Government launches inquiry into media and advertising services competition

The ACCC is directed to launch a new inquiry into the impact digital platform providers such as Facebook and Google are having on media and advertising competition in Australia

The potentially detrimental impact of digital platform giants such as Facebook and Google on media and advertising competition in Australia is being put under the spotlight thanks to a new inquiry announced by the Federal Government.

The treasurer, Scott Morrison, has officially directed the Australian Competition and Consumer Commission (ACCC) to commence an inquiry into digital platform providers, looking at the effect digital search engines, social media platforms and other digital content aggregation sites are having on the competitive media and advertising landscape.

ACCC chairman, Rod Sims, stressed the watchdog was going into the inquiry with an “open mind” and an intention to study how digital platforms, such as Facebook and Google, operate to understand their influence in the Australian media market.

“We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers,” he said in a statement.

The ambition is to look closely at longer-term trends and the effect of technological change on competition in media and advertising, Sims said.  

“We will also consider the impact of information asymmetry between digital platform providers and advertisers and consumers,” he said.

The ACCC is being asked to investigate the extent to which platform service providers are exercising market power in commercial dealings with the creators of media content as well as advertisers; their impact on the level of choice and quality of news and journalistic content available to Australians; and the impact of information asymmetry, including innovation and technological change, on competition in the media and advertising sector.

The ACCC noted the rapid decline of print advertising and the rise of digital media and the pre-eminent form of reaching audiences. According to the latest IAB/PricewaterhouseCoopers figures, digital advertising now represents 50 per cent of total advertising expenditure, reaching $7.6 billion in the 12 months to 30 June 2017.

“As the media sector evolves, there are growing concerns that digital platforms are affecting traditional media’s ability to fund the development of content,” Sims continued. “Through our inquiry, the ACCC will look closely at the impact of digital platforms on the level of choice and quality of news and content being produced by Australian journalists.”

The inquiry is being held under Part VIIA of the Competition and Consumer Act (2010), giving the ACCC the ability to gather information on a compulsory basis, as well as hold hearings to assess the level of competition in a market. 

In a media statement, Minister for Communications, the Arts and Government Business in the Senate, Mitch Fifield, said the inquiry forms part of the Turnbull Government’s broader Broadcast and Content Reform package and was a measure agreed with the Nick Xenophon Team.

“The package will strengthen and diversify our media industry and support local jobs,” he stated.

A call for public submissions is due out in the New Year, with a preliminary report then anticipated in December 2018. The final report is due early June 2019. 

Sims called on content creators, mainstream media outlets and smaller media operators, platform providers, advertisers, journalists, consumers and small business interest groups to share their views as part of the process.

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