Opinion

Be careful what you wish for – the ACCC’s digital platforms proposals could bite Australian advertisers and publishers

Australian ad industry and media outlets have praised the ACCC's criticism of Facebook and Google in the interim digital platforms review, but Mumbrella's Paul Wallbank says a careful reading of the reports shows there could be more to the story.

Despite the ACCC’s interim report into digital platforms being met with almost universal acclaim from Australia’s marketing and media industries, a closer reading shows the local industry may not be completely delighted if the regulator gets its way.

ACCC chair, Rod Sims, speaking at a Sydney media conference after releasing the interim report

The ACCC’s proposals would see a new super-regulator for the ad industry along with changes which would affect big and small publishers.

In the regulator recommendation, the ACCC is proposing wide-ranging powers to monitor the behaviour of digital platforms, not just for Facebook and Google, but for any business generating $100m per annum from digital advertising.

The report says:

The regulatory authority could consider the digital platform’s criteria, commercial arrangements and other circumstances which impact competition between advertisers, suppliers of advertising services and digital platforms. This may include:

  • the ranking and display of advertisements and also organic content (when advertisements are displayed alongside the organic content)
  • whether the acquisition of any other product or service from the same digital platform (or a related business) affects the display or ranking of advertisements or content
  • the impact of any related business of a digital platform (e.g. how referral links appear in the search engine results page or social media news feed).

The relevant digital platforms would need to be obliged to provide information and documents to the regulatory authority on a regular basis, and the regulatory authority would need appropriate investigative powers. The regulatory authority could have the power to investigate complaints, initiate its own investigations, make referrals to other government agencies and to publish reports and make recommendations.

This could turn out to capture all of Australia’s media companies, particularly as streaming services and addressable TV become serious revenue generators.

In the gleeful rush to applaud the ACCC in making some threatening noises toward Facebook and Google, the industry seems to have overlooked that the regulator is making a fairly substantial power grab over the industry.

It’s hard to see how any media company would be happy providing ‘information and documents’ about their internal workings to the ACCC.

At the media conference discussing the report, ACCC boss Rod Sims laid out how suitable his agency was for this role.

Sims said: “As the regulator for competition and consumers, the ACCC is well placed to address the complex issues that arise from the meteoric rise of the platforms.”

Along with proposing a regulator to watch larger media companies and advertisers, there’s also some bad news for Australia’s smaller publishers.

First, Sims flagged the ACCC’s focus in protecting publishers would be on print outlets, saying: “The dominant way Australia deals with public good issues in journalism and the media is by funding the ABC, and we have TV and radio that get subsidised spectrum – they may dispute that, but it is subsidised – but there’s nothing there for print and we just want to think about this issue and we want to kickstart print subscription.,”

While this is understandable given print advertising revenues are the most affected by the rise of digital advertising, Sims’ view is at odds with his agency’s own rationale for not opposing the Nine-Fairfax merger despite competition concerns.

A diagram from the ACCC report illustrating changing Australian ad spend share since 1996

“This merger can be seen to reduce the number of companies intensely focusing on Australian news from five to four. Post the merger, only Nine-Fairfax, News/Sky, Seven West Media and the ABC/SBS will employ a large number of journalists focussed on news creation and dissemination,” Sims said said when announcing the ACCC would not oppose Nine’s buyout of Fairfax.

“With the growth in online news, however, many other players, albeit smaller, now provide some degree of competitive constraint. These include, for example, The Guardian, The New Daily, Buzzfeed, Crikey and The Daily Mail.”

All of the alternative outlets cited by the ACCC as news competitors to a merged Nine-Fairfax are predominantly online platforms – or indeed online only – not print.

But despite lauding these digital news outlets when allowing the Nine-Fairfax merger through, this week Sims took aim at the problematic practices of some online players.

“Media businesses are fierce competitors for exclusive content, which is generally produced by journalists investigating tip-offs, doing research and speaking with a range of people to get their stories,” said Sims.

“Media businesses are concerned digital platforms don’t always recognise original content from the original source in their ranking and their displaying of news online.

“This reduces value for the news businesses that have invested a lot of money and time to create content. Journalists may work many days or weeks to break an exclusive online story and a competitor can quickly reproduce that story, post it on a rival site which, due to the reach of the original platforms, may draw traffic away from the original source of the story.”

Along with an implied focus on print, the interim report also suggested a review of the oft-delayed Small and Regional Publishers Innovation scheme, despite the program having not been launched yet.

A review of the impacts of the measures comprising the Regional and Small Publishers’ Jobs and Innovation Package in 2018–19 to determine whether the Package should be continued beyond its current three year funding profile (and potentially modified or expanded).

Even the good news on allowing tax deductions for subscriptions is tempered, with the ACCC focusing on the risk of ‘misappropriation or fraud’:

(b) Tax offsets for the costs incurred by news media organisations to produce particular types of journalism that have high public benefits and are at risk of under-production. The ACCC recognises the difficulties in determining the scope of such a subsidy and the risk of misappropriation or fraud.

That such a scheme would come to life with the regulator and government worrying about fraud, echoes the problems the start-up sector is encountering with the federal government’s R&D concession that has seen hundreds of startups having payouts under the scheme clawed back as the ATO retrospectively tightens its rules.

Added to the complexities Sims is hinting at, the regulator is also proposing ACMA takes on the workload of developing and enforcing what would effectively become a mandatory industry code of practice:

(c) Making personal subscriptions for publications by media businesses that are signatories to a registered ACMA code of practice, as set out in the potential proposal described above, tax deductible to encourage production and consumption of news and journalism.

ƒSo while there’s much for media companies to cheer in the ACCC report, there’s much that should worry them too.

However, ultimately it probably doesn’t matter. The final report is still nearly seven months away and much will change in that time.

One change will probably be that Australia will have a new government, possibly with its own Senate headaches like the one that gave rise to this inquiry. So it’s fair to guess many of the ACCC’s proposals will never get to become reality.

Which may suit Australia’s media industry just fine.

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