SA could soon become the latest in a string of countries to impose hefty compensation measures on Big Tech, aiming to balance the scales and support local media owners relegated to fringes by the unchecked rise of US tech giants.
On Monday, the Competition Commission’s media and digital platforms market inquiry released a series of findings against tech giants Google, Meta (Facebook), Microsoft, OpenAI, X (formerly Twitter) and TikTok.
A recommendation that Google should compensate them with R300m to R500m annually for a three- to five-year period could boost SA’s ailing traditional media houses, whose revenues have dried up over the past decade due to the rise of technology platforms and shifting consumer behaviour.
The inquiry, initiated in October 2023, was designed to examine the effects of digital platforms such as X, Facebook and Google on the distribution and monetisation of media content, and whether they used anticompetitive or harmful practices that needed to be addressed.
“There are market features on digital platforms that distribute news media content that impede, distort or restrict competition, or undermine the purposes of the [Competition] Act and which have material implications for the news media sector of SA,” the commission said.
To address these issues, it proposed several remedies, including a requirement for Google to compensate SA’s news media houses with R300m to R500m annually for a three- to five-year period.
Other remedies to address the imbalance are the removal of search bias in favour of foreign media and YouTube and the promotion of vernacular and community media.
These digital platforms do not produce news themselves and cannot replace journalism’s role.
— Competition Commission
Local authorities may face challenges in enforcing these rules if they come into effect. A recent measure in Australia, in effect since January, forces tech firms with Australian-based revenues in excess of $160m to pay for content or risk hefty tax bills. Such taxes will be waived if companies voluntarily strike deals with Australian media firms. However, Meta, the Facebook and WhatsApp owner, has suggested it will not renew such deals when they expire, saying news makes up a tiny portion of its traffic.
In Canada and California, Meta and Google have chosen to remove links and block news-related content to avoid paying media companies. In addition, Meta is to stop “deprioritising news on the Facebook feed to restore referral traffic to the media from its peak with at least a 100% increase in referral traffic”. Meta and X are “to cease deprioritising news posts with links in the user feed”.
YouTube, owned by Google, should improve the ability of the media and broadcasters, including the SABC, “to monetise their content on its platform through increases in the revenue share to 70% and active promotion of higher value direct sales by the media”, the commission said.
Financial challenges
In SA, the financial challenges to commercial and community media as well as the public broadcaster have led to shrinking newsrooms, closed bureaus and news deserts outside the metros, the commission said.
“There is limited scope in SA for the majority to pay for news and subscription models are not an option for the public and community media. This threatens access to news and media diversity,” it said.
“While there are challenges that the media must face from the disruptive effect of digitalisation, the inquiry provisionally finds that these challenges are exacerbated by the conduct of platforms that hinder the ability of the news media to secure and monetise digital traffic. These digital platforms do not produce news themselves and cannot replace journalism’s role.”
A number of media houses have announced retrenchments to cope with the loss of advertising revenue, particularly for legacy businesses. Associated Media Publishing, which ran titles such as Cosmopolitan, has shut its doors, while Media24 closed the print editions of five newspapers, transitioning three of them into digital-only brands and putting hundreds of jobs on the line. Last September, Daily Maverick announced it would begin a cost-reduction exercise, aiming to cut about 15% of operating costs.
In the same month, Independent Media — owner of publications such as The Star, Cape Times and Isolezwe — announced retrenchments, citing substantially the same reasons as Daily Maverick about an unsustainable media industry.
Much of this has been attributed to the shift in the consumption of digital news sources as a result of smartphones and more affordable access to the internet.
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