As the year comes to a close, tech giants Google and Facebook face additional hurdles. The Australian Competition and Consumer Commission (ACCC) regulator will investigate if they had indeed disrupted the news media.
The initiative by Australia’s regulator comes at a time when the media landscape in the country struggles to generate advertising revenue. In addition, digital distributors like Google, Facebook, and Netflix have amassed the majority of the ad dollars.
The chairman of the Australian agency confirmed the probe into these platforms, according to Reuters.
“We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers,” ACCC Chairman Rod Sims said in a statement.
Also, the ACCC Chairman added that this investigation will examine how the companies operated, and understand the influence Google and Facebook have in Australia.
As corroborated in the news release, a Google spokesman stated that they look forward to cooperating with this request, while Facebook did not immediately comment on this inquiry.
This ACCC investigation stems from media reform negotiations in parliament earlier this year.
Facebook and Google will capture a phenomenal 84 percent of the digital ad spend worldwide this year as the two online companies account for all of the growth in internet advertising this year, according to @GroupMWorldwide. https://t.co/UWnBVBf7dQ pic.twitter.com/e0f1jY7yBH— Kevin O'Keefe (@kevinokeefe) December 4, 2017
The Australian government’s interest in this matter is to shed light on what is happening in the news business. Like in many other parts of the world, the media industry is suffering from a decline in profits and revenues.
“The government ordered the probe as part of wider media reforms amid growing concern for the future of journalism and the quality of news following years of declining profits and newsroom job cuts.”
The government will hold an inquiry into Facebook, Google etc and their impact on journalism and advertising pic.twitter.com/DnKumjd2QI— David Swan (@swan_legend) December 3, 2017
This investigation led by the Australian commission is going to require and demand information from businesses. It will also hold hearings and complete its final analysis on the subject in 18 months.
This media phenomenon and struggle is not at all new. It has been happening for some time now. As stated by Wired, there is a connection between the growing revenue going to Google, while print newspaper ads continue to plummet.
“Between 2004 and 2016, Google’s revenue — most of which from advertising — grew from $3.2 billion to $89.5 billion. In that same period, the amount of local businesses spent on print newspaper ads fell from $44.4 billion to $12. billion.”
Conforming to Borrell Associates, they have estimated that within five years, very few local papers will have the necessary resources to publish daily.
How has Google and Facebook come to dominate the advertising market? They are leaders in their respective industries. To date, Facebook remains the largest social media network with 2.07 billion users. Google remains the largest search engine on the planet. It is natural for businesses to advertise on these platforms since they yield a high return on investment in terms of advertising.
A detailed analysis by Axios explains that they are sophisticated tech companies because both are more able to adapt to the changes in the marketplace.
“Tech giants, aided by decades of minimal regulation, have scaled to the point at which they are able to adjust their advertising models and adapt to consumer demands faster than most media companies can keep up with.”