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Image: Midjourney The Competition Commission is holding a market inquiry into digital media and platforms in South Africa and on Tuesday explained the issues at play in a panel discussion. Established in terms of the Competition Act, the market inquiry is “based on the commission’s view that there may exist market features in digital platforms that distribute news media content that impede, distort or restrict competition, and which may have adverse implications for the news media sector of South Africa”. The inquiry follows a complaint lodged in 2021 by an industry association. Publisher Support Services (PSS) made representations to the commission on behalf of founding members Media24, Arena Holdings, Caxton, Independent Media and Mail & Guardian Media. South Africa is seeing a shift in the consumption of digital news due to the increasing use of smartphones PSS submitted that the transition to digital news consumption and advertising had resulted in all publishers seeing a huge decline in advertising revenue, and an increase in costs as newsrooms needed to devote resources to their digital presence. This transition leaves the publishers in a precarious financial position despite cutting costs. As a result, independent journalism in the country is under threat, PSS contended. The commission’s inquiry follows several investigations led by competition authorities globally on the impact of digital platforms on news media. This includes the generation of advertising revenue and the ability of news media sustainably to provide quality news content to the benefit of consumers and democracy. Read: SA publishers to drag Google, Facebook to the Competition Commission Global inquiries found that large digital platforms such as search engines and social media sites are important gateways for news content to reach consumers – which can create an imbalance in the trading relationship between the news media and digital platforms that has implications for the level of referral traffic and fair payment for content. Collectively, this may affect the sustainability of independent journalism, the commission has heard. Other investigations There have been investigations in several other countries and regions into ad-tech markets that sell publishers’ display advertising inventory, purchase inventory on behalf of advertisers, and the advertising exchanges that connect the two groups. The investigations will seek to determine whether conflicts of interest result in competition concerns, which may impact the volume of advertising, the size of bids for a publisher’s inventory, and their share of the advertising spend. Veteran media manager Paula Fray, who is advising the panel, said South African media was already struggling before Covid, but that as a result of changing conditions and the pandemic, some 400 jobs in journalism had been lost. She agreed that multiplatform journalism is now the norm and because resources are so limited, the media has been forced to explore new business models. Read: CompCom to probe adtech markets in digital media inquiry South Africa is seeing a shift in the consumption of digital news due to the increasing use of smartphones and more affordable access to the internet and this change in consumer behaviour has impacted the cost and revenue of South African news media businesses. Traditional classifieds and print advertising revenue has declined; and while digital advertising revenue has increased and there is potential for aggregator content revenues, digital platforms and ad-tech markets can influence competition for these revenue streams. Image: Midjourney The inquiry will specifically consider how these markets impact the digital visibility and competitiveness of smaller news organisations, including community and African language news media, and the diversity of news available to consumers. This will include search engines, social media sites, video-sharing platforms, news aggregation platforms and ad-tech market participants. Independent journalism in South Africa is under threat, a concern since independent public interest journalism is one of the cornerstones of a healthy democracy, said Competition Commission chief economist James Hodge. Read: Facebook defends itself over criticism from South African publishers He said the inquiry is cognisant of the fact that independent investigative journalism has cost implications and will gauge whether this sort of journalism is rewarded on digital platforms. The commission said it is aware that globally there have been several inquiries into the impact of digital platforms such as Google and Meta Platforms (owner of Facebook and Instagram) acting as gateways to reaching consumers, especially for businesses in the news media sector. Commission to probe South Africa’s digital media sector Google and Meta, through their digital platforms, are dominant gateways to consumers and news publishers are, in part, dependent on referral traffic from these platforms. The algorithms used to rank news items in search results or inserted in social media feeds also determine competitive outcomes between news media organisations, and may favour larger, more established media companies or reinforce particular media sources, to the detriment of competition from smaller or more diverse media organisations. In terms of legislative requirements, the inquiry must be concluded within 18 months. The commission is aiming for 15 months. – © 2023 NewsCentral Media Get breaking news alerts from TechCentral on WhatsApp
