Digital platform inquiry discusses Google, Facebook but falls short of radical action

By Dr. Merja Myllylahti

Auckland University of Technology (AUT)

Auckland, New Zealand


In early December, the Australian Consumer and Competition Commission (ACCC) delivered its important preliminary report about Australian digital platform inquiry. The inquiry has been marketed as “the first in the world,” and its recommendations have been eagerly awaited around the globe.

The preliminary report, which is 374 pages long, has plenty of valuable insights, propositions, and material to chew on, and it is clearly pro-journalism. The problem is it offers no concrete actions, only recommendations, and who knows what happens with those. Perhaps the actions will come after the Commission publishes its final report in June of 2019.

The ACCC calls out technology companies but does not demand radical changes.
The ACCC calls out technology companies but does not demand radical changes.

The report provides some unsurprising findings. It confirms Google and Facebook have substantial market power in the Australian media market and that there is a clear case for the regulation. The report states digital platforms have “a profound impact on Australian news media and advertising,” and their impact on the supply of news is significant. Similar observations have been made in many reports and other markets. My own report about the New Zealand media market offers a very similar picture, unsurprisingly.

However, the ACCC’s report also delivers some unexpected recommendations. For example, it proposes a completely new regulatory body to monitor how Google and Facebook rank and display news content and advertisements. The commission notes the way platforms’ algorithms rank and display advertising and news content lacks transparency. This can harm news companies and favour their own businesses. It notes “platforms’ key algorithms, in determining the order in which content appears, is not at all clear.”

The ACCC acknowledges Google and Facebook have become “unavoidable business partners for many Australian businesses” as they enable news companies to reach large audiences. Yet, at the same time, they compete with news companies for advertising dollars, user data, and consumers’ attention. When news companies rely on these platforms for attention, they become dangerously dependent on their traffic, as my academic study shows.

The ACCC’s chair, Rod Sims, suggests Google and Facebook are, indeed, media companies although they don’t produce journalistic content. Sims says Google and Facebook are “more than mere distributors or pure intermediaries in the supply of news,” and they “perform similar functions as media businesses” as they select, curate, and rank news content. So, if this is the case, they should be regulated similarly to broadcasting and news publishing companies. There is a need to level the playing field.

While combing through the report, it is hard to find any specific actions proposed to improve news companies’ revenue models in the short term. The Commission is seeking further feedback on tax offsets that could be applied for the costs incurred in producing journalism offering “high public benefits and are at risk of under production.” It is fair to say the commission will have a substantial hurdle in scoping what content and production falls into this category — and admits it.

Additionally, the ACCC is exploring the option of making personal subscriptions to news publications tax deductible to encourage more people to buy digital subscriptions or to pay voluntary reader payments. Again, the Commission is right to point out “there can be concerns with implementing and proposing tax incentives and subsidies.”

Supporting news media with some sort of tax benefits is not anything new. When announcing its C$595 million package to support journalism in Canada, the federal government proposed readers could get a temporary, non-refundable tax credit, which would allow them to claim back 15% of the cost of the digital subscriptions.

It also suggested news companies could be aided by a refundable tax credit, which would be applied to those news organisations producing “a wide variety of news and information of interests to Canadians.” According to the proposal, news organisations fitting into this category could get tax credits against the labour costs for producing public interest journalism.

The ACCC’s report is important as it clearly documents the problem with “platform power.” Still, I felt somewhat deflated after reading it. Perhaps I was expecting more radical recommendations to address platforms’ substantial market power. News Corp has urged the platforms to be broken up. I am not sure if that is a solution, but … perhaps things will look different in 2019.

About Dr. Merja Myllylahti

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