South Africa’s Competition Commission has slapped tech giant Google with a R300 million to R500 million a year “provisional remedy” to compensate local news media, including online, television and radio, for the imbalance in competition and digital advertising revenue.
(Photo Illustration by Leon Neal/Getty Images)
South Africa’s Competition Commission has slapped tech giant Google with a R300 million to R500 million a year “provisional remedy” to compensate local news media, including online, television and radio, for the imbalance in competition and digital advertising revenue.
The search engine giant, social media sites and AI platforms must also improve the future balance of competition and revenue, in some cases by making algorithmic changes such as removing search biases in favour of foreign media, ceasing to deprioritise news on social media feeds and improving the ability to monetise content.
These were among the seven key provisional remedies outlined in the commission’s provisional report from its media and digital platforms market inquiry released at a media briefing on Monday.
It made wide ranging findings against tech giants Google, Meta (the parent company of Facebook), Microsoft, OpenAI, X and TikTok, and proposed provisional remedies across search, social media, generative AI and digital advertising to correct conduct that adversely affects competition for digital advertising and journalism.
The inquiry estimates that Google benefits from news content by R800 million to R900 million annually, while the South African media loses R300 million to R500 million.
Competition commissioner Doris Tshepe said the inquiry, which started in October 2023, had involved 16 months of extensive evidence gathering, public and in-camera hearings, expert report submissions, consultation with industry role players and focus group discussions.
It was initiated in terms of the Competition Act, because the commission had reason to believe that there are market features on digital platforms that distribute news media content that impede, distort or restrict competition, or undermine the purposes of the Act.
“The inquiry is also unique in that the media are key agents in the fulfilment of constitutional rights to freedom of expression, and whose work promotes the fulfilment of numerous other constitutional rights. As the digital platforms do not create content themselves any undue harm to the news media would undermine the fulfilment of these constitutional rights,” Tshepe said.
“Indeed, one of the reasons for prioritising this market inquiry was the importance of preserving a strong independent media with a diversity and plurality of voices to strengthen our democracy.”
Panel member Paula Fray outlined the draft findings of the provisional report, which highlights the competitive dynamics between traditional media and digital platforms, revealing that intermediaries such as search engines and social media platforms have become the primary sources of news for most people in the country.
“Hosting news content produced by the media are mostly watched on social media platforms and not on news websites. A shift online has seen a massive decline in traditional advertising revenue sources of around 40% for major print publications.” she said. “Broadcasters are not immune to this trend, and the SABC ad revenue declined 47% from its peak.”
She said the news media has not been able to replace this lost revenue with digital ad revenue, because the losses are four to five times the gains in digital revenue and that news is increasingly consumed through search and social media intermediaries which dominate digital advertising.
She said one of most pressing concerns was the decline of traditional media revenue because of this shift in advertising spend towards digital platforms.
“This has significantly affected the sustainability of journalism. Some of the key findings of the provisional report include that Google Search monopoly and its dominance over news media have led to an unfair distribution of value, weakening South Africa’s media industry for the past 14 years and continuing to do so,” Fray said.
The unequal bargain position had resulted in an inequitable sharing of user data and insight between Google and news publishers.
“The Google algorithm distorts competition between news media and organisations in so far as it over represents global news media in South Africa for search and top stories, underrepresents vernacular and community media, and over represents subscription publishers.
“Findings on social media giants like Meta, YouTube, X and TikTok [are that] they dominate social media and adversely affect the quality and consumer choice of South African news media, particularly on credible news media that supports the realisation of our citizens constitutional right to be informed and active members of a democracy which makes the adverse effect substantial.
YouTube dominates video search and uses Google Search to direct video queries straight to its platform, Fray said.
“The SABC is adversely affected by YouTube making public interest broadcasting far less financially sustainable. Another finding is that news organisations pay the cost of fact checking and misinformation spread on social media, yet social media does not compensate media for this benefit.”
The threat to advertising as a revenue source was a threat to access to news and media diversity, while the subscription model lends itself to a “winner takes most outcome” that will further concentrate news in an already concentrated industry.
“The impact of this shift and the conduct of platforms is evident in the news today. Journalism numbers have halved from the peak with an increased casualisation of journalists that remain, along with the ‘juniorisation’ of newsrooms,” Fray said.
“Many news bureaus have closed and … many community and regional papers have shut down … The rapid decline of the media has severe consequences for our democracy and the constitutional rights of citizens.”
AI bots and chat bots represent a new intermediary threat to the news media, Fray added.
“While the news media must rise through the challenges presented by this disruption, the inquiry finds that the conduct of the digital platforms have exacerbated the harm to the media by using referral traffic and also increasing the costs of the news industry by requiring the media to produce digital content in the format of the platforms,” she said.
Competition Commission chief economist and deputy commissioner James Hodge said the inquiry had taken “a slightly different approach to find longer term solutions that are win-win and more sustainable” alongside “short-term remedies” to address the current state of the media, which was a product “in large respects, of historic conduct by the platforms”.
“This is a very dynamic sector, and our previous engagements and experience from the online intermediation inquiry is that rather focusing on outcomes allows flexibility and dynamism for the platforms to respond to changes in the market or consumer behaviour while still achieving the outcomes we want,” he said.
“Absent any win-win solutions finding traction with the digital stakeholders the only alternative that we can see is to impose a five to 10% digital levy or tariff on search, social media and AI companies to compensate the media.”
Hodge highlighted the following key remedies:
- Google must compensate the South African news media R300 million to 500 million annually for a three- to five-year period for the imbalance in shared value while putting in place changes to search that will sustainably create shared value with the media through increases in referral traffic. This includes the removal of search bias in favour of foreign media and YouTube, and the promotion of vernacular and community media.
- Meta must stop deprioritising news on its Facebook feed and restore referral traffic to the media’s websites by at least 100%. Meta and X must cease deprioritising news posts with links in the user feed.
- YouTube must improve the ability of the media and broadcasters, including the SABC, to monetise their content on its platform through increases in the revenue share to 70% and active promotion of higher value direct sales by the media.
- The Electronic Communications and Transactions Act of 2002 must be amended to introduce platform liability for harmful content and the amplification of misinformation. Social media platforms should partner with and compensate the media on fact-checking.
- Search and social media to share richer anonymised user data for consumers engaging news content on their platforms to enable improved insights and monetisation of audiences.
- The media should be allowed to negotiate collectively with AI companies for content deals to train and ground chatbots. If not, measures should be in place to prevent AI chatbots from favouring current global media partners and to drive referral traffic to news media.
- On Adtech, the inquiry proposes the domestic implementation of remedies agreed upon in the European Union and the United States (in future) along with fee reductions and an end to self-preferencing conduct like exclusive access to YouTube inventory and charging competitors additional fees.
Hodge said the commission expected that the tech giants would take its proposed remedies to heart, enabling them to avoid the enforcement of any final penalties or a digital levy.
Stakeholders and the public have six weeks to comment on the report and submissions must be sent to the commission 7 April, with supporting evidence where relevant.
The final report will be published later this year.
