On 15 September 2023, the Competition Commission published the final Terms of Reference to initiate a market inquiry into the distribution of media content on digital platforms in South Africa, termed the Media and Digital Platforms Inquiry (the "MDPMI"). Initiated in response to growing concerns over the influence of digital platforms on traditional news media outlets in terms of threatening competition and the protection of consumers and independent journalism, the MDPMI could significantly reshape the South African media landscape.
SCOPE OF THE MDPMI
The MDPMI will cover a broad range of stakeholders, including (non-exhaustively):
- News publishers
- Broadcasters
- Local/community media
- Various digital platforms such as search engines, social media, and news aggregators (eg: Google News, Apple News)
- Video-sharing platforms
- Ad Tech companies
- Generative AI services
However, it excludes non-news publishers, including magazines and books, as well as app store fees and terms and conditions for South African news media-owned apps.
CONCERNS OF THE MDPMI
- Assess digital landscape trends
News media organisations rely heavily on platforms such as Google and Meta for referral traffic. However, these platforms often extract copyrighted news snippets for free, subsequently reducing/denying publishers both vital referral traffic and display advertising revenue.
- Ensure fair competition
The Commission's view is that particular market dynamics within the digital platforms distributing news media content impede competition or run counter to the objectives of the Competition Act, 1998 (as amended) (the "Act"). The MDPMI will evaluate the market features affecting competition, including the impact of quality and consumer choice of South African news media and the impact on small and medium-sized news organisations or those owned by historically disadvantaged persons.
- Examine the impact on news media organisations' revenue
Google and Meta's alleged dominance extends to digital advertising and the Ad Tech supply chain, which is used for the buying and selling of display advertising on websites and mobile applications. This can result in news publishers receiving a lower share of advertising revenue than they would in a competitive market.
- Assess generative AI's influence
The Commission highlighted concerns that stem from a new wave of generative AI, which can answer user queries directly, potentially siphoning traffic from news publishers' websites. Further concerns about using news publishers' content to train these AI systems without authorisation or compensation have also emerged. AI models are therefore set to be investigated by the MDPMI in order to safeguard competition and reduce public interest harm to news media businesses by implementing appropriate remedies. The MDPMI will also consider how algorithms used by digital platforms to rank news items can favour established media companies, potentially harming competition from smaller or more diverse media organisations.
- Consumer data control
Digital platforms also control access to valuable consumer data, preventing news organisations from fully understanding and serving their audiences. Additionally, frequent changes in algorithms further disrupt publisher visibility and referral traffic.
- Address legal disparities
Existing laws and regulations that apply to traditional media businesses may not apply at all or are disproportionately applied to digital platforms despite both performing identical/similar functions.
REMEDIAL ACTION
The inquiry will determine appropriate remedies where any adverse effect on competition or the purposes of the Act are found. In this regard, the MDPMI may be seen as an attempt to expand the powers of the Commission beyond those specifically mandated in the market inquiry section of the Act, which only tasks the Commission with assessing market features that hinder competition and not whether they undermine the Act's purpose. Several commentators criticised the Commission during the online intermediation platform market inquiry for attempting to go beyond its powers, and the Commission may be opening itself up to further criticism here.
TIMELINE AND IMPACT
The MDPMI is set to commence within 20 business days from publication of the final terms of reference, 13 October 2023 and the final report is expected to be delivered in 18 months.
CONCLUSION
The MDPMI is a comprehensive effort to scrutinise the complex dynamics between digital platforms and traditional news media. With implications for policy, competition, and revenue models, this inquiry could serve as a pivotal moment for reshaping South Africa's media landscape.
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