Zuckerberg Facebook

Facebook has been pushing back against criticisms that social media has changed society. Source: Reuters

Australia’s competition watchdog to investigate Facebook, Google

AUSTRALIA’S competition regulator announced that it would be embarking on an 18-month investigation into allegations that some of the biggest technology giants would be going under the microscope for their role in disrupting the media and advertising industries negatively and their impact on consumer rights.

“We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers,” said the chairman of the Australian Competition and Consumer Commission (ACCC), Rod Sims said in a statement according to the Financial Times.

“The ACCC goes into this inquiry with an open mind and will study how digital platforms such as Facebook and Google operate to fully understand their influence in Australia.”

The probe will look into the effects of the online giants – most of whom are from the Unites States – on the job market, but more specifically on their effect on journalism and the media industries. Australian media firms have been facing a steady decline, keeping in time with a worldwide trend in the industry where more digital platforms have drawn away eyeballs from traditional outlets.

Fairfax Media is one of many Australian publishers which have been hit by falling ad spend since the emergence of digital platforms as a force. Source: Reuters

Fairfax Media, a mainstay of the scene, has been facing down huge job cuts and uncertain future ownership thanks to poor advertising revenues.

The Australian government called for the investigation as part of a wider trend of rising concern about the outsized role of technology in messing with information flows, newsroom jobs, and the role of journalism in shaping society and government.

The power of these firms was thrown into stark relief during the recent US elections, whose repercussions are now being throw into high relief by various congressional hearings into Facebook and Twitter’s algorithms and relationships with Russian actors.

“Many overseas jurisdictions are thinking of ways to understand these digital platforms better to enable them impose new standards or regulations,” said Brian Han, analyst at Morningstar, to the FT.

“Up to now these technology companies have remained largely unvetted by governments as legislation has not kept up to date with technology.”

Australian Prime Minister Malcolm Turnbull holds a press conference at Parliament House in Canberra, Australia. Source: Reuters

Among the companies under scrutiny are Facebook, Alphabet Inc.’s Google, Netflix and Twitter, all of whom will be investigated for their role in hurting traditional media’s ability to generate revenue.

“As the media sector evolves, there are growing concerns that digital platforms are affecting traditional media’s ability to fund the development of content,” said Sims.

According to Pew Research Center statistics quoted by the FT, the US newspaper industry has fallen to roughly a third of its original US$49 billion value from 10 years go. Today, Facebook and Google account for 85 percent of total digital ad spend growth based off a report by Kleiner Perkins Caufield and Byers.

While Facebook has released a statement citing its willingness to cooperate with the probe – even welcoming the inquiry into the issue – Google has said that they disagree with proposed plans to levy fines on tech companies that would be funneled into funding for traditional journalism.



“We don’t believe that handouts, regulations and intervention is the answer,” Jason Pellegrino, Google Australia’s managing director, told a hearing in August, according to the FT.