Australia: The ACCC Digital Platforms Inquiry Final Report: is media law reform destined for the too hard basket once again?

Last Updated: 13 August 2019
Article by James North, Adam Foreman and Jennifer Dean

The genesis of the Australian Competition and Consumer Commission's (ACCC) Digital Platforms Inquiry (DPI) was a deal the Federal Government did with cross-benchers in 2017 to obtain support for a relaxation of media ownership laws. Journalistic content creation was always intended to be its core focus.

In reading the Final Report and its wide-ranging recommendations, there is a sense that some of this focus has been lost, with many recommendations likely to have only a marginal impact on the sustainability of media business models and much of the work in formulating concrete measures in key policy areas being deferred to future processes.

That being said, the media regulatory framework is complex, overlapping and technical, and the policy implications of reform extend significantly beyond questions of the influence of digital platforms on competition or consumer welfare. Given this context, it seems reasonable that media law harmonisation in particular should be addressed as part of a more holistic review.

The Government has expressed its broad support for the ACCC's recommendations, but its political will to drive legislative change in this challenging policy area is yet to be tested.

In this article, we look at the key findings and recommendations of the DPI in relation to the media sector and consider what concrete reform in this area might look like.

Harmonisation of media regulation

It would be difficult to find a stakeholder who is not broadly in favour of harmonising media regulation across different modes of delivery (the submissions lodged with the DPI reflect this). The real challenge is the 'how' and this is a question the ACCC has not tackled, instead recommending that it be addressed by way of a separate government process.

One of the more interesting (or dispiriting) aspects of the DPI Final Report is the list of previous reviews of media laws going back to 2005 (Appendix C). By our count, there have been approximately 12 reviews in the last decade that have at least touched on questions of convergence and harmonisation of media regulation, including the Convergence Review conducted under the previous Labor government in 2012. None of these reviews have resulted in legislative change.

Like many of the reviews before it, the DPI Final Report makes the case that technological convergence means siloed regulation of different delivery modes is inefficient, and that businesses operating at the same functional layer (i.e. content production, delivery applications/services, digital/IP transport or infrastructure) should be subject to the same kind of regulation.

Some of the key discrepancies identified by the ACCC include:

  • What constitutes a broadcasting service. Because of how 'broadcasting services' are currently defined under the Broadcasting Services Act 1992 and subordinate legislation, providers of 'on-demand' and/or Internet-based services such as streaming services are not treated as broadcasters. This has a range of consequences, including that they do not require broadcasting licenses and are not subject to licence conditions – unlike providers of traditional radio and linear free-to-air and subscription television services.

  • Content regulation. Content regulation is perhaps the area where some of the most significant regulatory discrepancies exist. For example, almost all content broadcast by free-to-air and subscription television services and subscription streaming or video-on-demand services must be classified, while content offered on the Internet for free need not be. Similarly, traditional media are subject to a range of Australian, local and children's content obligations which do not apply to IP-based streaming or on-demand services.

  • Advertising standards. While a range of industry advertising standards apply to print, broadcast and online advertising, there are inconsistencies in relation to certain kinds of advertising which are hard to justify on policy grounds.

One area that is not directly considered by the ACCC is media ownership regulation. There is currently a set of restrictive rules in place which govern common ownership of traditional media operations including print, radio and free-to-air television businesses. However, these rules do not apply to, nor take into account, ownership of publishers of online content, including online news and journalistic content.

The ACCC has recommended a further government process to develop a platform-neutral regulatory framework. While the Federal Government has indicated its broad support for this recommendation, it is undoubtedly a daunting task with key questions remaining unresolved. For example:

  • Fundamentally, should the harmonisation project be about rolling back regulation for traditional media or increasing regulation of Internet-based content?

  • To what extent should user-generated content platforms be subject to content regulation – especially as some forms of user-generated content become increasingly professionalised?

  • Should streaming services be able to partner with free-to-air television and jointly produce Australian content to meet quotas?

  • Should commercial free-to-air broadcasters be required to continue to produce children's content for a declining audience or are public broadcasters better placed to produce this kind of content?

While the policy case in support of harmonisation is relatively clear, there is arguably limited evidence to support the ACCC's finding that the current arrangements give digital platforms a competitive advantage over traditional media, except perhaps at the margins. To the extent there is a competitive advantage, in our view this is more likely to be attributable to different modes of delivery and associated differences in the level of infrastructure investment required.

Monetisation of journalistic content

The Final Report concludes that the significance of digital platform providers of news referral services for media businesses makes them 'unavoidable trading partners'. As a consequence, the ACCC has found there is a fundamental bargaining power imbalance between the major aggregation, search and social media platforms and media businesses, and that this leads media businesses to accept less favourable service terms.

The ACCC considers this imbalance in bargaining power can result in digital platforms implementing policies or changes to their services which can have a significant impact upon media businesses with limited consultation or negotiation. Examples identified by the ACCC include:

  • the inability of media organisations to optimise the length of snippets produced in search results to avoid adverse impacts on the frequency with which users will click through to a story;

  • the adoption of formats (especially mobile formats) that limit the ability of media organisations to monetise traffic, develop brand awareness and collect user data;

  • providing limited access to user data; and

  • making adverse changes to algorithms with limited consultation or notice.

To address the issues it has identified, the ACCC recommends that designated digital platforms supplying news referral services should each be required to implement a code of practice to govern their relationships with media businesses. It is proposed that these codes would be subject to approval by the Australian Communications and Media Authority (ACMA) and would contain minimum commitments about:

  • sharing data about user consumption news content with media businesses;

  • providing early warning of significant algorithm changes;

  • not hindering media businesses' ability to monetise their content; and

  • negotiation of appropriate compensation where a digital platform obtains direct or indirect value from content produced by news media businesses.

The proposed codes could effectively require digital platforms quantify the 'value' delivered by news content and proportionately distribute associated revenue.

Perhaps more than any other recommendation in the Final Report, this has the potential to profoundly affect the business models of news media businesses. It could also impose substantial compliance costs upon designated digital platforms. Further, real questions remain about how the task of quantifying 'value' would be undertaken and whether the ACMA has the internal capabilities to assess the economic modelling that would likely be required.

Because the ACCC's recommendations address the issues at a relatively high level, much will depend on how any enabling legislation is framed and the approach the ACMA takes to its oversight role. There is scope for these codes to simply be a collection of general statements of principle on the one hand or a fully-fledged form of regulated access with specified price and non-price terms on the other (much like access to regulated telecommunications facilities and services).

Choice and quality of news journalism

Examining the ongoing availability of diverse, high-quality news and journalistic content was arguably the underlying impetus for the DPI.

The ACCC has outlined its findings on this issue in some detail, including:

  • traditional media businesses have experienced significant declines in advertising revenue as advertisers follow audiences online;

  • in recent years the number of people employed as journalists has declined significantly;

  • while digital platforms have facilitated the proliferation of 'digital native' publishers, these businesses have tended to employ relatively small news rooms;

  • the online environment provides relatively poor incentives for the production of public interest journalism which may attract small audiences;

  • coverage of local news stories is shrinking generally and there have been significant numbers of local newspapers that have closed in recent years; and

  • there has been a proliferation of 'fake news'.

These are issues that governments and media organisations are grappling with around the world. The ACCC's recommendations to address them are heavily focused on public funding/tax concessions and public awareness raising measures, which seem unlikely to be effective in addressing the profound structural changes that have been observed in any meaningful way.

Specifically, the ACCC is recommending 'stable and adequate' funding for public broadcasters, grants to support local journalism and tax incentives for philanthropic support of journalism and news subscriptions.

In terms of raising public awareness, the ACCC is proposing that the Government fund digital literacy resources for the community and make changes to the school curriculum. The ACCC also recommends that the ACMA should be tasked with monitoring digital platform initiatives to assist users to identify trustworthy news sources and that an industry code of conduct be established to handle complaints about inaccurate content (or content which is presented as news journalism, but is not).

What's next?

The key recommendations targeted at the media sector are of the 'wait and see' variety.

While the case is clear for the harmonisation of media regulation across delivery platforms, managing the expectations of stakeholders and developing and implementing a concrete proposal will inevitably be challenging for the Government.

Similarly, it remains to be seen whether the proposed codes to regulate the relationships between digital platforms and news media businesses will materially affect the value placed on news content in terms of enhancing the services offered by digital platforms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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