Competition Commission inquiry — SA media companies welcome smackdown for Big Tech

Monday was, for the first time in years, a better day for South African media houses than huge US tech firms — as the results of a Competition Commission inquiry vindicated the belief of local news outlets that they are being shortchanged by tech giants including Google, Meta and X.

The inquiry’s preliminary recommendations, as reported by Daily Maverick’s Ferial Haffajee, include that Google pays R300-million to R500-million per year into a South African media fund for three to five years; that YouTube must increase its revenue share for local news media and broadcasters; and that Meta should tweak its algorithm to reprioritise local news media links.

Whether a tech industry which has fought back against similar projects in other countries will be amenable to these proposals remains to be seen — but the Competition Commission’s project lead Noluthando Jokazi told Daily Maverick that the platforms had been playing nice with the inquiry.

“They have been cooperative,” Jokazi confirmed on Monday.

“We had three rounds of information-gathering and received about 2,000 submissions from the platforms to date. In situations where we don’t get cooperation, we have powers to summon — but we haven’t had to use them.”

Big tech likely to chafe against findings

Yet there are already signs that the social media and search giants may not take the findings lying down.

Of all the companies dealt with in the report, only Google was hit with something approaching a bill: the proposal that it should pay R300-million to R500-million a year into an annual media fund.

“We will review today’s report in detail but we disagree with the claim that Google has taken disproportionate value from publishers,” said Google spokesperson Ekaterina Kondratieva.

“In 2023, our products like Google Search and News generated an estimated R350-million in referral traffic value for South African publishers while we earned less than R19-million from ads displayed next to news queries.”

The report does not, however, base its calculations purely on ads next to news queries. It notes also that “news has particular value to search engines”, as it builds trust for the search engine.

“The conclusion that the value exceeds ad revenues on news queries is also consistent with outcomes where Google has been forced to bargain with the news media, with negotiated amounts well above the revenue from ads served on news queries only,” stated the report.

Elsewhere in the world, the demand from governments that tech giants make fair commercial arrangements with news outlets has sometimes resulted in punitive action. In Canada, for instance, both Meta and Google said in response that they would simply ban Canadian news from their platforms.

But the Competition Commission is unfazed. The inquiry’s chairperson, James Hodge, reminded a media briefing on Monday that South Africa was “a market where they earn good revenues”.

Meta did not respond to Daily Maverick’s request for comment on Monday.

Does financial compensation go far enough?

Hoosain Karjieker, of the Publishers Support Services, told Daily Maverick on Monday that although the report was a “positive step in the right direction”, the proposed remedies were “a bit soft and vague”.

Karjieker added: “The numbers may have to be renegotiated.”

Daily Maverick CEO Styli Charalambous praised the commission for its “huge breadth and volume of work”, describing the report as a “massively important body of work that will have ripples on the industry beyond our borders”.

He questioned, however, why only Google had been targeted for financial compensation.

“It is odd that social media companies were not included alongside Google, considering the damage they have done through actively promoting mis- and disinformation, hate speech, inciting violence, genocides, death threats and others,” said Charalambous.

“The cost of these practices, or inaction to curb these phenomena has resulted in massive losses to journalism, financial and otherwise, and even greater cost to democracy around the world.”

A statement from the South African National Editors’ Forum (Sanef) took a similar line.

“Sanef believes the big techies ought to be held accountable for losses already incurred too. Quantitatively, the R300- to R500-million appears too conservative given the scale of the damage done to South African media in general,” it stated.

Jokazi told Daily Maverick, meanwhile, that the report recommendations had focused on long-term solutions rather than short-term payouts.

“We are trying to approach this differently from other jurisdictions,” said Jokazi.

“The remedies focus on maximising referral traffic [from the platforms to news]”.

One of the issues identified by the report is that these platforms are throttling access to local news; Google by preferring to show links to international media, and X and Meta by burying links to news sites to keep users on their own platforms rather than external sites.

Vindication of the necessity of news for democracy

The report included a resounding affirmation of the role of the news media as “fundamental to South Africa’s democracy” and as a “public good” that needed to be supported — findings described by Charalambous as “urgent and long overdue”.

It also laid bare just how devastating the impact of digitisation and the turn to social media platforms had been for conventional news outlets, showing how journalism’s workforce had been halved over the last 20 years.

The report’s recommendations are not final, with all stakeholders given a further six weeks to comment on the remedies it is touting.

Jokazi is optimistic that Big Tech will see the value of what the commission is proposing and view it as a “win-win solution”.

“We believe it’s in their best interests to engage,” she said.

Charalambous warned, however, that if Meta and X refused to comply with the final findings, and further ignored the 5-10% tariff on South African advertising earnings which would then be triggered, it could lead to an uneasy political situation.

“We then run the risk of a political standoff where South Africa could follow the Brazilian government in shutting down social media platforms for non-compliance with legal orders and risk a political tit-for-tat incident,” said the Daily Maverick CEO.

“We may be bringing reason to a gunfight with some very unreasonable people. Nevertheless, the commission has jurisdiction and legal powers — and it is only nation states that can respond to the damage these companies have meted out on society and our information systems.” DM