Media and digital platforms inquiry findings rebalance markets

THE socio-economic gains of South Africa’s young democracy must at all costs be preserved, if not solidified. To achieve this, South Africans must be unapologetic about protecting their freedoms as enshrined in the supreme law of the Republic, the Constitution. One of these freedoms is the freedom of the press and other media.

 It is for this reason that the Competition Commission relentlessly invoked section 43B(1)(a) of the Competition Act 89 of 1998 (as amended) and initiated the Media and Digital Platforms Market Inquiry or MDPMI for short.

The Commission initiated this Inquiry in October 2023, because we strongly believed that there exist market features in digital platforms that distribute news media content, the AdTech markets that facilitate digital advertising and the AI services that use and display news media content, which impedes, distort or restrict competition, or undermine the purposes of the Act, and which have material implications for the news media sector of South Africa.

This includes features that adversely affect consumer choice, media diversity and media organisations that are small medium enterprises (“SMEs”) or owned by historically disadvantaged persons (“HDPs”). 

In keeping with the ethos of accountability and transparency, the Competition Commission recently released its final report on the Media and Digital Platforms Market Inquiry.

The final report outlines the MDPMI’s findings and includes binding remedial actions. The findings are based on 24 months of extensive engagement with affected stakeholders, evidence gathering through public and confidential hearings, expert submissions, a consumer survey, and the outcomes of focus group discussions, amongst others.

Why is this inquiry so important? News media is essential for democracy because it serves as the cornerstone of public accountability and informed citizens. 

Yet, the global transition to digital platforms has severely undermined traditional revenue models and has eroded the financial positions of news media. That’s why the MDPMI’s recently released final report represents a landmark step toward rebalancing digital markets, protecting fair competition, and rebuilding the long-term sustainability of South Africa’s news media.

We’ve divided the report into the following four sections: search and news, social media, generative artificial intelligence, and digital advertising technology. Under each of these sections, we have listed several findings as well as remedies. Let me unpack some of the key findings and remedies under each of these sections.

First, in terms of search and news, the Commission found that the Google algorithm distorts competition between news media organisations because it over-represents global news media in South Africa for search and top stories, and under-represents vernacular and community media. 

We need to keep in mind that Google has a monopoly position in this sector and media outlets have an unequal bargaining position. This means that there has not been an equitable share of value between Google and news publishers in South Africa both historically and currently. This inequity has materially contributed to the erosion of the media in SA, distorts competition for news content distribution and monetisation, and has caused competition for advertising revenue and consumer data to be imbalanced. 

This will all continue unless remedied. Therefore, the Commission has sought to reach agreement with the search engine on the way forward where it can, but on the basis that the remedies do address the harm identified.

Importantly, in remedy design, the Commission focused on ensuring the greater long-term sustainability of the media in its relationship with search whilst ensuring fairer short-term value exchange. 

Central to these outcomes is a R688 million Media Support Package agreed with Google and YouTube, which will fund national, community, and vernacular media through a combination of content licensing, innovation grants, and capacity-building initiatives. 

This includes support for newsroom innovation, contributions to the Digital News Transformation Fund, and funding for vernacular-language training through the Media Development & Diversity Agency (MDDA).

The vernacular training with MDDA is one of the various initiatives under the package. Google will also introduce new user tools to prioritise local news sources, provide technical assistance to improve website performance, share enhanced audience data, and establish an African News Innovation Forum. Microsoft, in turn, will extend its MSN news contracts to include five additional national publishers.

Second, when examining social media, the Commission looked at platforms such as YouTube, X, TikTok, and Meta’s Facebook. Algorithmic preferencing of sensational content also came under the spotlight. YouTube has considerable market power as an aggregator of long-form video content where users go to search and view video content. 

YouTube’s market position results in an inequitable bargaining outcome as news media need to place their content on YouTube to reach the audience and monetisation must happen on the platform which is where the videos are viewed but YouTube determines who is eligible for sharing in ad revenue.

YouTube has set criteria for this at levels which exclude most of the small independent and community media and do not offer support for onboarding. In 2021 specifically, there was a shift on Facebook with the algorithm deprecating posts with links to keep users on the platform. 

Traditionally, media had relied on those link clicks to drive traffic to their own websites generating ad revenue. The Commission found this change in algorithm has resulted in a substantial decrease in the media’s reach into its followers and referral traffic from Facebook, worsening the precarious financial position of the media, and undermining consumer choice. 

X has also followed suit with a similar change in algorithm and because it does not offer all of its monetisation tools in South Africa, it has excluded most of the media from any monetisation on its platform.

Finally, TikTok does not offer all of its monetisation tools in the country which means there are limits placed on the ability of the news media to monetise their content on the platform. 

The incentive to drive engagement on social media has resulted in the promotion by the social media algorithms of more sensationalist and provocative content. This algorithmic bias distorts competition on the platform for selection and ranking, placing the news media at a disadvantage given their focus on credible news reporting.

It also undermines efforts to counter the negative impact of misinformation with credible news content, as credible news is surfaced less in the feed. The news media also bears a cost of fact-checking misinformation spread on social media.

Meta will thus create a Media Liaison Office in South Africa and expand monetisation access through workshops, ad credits, and the removal of follower thresholds. YouTube will offer automatic access for all South African media to its Partner Programme and support the SABC with direct ad sales and archive digitisation.

 TikTok will roll out its Publisher Support Suite in South Africa, including monetisation and analytics tools, while X Corp will make all monetisation programmes available locally and provide training workshops. All platforms will implement digital literacy initiatives to strengthen media resilience and counter misinformation.

The third and fourth sections of the MDPMI report focuses on generative artificial intelligence (AI) and advertising technology. The inquiry found that the unfair use of news media content to train and ground AI chatbots has had an adverse effect on competition. 

Whilst larger news providers have opted out of AI crawlers, most smaller media are not able to do so. This harms the quality and diversity of media, along with the plurality of voices and the ability for citizens to get news in their home language.

Remedies in AdTech and AI will align South Africa with leading global standards. Google will extend transparency measures from the EU, improving visibility into advertising costs and publisher payments, and will remove self-preferencing practices within its ad systems. AI companies will offer South African media the same content controls and opt-out mechanisms available in the EU, alongside biannual training to support the development of a fair and functioning market for licensed content.

The final report and these remedies represent a landmark step toward rebalancing digital markets, protecting fair competition, and rebuilding the long-term sustainability of South Africa’s news media. 

A healthy, independent, and diverse press is essential to democracy, and collective action, equitable regulation, and platform accountability are vital to safeguarding that principle for the digital future.

More information about the remedies is available in the full report on our website at www.compcom.co.za

Makunga is the spokesperson for the Competition Commission of South Africa