Digital media inquiry: tech giants accused of engaging in abuses of power

Technology giants have been accused of breaching competition practices and abusing their position to push out ­rivals.

Seven Group chief executive Ryan Stokes. Picture: Hollie Adams

Technology giants have been ­accused of breaching competition practices and abusing their ­dominant position to push out ­rivals, in an array of complaints from companies, unions and ­industry bodies.

Publication yesterday of 57 submissions to a world-first ­inquiry into the digital media market by the Australian Competition and Consumer Commission revealed a long list of allegations against Facebook, Google, Amazon, Netflix and Apple.

Written testimony from News Corp, Seven West Media, the Ten Network, Nine Entertainment, advertisers, trade groups and the journalists union reflects growing anxiety across their industries about the power of Silicon Valley, which could open the door to years of regulatory scrutiny. In a 147-page submission, News Corp, publisher of The ­Australian, made clear that companies such as Facebook and Google were “engaging in anti-competitive practices”.

The Media Entertainment and Arts Alliance estimated that since 2011, a quarter of all journalists in Australia, about 3000 in total, had been made redundant as the tech­ titans rendered publishing ­models obsolete.

Seven Group chief executive Ryan Stokes called for the digital giants to be regulated to ensure their platforms were “fair for users and for businesses and doing the right thing by the community”.

He said the era of online platforms reaping billions of dollars in advertising revenue from content produced by others, without adequate compensation, must come to an end.

Fairfax Media said the proliferation of online news sources and the competitive might of Facebook had contributed to a drastic fall in advertising revenue from its metropolitan publishing business, which had shed 72 per cent of ­advertising revenue in the eight years to 2017.

GRAPHIC: What the media told the inquiry

Australian Associated Press blamed the tech giants for the loss of clients and subsequent job losses, saying it was “continuing to lose large amounts of revenue to these digital aggregators, search engines and social platforms”.

Newspapers employed 23,472 people in 2010-11 but by June last year that had fallen to 14,678.

The trade group for Australia’s leading brands expressed concerns about inflated advertising sales metrics, fake news and fraudulent online traffic, arguing that the tech giants should be classified as media companies. The Australian Association of National Advertisers said it was disingenuous for tech giants to talk about themselves as distributors with no responsibility for what flowed through their pipes amid the proliferation of “fake news”. Instead, regulators should treat them much like traditional media companies, it said.

Subscription-TV rivals Foxtel and Stan criticised the role of the tech giants in facilitating online ­piracy.

They highlighted how ­Google’s YouTube and Facebook systematically allowed their sites to include a profusion of ­copyright-infringing clips and films. “It is extremely difficult to ­attract paying consumers for a product which is also available ‘free’ due to unauthorised use,” Foxtel wrote.

Free-to-air networks Ten, Nine and Seven expressed concerns about the ability of Facebook and Google to acquire potential competitors, and how they profited from the content of others without payment or consent.

In Australia, Google dominates search advertising with a 95 per cent share of the market, and 50 per cent of the mobile device operating system market. Facebook rules the social media market with more than 80 per cent of the ad market. “The ACCC must intervene to ensure that the competition for advertising revenue is occurring in a fair and effective manner,” Ten said.

In an interview with The Australian, Mr Stokes called on the ACCC to take a “robust” approach to its digital platforms inquiry. He expressed hope that its interrogation of the tech giants’ market dominance could be a game-changer.

“If you regulate something, you can get better influence over it — and you can ultimately tax it,” Mr Stokes said.

He called for a “fair return for content” from Google and Facebook, saying traditional media companies were bearing the cost of producing quality content to feed the platforms. His comments came after Google Australia’s disclosure this week that its local ­advertising revenue tipped $3 billion, confirming industry estimates. Facebook, which still books a portion of local advertising revenue in tax-haven Ireland, took in $479 million.

News Corp said for advertisers, the dominance of tech giants was leading to “less choice and higher prices” with companies such ­Google not only selling ads but operating and owning the software used to buy and sell ads.

The Australian Communications and Media Authority’s 19-page submission highlights how recent reports have revealed that Facebook quietly constructed a vast database of “shadow profiles” of people who have never consented to use the social media platform.

Mark Zuckerberg, the 33-year-old founder of Facebook, made the astonishing admission in April while giving evidence to a US congressional investigation into the company’s behaviour, according to two separate reports in The Australian.

“The potential for platforms to harvest data about non-users has been speculated upon,” ACMA wrote, adding that the issue “requires further examination”.

Additionally, ACMA raised concerns about whether tech giants take adequate steps to depersonalise data in line with personal privacy laws. This means that the “individual is no longer identifiable” once they decide to delete an account or leave a social media platform such as Facebook.

In December, Scott Morrison directed the ACCC to conduct an inquiry into digital platforms.