The Australian Competition and Consumer Commission (ACCC) plans to invite Facebook and Google to a hearing and answer questions about their business practices in particular the use of personal data and how their dominance has affected news media in terms of Australian advertising dollars.
Rod Sims, Chairman of the ACCC has stated that Facebook and Google as well as other tech giants could face criminal sanctions if they fail to assist in the commission’s inquiry. It is reportedly the first such inquiry to be undertaken.
According to Sims, Australians were becoming increasingly concerned about the quality of news media being published as well as the threat of their personal data being harvested by these powerful technological giants:
“The ACCC has the power to serve a notice that compels companies to provide certain information. We can make recommendations to government or we can take action under our act. Keep in mind, they (Facebook and Google) are doing business in Australia.
“Facebook is the dominant social media platform and Google is the dominant search platform, and clearly the media’s previous business model has been a fair bit disrupted. Beyond those points that we go in with a completely open mind about what really is going on and what can be done about it.”
There are an estimated 10.82 million Facebook users in Australia which represents roughly 44% population of 24.6 million people. This number is expected to increase to 11.56 million by 2022.
Sims admits that determining what constitutes as quality news is a subjective matter. However, the ACCC plans to canvass opinions from different sectors.
The ACCC’s inquiry is expected to last 18 months. The commission is likewise concerned about the state of competition in media and advertising. Google, Facebook and content aggregators such as Apple News have ventured into media via paid advertising and may have impacted the local industry.
Senator Nick Xenophon has raised concerns that these tech giants were compromising the earnings of local Australian media companies. Many of these traditional advertising companies have lost valuable print advertising revenues to digital advertising options.
In particular, the ACCC is worried that lower advertising revenues would affect the ability of these traditional news media companies like Fairfax and News Corp. to fund the production and distribution of news.
Sims disclosed in the ACCC’s report that local Australian newspaper and magazine publishers lost an estimated $1.5 Billion and $349 Million in print advertising revenue in 2011 and 2015 respectively. Earnings from digital advertising only amounted to $54 Million and $44 Million in the aforementioned periods.
“In this inquiry, the ACCC will undertake an independent review of the extent to which advertisers now prefer to use digital platforms rather than traditional media and the potential impact of the market shift on the on-going creation of news and journalistic content in Australia.”