the New Zealand market. And to fail to use its powers to launch an inquiry into their business practices.
In particular — Google and Facebook — who are hoovering up advertising revenue at an obscene pace and crippling the profitability of New Zealand media.
The commission has opined at length that its aim to ensure “plurality” is preserved was the key factor it relied on when it turned down the NZME- Fairfax Media application for an authorisation to merge their New Zealand assets.
I’m not going to reiterate the commission’s arguments on this score. But it is relevant that the commission did acknowledge that Facebook and Google have exerted financial pressure on the market.
“What we face at the moment is a really dramatic change in the market in that 80 per cent of advertising revenue now goes offshore to Facebook and Google,” commission chairman Mark Berry told the Herald’s Liam Dann.
“That inevitably is putting a lot of financial pressure on the applicants.” This dominance by the digital behemoths is the salient point.
And it should raise alarm bells with the competition regulator. But aside from remarking that effectively the New Zealand media market is in play, Dr Berry has not signalled the next logical step which is to launch an inquiry into the practices of the global technological giants relating to their dominance of the advertising ( and other) markets here. It’s refreshing that other regulators are made of sterner stuff. Take the European Union’s competition commissioner Margrethe Vestager who spearheaded a major investigation into Google’s business practices. Earlier this year the EU announced anti- trust charges against the search giant.
The Financial Times observed this week that, as companies like Google, Facebook and Apple assume an economic power that even Microsoft in its monopoly heyday could only dream of, these issues are starting to force themselves into the limelight.
“How much value should the platforms suck out of the digital ecosystems they support, and what kind of checks and balances should there be to make sure they treat others fairly?” asked the FT’s West Coast editor, Richard Waters. Dr Berry may be waiting for Fairfax Media and NZME to decide whether or not they will appeal the commission’s determination. The parties had 20 working days to make that call from the May 4 announcement.
But a regulatory body which has already called on the service of the redoubtable Jim Farmer to buttress its recent determination could just as usefully ask that QC to advise it on terms of reference for an anti- trust inquiry or investigation. It’s not as if it should take a direction from a Cabinet minister for this to occur. Unfortunately our politicians have been ineffectual over the clear and present danger that Facebook and Google — through their undermining of the financial ability of local media to maintain journalist levels as revenues decline — present as a threat to democracy.
Instructively, Australian politicians are not made of such wimpish stuff.
This week Senator Nick Xenophon ponied up with other politicians to launch an inquiry which will look into the adequacy of consumer and competition laws in dealing with the “market power and practices of search engines, social media aggregators and content aggregators, and their impact on the Australian media landscape”. Writing in The Australian, Xenophon made clear that the opaque ad sales systems and digital data that underpins the Silicon Valley giants needed new approaches from regulators. “Our regulations and, in turn, our regulators have failed to keep up with the rapacious incursions in the advertising market by Facebook and Google . . . their success is based to a large extent on cannibalising existing media outlets. The hard work of Australian journalists is being used as a springboard for Facebook and Google to generate advertising content for which they generally pay nothing.
“Media companies in Australia will wither and die unless we tackle the haemorrhaging of advertising revenue to Facebook and Google, which between them are hoovering up A$ 3.2 billion of ad revenue from the Australian market,” Xenophon said.
The House of Commons is also investigating.
The Aussie inquiry will look into: 1. The current state of public interest
journalism in Australia and around the world, including the role of Government in ensuring a viable, independent and diverse sector. 2. The adequacy of current competition and consumer laws to deal with the market power and practices of search engines, social media aggregators and content aggregators and their impact on the Australian media landscape. 3. The impact on public interest journalism of search engines and social media internet service providers circulating “fake news” and an examination of counter measures directed at online advertisers, “click bait” generators and other parties who benefit from disinformation. 4. The future of public and community broadcasters in delivering public interest journalism, particularly in under serviced markets like regional Australia and culturally and linguistically diverse communities. 5. An examination of “fake news”, propaganda, and public disinformation, including sources and motivation of fake news in Australia, overseas and the internationally.
It's time our politicians woke up to the real impact that Google and Facebook's oppressive behaviour has on the viability of our media role and its ability to serve democracy.