About this review

As part of the deal to get the media law reforms through through the Senate in September, the government agreed to an inquiry into Google and Facebook and other digital platforms.

The Government subsequently directed the ACCC to commence the inquiry in December 2018, looking at the effect 'digital search engines, social media platforms and other digital content aggregation platforms are having on competition in media and advertising services markets'.

An issues paper was released on 26 February 2018, followed by a round of public submissions and public engagement.

A preliminary report was submitted 3 December 2018 and published on 10 December 2018. Further submissions and consultation followed.

The final report was delivered to the Treasurer on 30 June 2019 and released to the public on 26 July 2019.

On 1 August 2019 a consultation on the final report was opened by Treasury. Following a submission period (1 August - 12 September) Treasury, the AG’s Department and Department of Communications and the Arts held targeted consultation meetings. See separate consultation page.

A formal government response was released on 12 December 2019 and is available here: Government Response and Implementation Roadmap for the Digital Platforms Inquiry (Australian Government, 12 December 2019).

Provided to Government on 3 December 2018.

The ACCC provided its preliminary report to government on 3 December 2018 and it was published on 10 December 2018.

• View ACCC media release

• View Preliminary Report (375 pages)

For further details about the preliminary report, including the preliminary recommendations, see the Preliminary report page.

Released 26 February 2017.

Submissions were due by 3 April 2017.

View  Issues paper.

Key sections and questions for stakeholders are reproduced below under the following section headings:

• Scope of inquiry

• Industry overview

• Questions to stakeholders

Scope of inquiry

The first section of the Issues Paper addresses the scope of the inquiry.

It begins by exploring the key terms used in the Terms of Reference:

Digital platforms (platform services)

‘Platform services’ are described in the Terms of Reference as ‘digital search engines, social media platforms and other digital content aggregation platforms’ (also referred to as ‘digital platforms’ in this Issues Paper).

The ACCC considers that relevant digital platforms for this Inquiry are those that may impact on competition in media and advertising services markets, particularly in relation to the supply of news and journalistic content. Practically, this may include digital platforms that provide media content, social interaction or search functionality (or some combination of these) to attract consumers to the platform and then sell ‘access’ to these consumers to advertisers. Google, Facebook, Instagram, Twitter, Snapchat, Apple News are examples of such platforms

Two questions follow:

1.1. Which digital platforms do you consider to be relevant to this Inquiry?

1.2. Should the Inquiry consider digital platforms that do not currently provide access to news and journalistic content in Australia but may either provide news and journalistic content in the future and/or have an impact in relevant markets (e.g. Amazon,1 instant messaging applications)?

‘News and journalistic content’

The Inquiry is directed at the impact of digital platforms on the state of competition in media and advertising services markets, ‘in particular in relation to the supply of news and journalistic content’. It will be important to consider how broadly the nature and scope of news and journalistic content should be defined. The ACCC will consider both well-established news providers and publishers as well as newer online-only suppliers of news and journalistic content, including podcasts. Specialist news suppliers (e.g. providers of science news or technology news) and opinion-led blogs and commentary as well as general news suppliers may also be relevant.

The Inquiry will examine the supply of news and journalistic content to consumers in Australia. This means that the Inquiry will focus on the 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. While this focus does not limit the Inquiry to Australian news and journalistic content, it does mean the Inquiry will pay particular attention to Australian news content or perspectives produced by Australian and international publishers and broadcasters.

Two questions follow:

1.3. What ‘news and journalistic content’ is particularly relevant to this inquiry? Should the ACCC consider a broad range of specialist suppliers of news and journalistic content?

1.4. Should the Inquiry focus on news and journalistic content supplied to consumers in Australia or news and journalistic content produced in Australia?

‘Choice and quality’

The Terms of Reference require the ACCC to take into account the impact of platform service providers on ‘the level of choice and quality’ of news and journalistic content supplied to consumers. As discussed in section 2 below, the availability of pluralistic and high-quality news content benefits society as a whole.

Media choice and diversity can be measured in a number of ways. Important indicators include the number of independent media voices present in the relevant region and the range and diversity of perspectives typically covered by those media voices. Digitalisation clearly has the potential to increase the choices of news and journalistic content available to Australian consumers, although established news providers still account for a significant share of online news consumption. However, also relevant to this Inquiry is the extent to which digital platforms impact the diversity of news and journalistic content supplied to consumers, including through the platforms’ algorithmic selection of news stories.

The ACCC considers that the ‘quality’ of the news and journalistic content available refers to the extent to which the content produced exhibits characteristics such as objectivity and accuracy and performs functions such as analysis and investigation. Factors impacting quality might include the funds available for investment in news gathering and reporting and the level of competition between news providers.

In addition to choice and quality, a number of related issues such as journalistic and editorial integrity, access to local content, and promoting Australian culture may also be relevant to this Inquiry. These issues will be considered to the extent that they have arisen due to the competitive impact of digital platforms on the media and advertising markets.

Two questions follow

1.5. What are appropriate metrics for measuring the choice and quality of news and journalistic content?

1.6. Are there any other issues relevant to the choice and quality of news and journalistic content that should be considered by the ACCC?

‘Media and advertising services’

The focus of the Inquiry is on the impact of digital platforms on the state of competition in ‘media and advertising services markets, in particular in relation to the supply of news and journalistic content’.

Media

The ACCC’s preliminary view is that the Inquiry should focus on the media markets involved in the supply of news and journalistic content. Media content which is far removed from news and current events, produced solely to entertain rather than inform consumers is unlikely to be a focus of this Inquiry. However, the ACCC recognises that the line to be drawn between news and journalistic content and other media content will not always be clear.

Advertising services

The Inquiry will also explore the impact of digital platforms on competition in the supply of advertising services. Compared to traditional advertising channels (e.g. newspaper, TV, radio), digital platforms provide advertisers with significant reach and greater precision in targeting consumers with particular interests or purchasing patterns. Advertising has consequently become much more efficient. However, there are currently only a few platforms with the scale and data access to offer such services. A key issue for competition in the supply of advertising services is the alternatives available to advertisers. These alternatives depend on the type of advertising (e.g. classified, display), the target audiences and the ability to target particular consumer groups.

Industry overview

The second section of the report provides an industry overview and identifies some areas of potential concern.

Questions to stakeholders

Section 3 of the issues paper sets out questions to stakeholders additional to those relating to the scope of the inquiry. Stakeholders are encouraged to make submissions on questions relevant to them - submissions are not expected or required to cover each question.

Assessing the market power of digital platforms

The Terms of Reference require the Inquiry to consider the extent to which digital platforms are exercising market power in commercial dealings with the creators of journalistic content and advertisers.

To consider this issue, it is necessary to assess the degree of market power of digital platforms (if any), identify any sources of that market power, and identify those most at risk from the exercise of any market power.

Central to this assessment is the recognition that digital platforms provide services to different types of users (e.g. consumers seeking to search the internet and advertisers seeking to reach an audience) and that the demand for the use of a platform by the different types of users can be interdependent (e.g. the value of a search engine to advertisers can depend on the number and type of consumers who use it). This interdependence can lead to different types of network effects for one or more groups of users (e.g. the more users on a social media network increases the value of that network for other users as well as for advertisers).

Network effects can benefit established digital platforms by entrenching their market position and raising barriers to entry for new entrants who have not yet acquired a critical mass of users. Barriers to entry may also be heightened by steps taken by digital platforms such as contract terms that seek to prevent new entrants from accessing users in established networks or the acquisition of potential rivals. 36 The ACCC seeks views on issues relevant to assessing the market power of digital platforms in relation to relevant groups of users including consumers, advertisers, and media content creators. The ACCC also seeks views on whether specific steps taken by digital platform may raise barriers of entry in any relevant market.

3.1. What are the relevant media and advertising services markets for this Inquiry? Who are the key market participants?

3.2. What are the relevant markets for assessing the market power of digital platforms? Who do digital platforms compete with?

3.3. How should the market power of digital platforms be assessed? What are appropriate metrics for measuring any market power (e.g. market concentration, profits, prices, number of users, access to user data)?

3.4. Do digital platforms have market power? If so, which digital platforms and in which markets? In particular:

(a) What realistic alternatives are available to users (i.e. consumers, advertisers and media content creators) of digital platforms? Do these alternatives effectively constrain the behaviour of digital platforms?

(b) Do users use multiple digital platforms for similar functions? Do you have any evidence or observations on switching between platforms or the growth of new platforms?

(c) What difficulties do users encounter in switching between platforms? Do digital platforms engage in behaviour that makes switching between platforms more costly or more difficult for users?

(d) Does increasing the number of users increase the attractiveness of that digital platform for other users? Does this mean that it is only viable for one or two digital platforms providing a similar service to consumers to operate at the one time?

(e) What difficulties are faced by providers in establishing competing platforms? Does the threat of new entry limit the market power of digital platforms? Over what timeframe should the threat of new entry be assessed?

(f) Are there examples where digital platforms have engaged in behaviours that indicate the exercise of market power? What types of users are most at risk from any exercise of market power by digital platforms?

3.5. Do digital platforms engage in any behaviour that enhances their market position by excluding competitors or potential competitors, e.g. through the acquisition of rivals or restrictive contract terms?

Implications for media content creators, advertisers and consumers

The Inquiry is required to consider the impact of digital platforms on the state of competition in media and advertising services markets. In the following questions, the ACCC seeks input into how these markets have been affected by digital platforms and the resulting implications for media content creators, advertisers and consumers.

Implications for media content creators (journalists and media organisations)

3.6. Describe the nature of any impacts (positive and negative) that digital platforms are having on media content creators? What causes these impacts? Are these impacts temporary or ongoing?

3.7. What are the advantages and disadvantages for media content creators of using digital platforms to publish or distribute their content?

3.8. What terms and conditions do digital platforms offer media content creators to publish or distribute their content? How do they differ from those offered by other distributors of media content? Do digital platforms offer different terms to different media content creators?

3.9. Have digital platforms changed the price, quality or choice of media content for Australian consumers? If so, what are the implications of this for media content creators? For example, how easily can media content creators offer access to subscriber only content via digital platforms and how readily can they obtain brand attribution for content accessed via digital platforms?

3.10. Do digital platforms have access to user data that is helpful to media content creators (e.g. readership statistics)? Does this access to user data create any information asymmetry between digital platforms and media content creators and, if so, how does this impact competition in the relevant markets?

3.11. If so, how much do media content creators value access to such user data? How does the access to or control over user data impact the relationship between digital platforms and media content creators? For instance, how transparent are digital platforms about how content reaches consumers via their algorithms and how much notice do media content creators receive when significant changes are made?

3.12. How important are digital platforms in delivering audience (and revenue) to media content creators relative to total audience and revenue?

 

Implications for advertisers

3.13. Describe the nature of the impacts (positive and negative) that digital platforms are having on advertisers? What causes these impacts? Are these impacts temporary or ongoing?

3.14. What are the advantages and disadvantages of using advertising services offered by digital platforms for advertisers (i.e. advertising agencies and businesses directly advertising on digital platforms)?

3.15. What terms and conditions do digital platforms offer advertisers? How do they differ from those offered by other suppliers of advertising services? Have digital platforms changed the price, quality or choice for advertisers? If so, what are the implications of this for advertisers?

3.16. Do digital platforms have access to user data that is helpful to advertisers (e.g. return on investment statistics)? Does this access to user data create any information asymmetry between digital platforms and advertisers and, if so, how does this impact competition in the relevant markets?

3.17. How much do advertisers value digital platforms’ access to user data? How does the access to or control over user data impact the relationship between digital platforms and advertisers?

 

Implications for consumers

3.18. Describe the nature of the impacts (positive and negative) that digital platforms are having on consumers? What causes these impacts? Are these impacts temporary or ongoing?

3.19. What are the advantages and disadvantages of using digital platforms for consumers?

3.20. What terms and conditions govern consumers’ use of digital platforms? How do they differ from those which apply when consumers obtain news and journalistic content from other sources?

3.21. Are consumers generally aware of these terms and conditions? Specifically, do Australian consumers understand the value of the data they provide, the extent to which platforms collect and use their personal data for commercial purposes, and how to assess the value or quality of the service they receive from the digital platforms?

3.22. Have digital platforms changed the price of media content supplied to Australian consumers?

3.23. If you consider the collection of data part of the effective price paid by consumers for use of the digital platforms, to what extent are consumers aware of and provide informed consent for the collection and use of their data?

3.24. Have digital platforms changed the quality or choice of media content supplied to Australian consumers? Has the use of algorithms to select content changed the diversity of news supplied to consumers?

3.25. How do consumers value digital platforms’ access to their data? Do consumers see it as a cost or a benefit (e.g. it enables customisation of the content displayed)? How does the access to or control over user data impact the relationship between digital platforms and consumers?

Longer-term trends

Innovation and technological change have led to significant changes to the way news and journalistic content is delivered and consumed in Australia over the past decade. In the following questions, the ACCC seeks stakeholder comment on the impact of longer-term trends, including innovation and technological change, on the state of competition in media and advertising services markets.

3.26. How have the channels used by Australian consumers’ to access news and journalistic content (e.g. TV, newspapers, social media, search engines) changed in the past five to ten years? How will this change in the next five to ten years?

3.27. How have the types of news and journalistic content accessed by Australian consumers’ changed in the past five to ten years? How will this change in the next five to ten years?

3.28. How has Australian advertising expenditure changed over time? In particular, how have digital platforms impacted the advertising revenue of media companies, especially those involved in the supply of news and journalistic content, and how have media markets responded?

3.29. Have innovation and technological change increased or decreased competition in the media and advertising services markets?

3.30. Have the markets that digital platforms operate in changed over time and are they likely to change further in the future? For example, to what extent can digital platforms now be considered to be publishers rather than distributors of content, and is this likely to evolve in the future?

3.31. How are the business models for news and journalism likely to evolve over the next decade and how sustainable is the commercial provision of high quality news in Australia? Do you have any other comments or observations on the impact of digital platforms or on the state of competition in the media and advertising services markets?

Existing regulation and proposals for change

In the following questions, the ACCC seeks submissions on the effectiveness of existing regulation applicable to the digital platforms and to the media and advertising services markets, as well as proposals for change.

3.32 Attachment B summarises the key existing regulation in Australia that applies to the media and advertising services markets. Are there any additional existing or proposed laws or regulations in Australia which should be taken into account by the ACCC in this inquiry?

3.33. How do existing laws and regulations apply to the conduct of digital platforms? For example:

• are digital platforms required to verify news and journalistic content before distributing it?

• do intellectual property and copyright laws apply to the conduct of digital platforms in a similar way as to other market participants?

If these laws and regulations do not apply to digital platforms, what are the implications for competition in the media and advertising services markets and how does this impact the quality and choice of news and journalistic content for consumers?

3.34. Should digital platforms be subject to the same laws and regulations as other market participants in the media and advertising services markets (e.g. news and journalistic content creators or distributors)?

3.35. What steps have been taken by digital platforms to address any competition and consumer concerns that have been raised (e.g. self-regulatory codes or guidelines). To what extent have these initiatives addressed concerns?

3.36. Are the existing laws and regulations sufficient to address the activities of digital platforms? Is there a case for the specific regulation of digital platforms and, if so, what issues would proposed regulation seek to address?