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01/03/18

“World first” inquiry Issues Paper on Digital Platforms released: News content in the spotlight

Following the Government’s announcement of the Digital Platforms Inquiry in December, on 26 February 2018 the ACCC released its paper seeking feedback on issues relevant to the Inquiry (Issues Paper).

Overall focus

The Issues Paper signals that the ACCC is considering historic and anticipated future trends in two key areas:

1. The impact of media companies’ reduced advertising revenue on the creation of news and journalistic content:

  • The ACCC is looking at whether the advertising revenues of “traditional media companies” is decreasing, and if that decreasing revenue impacts these companies’ ability to fund the production and distribution of news content.
  • The Issues Paper focuses on the extent to which advertisers “now prefer to use digital platforms rather than traditional media”, and whether that preference impacts the creation of news and journalistic content to consumers in Australia.
  • The ACCC is particularly interested in “news and journalistic content that is likely of most interest to Australian consumers, such as reporting and analysis of current events relating to Australia or where a particular Australian perspective is provided.”

2. The wider effects of digital platforms on the nature and consumption of news:

  • While the ACCC acknowledges the benefits of using data to customise products based on a specific consumer demand, it is interested in how digital platforms’ algorithms and collection of consumer data may impact the plurality of news and journalistic content presented to Australian consumers.
  • The ACCC recognises that the use of “big data” technologies can create more targeted services for advertisers, which in turn can create new or improved products. However it is exploring whether that big data use gives rise to competition and consumer concerns. This includes asking:
    • Do data-driven network effects and economies of scale give digital platforms an enduring competitive advantage?
    • Are there adequate levels of data protection and consumer privacy? and
    • Are consumers aware of the amount of data they provide to platforms, the value of that data, and how it is used?
  • The ACCC is also asking whether platforms’ use of algorithms results in a “filter bubble” effect, where consumers receive less exposure to new information or conflicting viewpoints. The IssuesPaper does however note that algorithms may improve accessibility and increase media diversity.

In order to analyse the concerns, the ACCC is considering if digital platforms have any market power, and if so whether they exercise that market power in commercial dealings with creators of journalistic content and advertisers.

Proposed line of inquiry

To explore the above questions and concerns, the ACCC is considering:

  • The market power issues stated in the Issues Paper through a traditional competition analysis. That is, it is looking at market definition, market shares, alternatives for substitution, and evidence of unconstrained behaviour in the market;
  • The non-market-power issues stated in the Issues Paper through in-depth analysis of the various stakeholder relationships, the terms and conditions that govern them, and the pros and cons of digital platforms for each stakeholder; and
  • Any other relevant issues, beyond those expressed in the Issues Paper, that interested parties may submit.

Timeline

The Inquiry’s key past and future dates that are known include:

  • 4 December 2017: Inquiry commenced
  • 26 February 2018: Issues Paper released
  • 3 April 2018: Due date for interested parties to respond to the matters outlined in the Issues Paper(including in written submissions)
  • May-June 2018: Public external engagement (dates and venues to be advised)
  • 3 December 2018: Due date for the ACCC to submit its preliminary report to the Treasurer
  • 3 June 2019: Due date for the ACCC to submit its final report to the Treasurer

Proposals for change

The Issues Paper highlights certain questions relating to proposals for regulatory change. In particular, it has called out whether:

  • Digital platforms should verify news and journalistic content;
  • Intellectual property laws apply to digital platforms, and if not, whether they should;
  • Regulations covering players in media and advertising services market should similarly cover digital platforms;
  • There should be industry codes to govern competition and consumer concerns; and
  • Existing regulations are sufficient.

The ACCC’s proposals will depend largely on the issues it finds during the Inquiry. It has emphasised that it is open to any possible solutions to issues that stakeholders may raise during the consultation process.

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