Watchdog launches investigation into SA’s media space

The Competition Commission has launched an investigation into the media space such including digital platforms on how they operate in terms of generating revenue through advertising and content.

The probe, which is called the Media and Digital Platforms Market Inquiry (MDPMI), is designed to scrutinize the distribution of media content on South African digital platforms and the advertising technology (Adtech) markets that link buyers and sellers of digital advertising inventory.

Many online news sites use different dynamics such as search engines optimization, generative artificial intelligence, content aggregators, which are also known as feed aggregator, and Adtech softwares to direct traffic of the audience to its platforms, where consumers and clients meet for transactional and business inventory.

The inquiry was established in terms of section 43B(1)(a) of the Competition Act, as amended and stems from concerns that there may exist market features in digital platforms that distribute news media content, and associated Adtech markets, that might restrict, distort, or impede competition, with potential adverse effects on South Africa’s news media sector.

The regulator’s commissioner, Doris Tshepe, said the launch of the probe will highlight the significance of the MDPMI, emphasising that the media plays a crucial role in ensuring an informed public and the smooth functioning of a democracy.

She noted that the inquiry would delve into various issues facing media sustainability.

“The inquiry comes at a critical moment for the media industry as news consumption rapidly shifts online and traditional sources of funding to print and broadcasting advertising decline,” said Tshepe.

The MDPMI will be led by James Hodge, chief economist and acting deputy commissioner of the commission, with the veteran media practitioner Paula Fray serving as a panel member.

Rise in digital platforms

Fray pointed to the rise in digital platforms which presents both opportunities and challenges to the media, including a need for sustainable business models.

“These challenges are driven by technological disruptions most recently, such as artificial intelligence, social media-fueled pressures to tell stories faster amid a tsunami of misinformation and disinformation, online harassment, global challenges such as the war in Ukraine, economic pressures, reduced newsroom resources, post-Covid and challenges to press freedom and freedom of information,” said Fray.

Hodge outlined the areas of focus of the MDPMI, saying media consumers are increasingly relying on video-sharing platforms, news aggregators, and social media to access news and generate revenue, and that there is a need to promote diversity in news and public interest journalism.

“During this initial phase, the MDPMI plans to conduct two rounds of information gathering, with public hearings scheduled for March 2024.

The MDPMI stated that it follows numerous global inquiries and investigations led by competition authorities regarding the impact of digital platforms on news media publishers, particularly in terms of advertising revenue generation and the sustainability of quality news content.

“These investigations have highlighted the significant role played by large digital platforms, such as search engines and social media sites, in news content distribution, potentially affecting referral traffic and fair content payment,” said the MDPMI in a statement.

“These global investigations have also examined the Adtech markets and the potential for competition concerns arising from concentration and conflicts of interest.

“In South Africa, there is a parallel trend with a growing shift towards consuming digital news sources due to increased smartphone adoption and affordable internet access.

“The distribution of news content through digital platforms has become a crucial means for news media businesses to reach consumers, leading to greater reliance on these platforms over time.

“This shift has impacted the cost and revenue structure of South African news media businesses, with traditional classifieds and print advertising revenue decreasing while digital advertising revenue has risen.

“However, digital platforms and Adtech market dynamics can influence competition for these revenue streams, which is a key focus of the MDPMI.”

It is understood that the inquiry will also assess how these markets affect the visibility and competitiveness of smaller news organisations, including community and African language news media, and the diversity of news available to consumers.

The inquiry will also take a forward-looking approach to assess the impact of new technologies adopted by digital platforms, such as generative AI 3 search support like ChatGPT on businesses in the South African news media sector.

The investigation’s scope is limited to businesses within the South African news media sector, including news publishers and broadcasters.

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