Social media giants accused of abusing market power

by Don Groves

Here is a summary of some of the submissions to the Australian Competition and Consumer Commission (ACCC) digital platforms inquiry.

Facebook and Google are abusing their monopoly powers, which negatively impacts traditional media and harms consumers, are spreading misinformation and are not preventing the misuse or theft of users' data, according to some submissions to the ACCC.

News Corp Australia told the inquiry the digital platforms are subverting access to online subscription and advertising revenues, 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."

News also noted the growth in the "rapid spread of misinformation, as there is less oversight and fact-checking of information published and disseminated on digital platforms."

Seven West Media (SWM) urged regulators to investigate and shine a light on the behaviour of the social media giants in data collection following the Cambridge Analytica scandal which embroiled Facebook.

Unconstrained by competitors; countervailing customer/buyer power; and regulation, Google and Facebook use their market power in their respective markets to engage in conduct which negatively impacts traditional media, and which harm consumers," SWM said.

SWM said the ACCC should consider whether the existing regulatory regime is "sufficient to protect the interests of users, to maintain competition in associated markets and to constrain undue influence and power being exerted over businesses and government."

The Australian Communications and Media Authority said the potential for platforms to harvest data about non-users requires further examination, as does the question of whether depersonalisation of data - so that the individual is no longer identifiable - is adequately addressed by existing privacy laws.

In its submission Foxtel said the free but unauthorised availability of Foxtel and Fox Sports' content on digital platforms is undermining subscription revenue, contributing to churn and threatening the economics of content production.

Whole series of programs created by Foxtel and Fox Sports at considerable cost as well as content such as NFL matches and V8 Supercars are freely available on YouTube and/or Facebook, which monetise this content through the insertion or display of pre-roll advertising.

However appeals by Foxtel to YouTube to take down infringing videos have had no effect as YouTube has failed to terminate the infringing user's account.

"If media companies are unable to monetise the content they create or licence, whether through subscription or advertising revenue, it is inevitable that decisions will be made to no longer commission or acquire that content."

In an Op-Ed piece for the company's newspapers, News Corp executive chairman Michael Miller said the business model for the news industry is now in a fragile state, with the digital platforms preventing publishers from best positioning their operations for the future.

News Corp's submission details how the platforms' market power has made them "unavoidable trading partners" for publishers which are, in effect, trapped and hurt by their anti-competitive practices.

In Australia, Google has 95% of the search engine market and 50 % of the mobile device operating system market while Facebook has 80% of the social media market and Apple around 40% of the mobile device market.

"As publishers transition to digital, platforms are increasingly using this dominance to stop publishers competing on their merits," Miller wrote.

"They can decide what you see, when you see it, what you don't see, what they know about you, the prices advertisers pay, where ads appear, and make or break businesses - with too little recourse for those affected."

"The potential to damage creation, distribution and consumption of news and cause widespread consumer harm is profound."

On behalf of Australia's screen production businesses Screen Producers Australia (SPA) asserted that Google and Facebook's influence in the advertising market has affected the market for content.

SPA referred to a market failure where buyers seeking are 'more for less' from producers, combined with the increasing trend to in-house production at the free-to-air broadcasters.

SPA called on the federal government to intervene in the market to address competition issues through a UK-style legislated terms of trade and to extend local content obligations to new market entrants.

The ACCC will provide a preliminary report to the Treasurer by December 3 2018 and a final report by June 3 2019.