Tech giants accused of market abuse by News Corp

News Corp has accused Google and Facebook of anti-competitive behaviour in the company’s strongest attack yet on the power of tech giants.

Facebook CEO Mark Zuckerberg.

The Australian Competition and Consumer Commission has today published 57 submissions from advertisers, consumers, digital platforms, journalists and media organisations as part of its digital platforms inquiry. The investigation was prompted by the Turnbull government, which directed the ACCC to probe the power of tech giants like Google and Facebook in Australia as part of its historic media reform package.

Dana McCauley 2.40pm: Twitter submission

Twitter has highlighted its work on ad transparency, data privacy and fake news in a bid to distance itself from rival social network Facebook in its submission to the ACCC digital platforms inquiry.

And the tech company emphasised its role as a news source for Australian journalists who “use Twitter every day to track local and global breaking news or trending stories, engage in research, identify sources or subject matter experts, and gauge public sentiment”.

Twitter in-stream video allowed publishers to monetise video content while making it easier for advertisers to reach mass audiences, the company said in its seven-page submission, noting that Seven had used the service to stream content on the platform from the Summer and Winter Olympics, Australian Open, My Kitchen Rules and AFL.

“These partnerships present multiple new opportunities for the media to reach passionate audiences by creating premium content and earning revenue by engaging brands to sponsor this content on Twitter,” the submission said.

“Twitter is increasing audience engagement and reach for media outlets by sending clicks to publishers and unlocking new sources of revenue for partners.”

Twitter argued that education was the answer to the proliferation of fake news, citing its partnership with organisations like the US National Association for Media Literacy to “help our users learn how to process online information and discern between sources of news”.

Darren Davidson 2.10pm: Australian Association of National Advertisers

The trade group for Australia’s leading brands has expressed concerns about inflated ad sales metrics, fake news and fraudulent online traffic at the big online platforms, arguing the tech giants should be classified as media companies.

The Australian Association of National Advertisers argues it is disingenuous for the tech giants to talk about themselves as mere distributors with no responsibility for what flows through their pipes.

Instead, regulators should treat the tech giants much like traditional media companies, which are subject to regulations, the AANA said.

“As they increasingly become and act as media publishers and not just content aggregation platforms, the issue of appropriate regulation for digital platforms as content creators and distributors should be considered,” the AANA said in a submission.

“Consumers are now accessing and consuming a vast share of their media consumption on these platforms, with advertising products placed against this, further strengthening the case for consistent regulations to protect advertisers and consumers alike. As aggregators, platforms have a responsibility for ensuring users have a way of confirming the validity of what is being discovered on their platforms. Rules around the dissemination of misleading or false information, should apply to all platforms.”

As the peak national advertiser body, the AANA seeks to protect the rights and interests of members including Unilever, Kimberly-Clark, NAB, McDonald’s, HSBC, Kellogg’s, Diageo, Fonterra, and Carlton & United Breweries.

Other AANA members include ANZ, 20th Century Fox, Woolworths, Westpac, William Hill, Virgin Australia, Toyota, Tourism Australia, Telstra, Suncorp Group, Subaru, Parmalat, Nestle and NRMA Insurance.

Darren Davidson 2.07pm: Australian Associated Press submission

One of the biggest employers of journalists in the country has directly blamed the tech giants for the loss of clients and subsequent job losses.

Australian Associated Press said it is “continuing to lose large amounts of revenue to these digital aggregators, search engines and social platforms”.

The impact of the tech giants is something of a double whammy, AAP argued, with publishers and broadcasters canceling subscriptions as they too lose revenue to the likes of Facebook and Google.

In a submission, AAP said: “For AAP the changing commercial dynamics have resulted in the loss of clients, specifically broadcasters, who have canceled AAP subscription services worth hundreds of thousands of dollars because in the words of one TV media executive: ‘We just google it’.”

APP recently closed its New Zealand Newswire after weak revenue weighed heavily on the business, with the loss of at least ten journalist jobs .

The impact of reduced revenue on quality news content creators, AAP said, is that fewer resources are available for “public interest and socially responsible journalism”.

This has resulted in a “poorer service for Australian news consumers” who are faced with declining quality journalism and the rise of “fake news”, the company said.

“There is a perception from the proliferation of news on search engines, digital aggregators and social media platforms that it is a cheap commodity, when in fact quality news creation is an extremely expensive operation,” AAP wrote.

Dana McCauley 1.15pm: Network Ten submission

Network Ten has called on the ACCC to step in and level the playing field for traditional media companies, in a short but scathing submission to the regulator’s digital platforms inquiry.

“Google and Facebook have captured more than half of all Australian advertising revenue in a little over a decade, at least in part based on unsubstantiated and exaggerated claims around reach, viability and effectiveness,” CBS-owned Ten said in its two-page submission, signed by chief operating officer Annabelle Herd. “They write their own standards and force advertisers to use their vertically integrated products to gain access to their platforms. This amounts to a distortion in the advertising market.

“The ACCC must intervene to ensure that the competition for advertising revenue is occurring in a fair and effective manner.”

Ten also called for the inquiry to address “the absence of independent verifiable metrics” on Facebook and Google ads’ viewability and reach, and the competitive advantage gleaned by the tech giants from “the scale of personal data” they have amassed.

And the third-ranked free-to-air network argued that the digital platforms should be considered media companies — albeit ones that “monetise content created by others, without meaningfully investing in its creation or licensing its use”.

“The diversion of advertising revenue to these dominant digital platforms away from newspapers, radio and television directly impacts the delivery of local, trusted, fair, accurate and impartial news content,” Ten’s submission said.

Dana McCauley 12.20pm: Fairfax submission

Fairfax Media says government regulation of the digital platforms should be considered “a last resort” and has stated its preference to work collaboratively with the tech giants to arrest the dramatic fall in its advertising revenue.

In its submission to the ACCC inquiry into digital platforms - a comparatively brief nine-page document - Fairfax indicated a clear preference for Google, its partner in a programmatic advertising deal signed in December, while signalling caution on regulatory intervention.

“We see the digital platforms as important and enduring participants in our operating environment and are seeking to proactively partner in recognition of this reality,” the company said.

Fairfax said its “clear preferred pathway” was for publishers and platforms to “explore and implement commercial, market-based solutions to the challenges presented by the current operating environment”.

“We see encouraging signs from some platforms that these efforts may be constructive,” it said, dismissing the suggestion that platforms should pay for journalistic content .

“A reasonable view is that [this] is likely impractical, poses potential risks to editorial independence, and potentially leads to worse outcomes for consumers,” the submission said.

Making platforms pay for content, and a separate proposal to tax the tech giants to subsidise public-interest journalism, both carried “risks of unintended consequences that must be seriously considered”, it said.

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

The publisher of The Age, Sydney Morning Herald and Australian Financial Review told the inquiry ad revenue in its metro publishing division had fallen from $800m in 1999 - when the division employed more than 1000 journalists - to just $225m a year. Fairfax has cut hundreds of editorial jobs cut over the period.

While it was critical of Facebook, saying the social media giant’s preference for keeping users within the platform meant that its ability to “appropriately recognise the value professionally-created content” was limited, Fairfax praised its partner Google.

“In recent months, we have noted a series of examples of Google working increasingly proactively with the industry to help address challenges or create conditions for publishers to capitalise on market opportunities,” the submission said.

Fairfax announced in December that it would join forces with Google in a partnership through which the tech giant sells programmatic advertising on the media company’s behalf.

The media company’s chief executive Greg Hywood talked up the “world-first partnership” at investment bank Macquarie’s annual conference yesterday, saying the deal would drive higher CPMs on programmatic ad sales.

“This partnership is indicative of the developments in the industry that will help sustain publishing earnings into the medium and longer term,” Mr Hywood said.

In its ACCC submission, Fairfax said two of Google’s core businesses – search and programmatic display – were “heavily reliant on having quality content on the open web”.

“This potentially creates a meaningful area of overlapping interest with the news industry,” it said.

“Advertisers increasingly value premium advertising inventory that can be traded programmatically ... Google’s programmatic products and digital commercialisation approach create opportunities to use this premium inventory to create distinctive value for advertisers.”

Fairfax also noted Google initiatives such as replacing its controversial ‘first click free’ policy with ‘flexible sampling’, which allows publishers to set the number of free articles readers may access per month, ‘subscribe with Google’ auto-logins and algorithm changes to priorities ‘authoritative’ sources during breaking news events.

Stephen Brook 12.10pm: MEAA submission

Large digital platforms should be classified and regulated as media companies, journalist’s union the MEAA said in its submission. And they should be regulated by the Broadcasting Services Act, the organisation said.

“Digital platforms deny that they are media companies, yet have managed to monetise the carriage of news items in ways that have created despair across the Australian media sector,” the union said.

“Due to the volume of media content and the apparent editorial role performed by algorithms (with or without human engineering), there seems to be a prima facie case for major digital platforms that carry news content to be subject to the Broadcasting Services Act 1992.

“At the very least, relevant digital platforms should make a considered effort to develop a meaningful industry-wide code of conduct about how it ensures that offensive, false, defamatory and other harmful materials deemed to be media content will not be displayed.”

The union pointed to the decline in the media sector over recent years in staff numbers and revenue.

“Google and Facebook have also become a channel for news media content through which Australian media companies have seen their business models rendered obsolete. “

The media sector had lost 3000 journalists positions in 10 years. Newspapers employed 23,472 people in 2010-11, by June 2017 that had fallen to 14,678, it said.

“MEAA believes that rampant revenue displacement from media companies to digital providers should lead to an acknowledgment that digital platforms are modern news companies – discussed further on in this submission; it follows that they — like the companies and individuals that journalism — must pay for the news and current affairs content.”

“News media companies are now strategically dependent on digital platforms to drive traffic to media websites (and associated platforms), yet the relationship is severely imbalanced.”

It called for the big platforms to be forced to contribute to a contestable public interest journalism fund.

Stephen Brook 11.50am: Walkley Foundation submission

Countermeasures against the digital giants were appropriate if the ACCC found they had unfairly undermined journalism, the Walkley Foundation said.

“If the ACCC investigation concludes there have been audience aggregation and advertising practices by global digital platforms that have unfairly undermined the creation of quality public interest journalism in Australia, we would support appropriate countermeasures,” the journalism organisation said in its ACCC submission.

The digital platforms were creating environments where fake news overwhelmed true news, it said. “The global nature of the online gig economy that sustains so much internet content means there are hundreds of thousands of low-wage workers worldwide available to create fake news.

“Fake news is simply easier. Shaping a fake story takes less time than digging out true stories. In fact, it’s so simple (and our needs are so easily played on) that bots can do it (and do). This means that the sheer volume of manufactured news overwhelms true news.”

The foundation said this could be countered by donating to non-profit news organisations.

“We are inspired by this revitalisation of public service journalism as well as the business-model experimentation, and we seek to encourage a homegrown Australian non-profit news ecosystem.”

Stephen Brook 11.40am: ABC submission

Digital platforms such as Google, Facebook and Apple had helped the ABC to “grow its reach and engagement capabilities”, the national broadcaster said in its ACCC submission. “The Corporation uses these media channels for community, public-interest and commercial reasons (while always maintaining its own, free and advertisement-free platform). Any additional revenue is reinvested in content creation.’’

The national broadcaster says it is working with Google, Facebook and Apple to cater to audiences migrating to digital platforms so it can “most efficiently engage” with Australians who prefer to access content online.

The ABC partners with Google and YouTube to assist content distribution and discoverability, while Facebook helps to “distribute our content, increase engagement and improve discoverability”. It distributes content via Apple News and also uses Apple to assist in development and promotion of apps, podcasts and music.

The ABC said that the ACCC’s definition of quality news content was inadequate, and should extend beyond objectivity and accuracy referenced in its issues papers to include timely and accurate reporting, important topics and diversity of perspectives.

Stephen Brook 11.30am: SBS submission

The changes in Facebook’s news feed algorithm caused a “marked drop” in the reach of SBS news reports, including current affairs program The Feed, which has experienced a drop of 50 per cent in its reach.

“This is damaging to SBS audiences. When consumers ‘like’ a news outlet’s Facebook page, they expect to see content from that provider appearing in their News Feed. This is happening less and less,’’ the Special Broadcasting service told the ACCC in its submission.

“The Feed, SBS’s youth-focused nightly current affairs program, has seen a 50 per cent drop in Facebook audiences since the January 2018 algorithm changes.’’

Major global digital platform were affecting SBS’s ability to attract advertising revenue and use it to invest in content, the broadcaster said.

“This results in less revenue for SBS and consequently, SBS’s ability to reinvest advertising revenue in the production of local Australian content, including news and current affairs.”

The Special Broadcasting Service said it invested in social media marketing on Facebook, Instagram, YouTube, WeChat, Snapchat, Twitter and other platforms. Research showed 17 per cent of audiences learnt about shows via social media.

Darren Davidson 9am: News Corp submission

News Corp Australia has accused Google and Facebook of anti-competitive behaviour in the company’s biggest attack yet on the power of the tech giants.

In a hard-hitting 147 page submission, the company said a small handful of online behemoths possess “substantial market power and are engaging in anti-competitive practices”, preventing publishers from “competing on the merits”.

While News Corp has been publicly critical of the tech giants before and the most ardent supporter of plans for a level playing field, the accusation that firms like Google and Facbook are guilty of market abuse represents a dramatic escalation of hostilities.

News Corp’s position reflects growing anxiety across the media, publishing, entertainment and retail industries that a handful of giant American tech groups have reached a level of influence that even the big banks never attained.

News Corp Australia boss Michael Miller. Picture: John Fotiadis

The tech giants have quickly amassed extraordinary influence, News Corp said in a strongly worded submission, to the extent that publishers have been left struggling to find sustainable business models.

While News Corp said it has embraced the digitisation of news and journalism, the tech giants have become so powerful in their role as “intermediaries between publishers and consumers” they have become “unavoidable trading partners”, leaving publishers at the mercy of their heavy handed tactics.

These practices have “profoundly” damaged the creation, distribution and consumption of news and journalism in Australia for consumers, publishers, and advertisers, News Corp said.

For consumers, digital platforms are “reducing the choice and diversity of original and quality news and journalism”, undermining the ability of consumers to assess “news sources, and prioritising unreliable content”.

Consumers are also facing “significant incursions on their privacy with digital platforms harvesting increasing amounts of personal data for commercial purposes”, News said in the wake of the Cambridge Analytica data leaks scandal.

For publishers, digital platforms are subverting access to online revenue streams, which is “undermining the sustainability of news and journalism as a private enterprise”, leading to “widespread cost-cutting in newsrooms and reduced incentives to invest in quality journalism”.

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, meanwhile, rules the social media market with more than 80 per cent of the ad market.

This matters became the media landscape is shifting to new digital and mobile platforms as new forms of distribution evolve at a rapid pace.

Journalists union the Media, Entertainment and Arts Alliance has estimated that since 2011, a quarter of all journalists in Australia have been made redundant.

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

“At the same time, advertisers too often find their brands placed in unsafe online environments, such as alongside extremist or other unsavoury sites,” News Corp wrote.

In conclusion, News Corp Australia said it has “not formed a final view” on whether further regulation is required.

“Current laws may be sufficient to deal with our concerns. However, it may also be the case that some further legislative, regulatory and/or policy intervention or changes are required.”

Regulators should scrutinise algorithmic abuse by the tech giants, the company said, adding there is ample evidence these firms affect the ­diversity of journalistic content and products available to consumers.

The algorithmic selection of news stories is having “negative impacts ... on news and journalism”.

The company has suggested establishing an Algorithm Review Board to “analyse and remedy algorithmic distortions of competition”.

This would also “designate the digital platforms as publishers/broadcasters to remove their incentives to distribute lower quality content”.

Darren Davidson 8.30am: Tech giants accused of market abuse

The competition regulator has published 57 submissions from advertisers, consumers, digital platforms, journalists and media organisations as part of its digital platforms inquiry.

Previously unpublished submissions to the issues paper include contributions from News Corp, Fairfax Media, Foxtel and Fox Sports, Ten Network, Nine Entertainment Co, Stan, the NSW Business Chamber, Twitter, REA Group, Commercial Radio Australia and the Australian Association of National Advertisers.

E-commerce giant Amazon, which launched in Australia last year, and Netflix, which has operated in Australian since 2015, did not make submissions to the inquiry.

The Australian exclusively obtained the 39-page issues paper in February. The paper sets out the scope of its high-­profile inquiry, which will examine potential market abuse by the tech giants as part of a world-first inquiry into the fast-growing digital media market.

Publication of the submissions coincides with the closure of Cambridge Analytica, the UK marketing analytics firm at the heart of the Facebook data scandal.

Some of the submissions have leaked ahead of the ACCC making them publicly available. Google and Facebook defended their role in the industry in response to heavy criticism they are draining revenue at an alarming rate from journalism.

Media executives criticised Google and Facebook’s submissions for glossing over and failing to discuss issues ranging from fake news and inflated ad sales metrics to fraudulent traffic.

They were also criticised for casting themselves as merely distributors with no responsibility for what flows through their pipes.

Seven West Media chairman Kerry Stokes said the unchecked market power of Google and Facebook poses a threat to traditional media and risks harming consumers.

Industry group Free TV expressed concerns about the ability of Facebook and Google to acquire potential competitors, and their role in facilitating piracy.