Study highlights digital giants’ effect on publishing industry, could offer blueprint for Canada
Toronto Star19 Aug 2019TONY WONG TECHNOLOGY REPORTER
Australia is taking on the digital behemoths of Facebook and Google, while the rest of the world watches closely. But will Canada follow?
After an 18-month landmark study, the final report from the Australian Competition and Consumer Commission on regulating big platforms and encouraging media competition was released in July. It didn’t get a lot of attention outside the country initially, but it is a watershed moment for consumers in the digital era as global regulators are examining whether it provides a blueprint for the future.
It is one of the first instances where an independent regulator is looking at antitrust and competition law through the lens of consumer protection regarding digital platforms and the publishing industry.
Google and Facebook are responsible for more than 70 per cent of all digital advertising, with traditional publishers and others struggling for the remaining piece of the market. That has left a hole in local news, not just in Australia, but in other countries including Canada.
“This is the first time we’ve seen really a credible, independent, non-industry panel really examine the media implications and what it will cost the economy,” says John Hinds, CEO of News Media Canada, which represents Canadian newspapers.
“This isn’t something that can be regarded as a partisan report by the industry or something that is politicized,” Hinds said. “It’s looking at how the big platforms are affecting consumers and the economy through a very practical lens.”
The sweeping 632-page report comes with 23 recommendations, including methods to ensure there is enough competition in the market, to determine if there is sufficient transparency in the prices charged for advertising and to require platforms to develop a code of conduct to make sure news businesses are treated fairly. News businesses would also be given notifications about any changes to algorithms that would affect news rankings on websites.
Other recommendations include taxpayer funding for local news and allowing donations for non-profit organizations engaging in public interest journalism to be tax deductible. The digital platforms have three months to respond to the report. The Australian government has said it will have a response to the report by the end of the year.
A spokesperson for the Canadian Competition Bureau said the bureau was aware of the Australian initiative to investigate digital platforms, but would not confirm whether it was considering a similar study.
“As you know, the bureau closely follows the developments of investigations by our international counterparts while remaining mindful of the different legal regimes in each jurisdiction,” said spokesperson Jayme Albert in a statement to the Star. “The bureau continues to closely monitor firms in the digital economy to ensure they do not engage in anti-competitive conduct.”
Local news has become an endangered species, with many smaller newspapers disappearing in the face of digital disruption. New York Times executive editor Dean Baquet said “the greatest crisis in American journalism is the death of local news” at an International News Media Association (INMA) conference. Baquet predicted that “most local newspapers in America are going to die in the next five years, except for the ones that have been bought by a billionaire.”
INMA, whose board of directors includes Torstar publisher John Boynton, considers and shares global strategies for media growth.
A study released in June by the organization found that Google alone made $4.7 billion (U.S.) in 2018 from publishers through advertising linked to its search engine.
Google has denied that figure, but there’s no doubt that the search engine along with Facebook takes the lion’s share of the digital advertising market.
Big tech has been under major regulatory scrutiny this year, not just for the impact on legacy media, but on privacy and antitrust issues.
Facebook was recently fined $5 billion by the U.S. Federal Trade Commission over privacy breaches in the Cambridge Analytica scandal. The U.S. Justice Department has also launched a sweeping antitrust investigation into the platforms, and the European Commission in July said it was launching an antitrust investigation into the activities of Amazon. Lawmakers in the U.S. have introduced bipartisan legislation (the Journalism Competition and Preservation Act) looking at how the newspaper industry can reach an agreement with the platforms for a share of the advertising revenue, giving them a four-year window to come up with a deal.
But while the European Union and the U.S. have launched aggressive investigations into the big digital platforms, other countries, including Canada, have taken more of a wait-and-see approach. Part of the reasoning may have been that the bigger jurisdictions have greater resources to deal with the world’s biggest companies.
Not so for Australia. The country of 25 million, compared to Canada’s 37 million, is not only less populated, but has a smaller economy (13th largest in the world by GDP, compared to Canada’s, which is 10th). But it has decided to tackle the issue head on.
“Australia, like Canada, are commodity-based economies with large land masses that are facing similar issues in regard to disruption,” said Mihkel Tombak, Hatch professor of technology management and strategy at the University of Toronto and an antitrust expert.
“Canada, though, has historically been more passive and sometimes waiting for other people to take the lead. This could either be a lack of self-confidence, or maybe it’s the smart thing to do. Let them experiment first and see what works.”
Albert said the Canadian Competition Bureau was “unable to confirm” whether it was investigating “any specific matters with regard to the publishing industry, as the Bureau is required by law to conduct work confidentially.”
News Media Canada’s Hinds says he has been in touch with the bureau to try and arrange a meeting to determine next steps.
“A lot of the discussion around media is about democracy and privacy. But the Competition Bureau can look at the issue through the lens of a tangible economic perspective and that’s certainly what we want,” Hinds said. “What the Australian example is telling us is that while everyone is looking for a silver bullet, this is an incredibly complex issue that requires a multi-faceted approach.”
What the Australian Competition Bureau didn’t do was recommend the breakup of the large platforms, although it did recommended changes that would force companies to inform regulators about the impact mergers would have on competition.
“You don’t necessarily want to discourage them from innovating or growing bigger, but what you want to do is to stop them from behaving badly so it stops other people from growing and innovating,” U of T’s Tombak said. “But the important thing is that the Australians are taking this very seriously.”
One way to regulate transnational companies with global reach might be the formation of an international competition authority, similar to the World Trade Organization, Tombak said.
“It’s been talked about before. But maybe now is the time, given the rise of these major digital platforms, that you need a competition regulator with more clout.”
In July, competition authorities of the G7 countries and the European Commission released a common understanding agreement highlighting challenges faced by regulators in the digital economy. It’s not quite the formation of a transnational competition bureau, but it’s a recognition that more needs to be done.