The Competition Commission said on Friday that it plans to initiate an investigation into digital media and platforms in South Africa, and has published draft terms of reference for the planned probe.

The “market inquiry” will focus on the distribution of media content on digital platforms, the commission said said. The “media and digital platforms market inquiry”, established in terms of the Competition Act, is “based on the commission’s view that there may exist market features in digital platforms that distribute news media content that impede, distort or restrict competition, and which may have adverse implications for the news media sector of South Africa”.

“This imbalance can have implications on fair payment for content and the sustainability of independent journalism,” the commission said.

The inquiry follows moves by regulators in other markets that have intervened to force big technology companies such as Meta Platforms and Google to pay media outlets to carry their content – even snippets of content – on their platforms. In countries such as Canada, France and Australia, these regulations, which have drawn fire from the tech giants, have been introduced in part to ensure local media outlets are sustainable.

“The inquiry is underpinned by the value of a properly funded press to advance a well-functioning democracy,” the Competition Commission said in a statement. “This includes the diversity of views from smaller media businesses and media owned by historically disadvantaged persons.”

It cautioned that the “nature and extent to which digital platforms impact the news media sector in South Africa are still to be evaluated and determined through this market inquiry”.

It said its investigation will focus broadly on:

The interaction and dependency of South African news media businesses on relevant digital platforms as an intermediary, distributor and link to online users for the dissemination of news content online; and
The impact thereof on news media businesses to aggregate, display, create and monetise their news content online.

“The main digital platforms that the inquiry will focus on include search engines, social media sites, video-sharing platforms and news aggregation platforms. The inquiry will also take a forward-looking approach and evaluate new technologies adopted by digital platforms, such as generative artificial intelligence search support (for example, ChatGPT), and the significance these may have on the operations of businesses in the South African news media sector. The inquiry will focus only on businesses within the South African news media sector, including news publishers and broadcasters.”

The commission said investigations by regulators in other markets have found that digital platforms, such as search engines and social media sites, are “important gateways for news content to reach consumers. This can create an imbalance in the trading relationship between the news media and digital platforms.

‘Equitable bargaining relationship’

“Many countries have adopted measures to alleviate the competition and consumer concerns stemming from the impact of digital platforms on the news media. These recommendations largely concern the adoption and creation of a more equitable bargaining relationship between digital platforms and news media businesses. This includes news media businesses having access to consumer data collected by digital platforms where it concerns their online content, and notification of significant changes to digital platform algorithms which impact news media businesses’ distribution of content, among others,” the commission said.

Changing consumer behaviour and distribution models have “impacted on the cost and revenues of South African news media businesses”, it added. “There has been a loss of traditional classifieds and print advertising revenue, as well as additional costs in providing digital news feeds and ensuring visibility on these digital platforms. While digital advertising revenue has increased and there is potential for aggregator content revenues, the features of digital platform markets can influence the magnitude of these revenue streams, which is what the inquiry intends to consider.”

The decision by the commission to launch an investigation follows a complaint lodged in 2021 by South African publishers, including Naspers-owned Media24, in which they want Google, Meta Platforms and other tech giants to pay to use their journalism.

An industry association called Publisher Support Services (PSS) made representations to the commission at the time on behalf of founding members Media24, Arena Holdings, Caxton, Independent Media and Mail & Guardian Media.

In a statement then, the publishers described their submission to the commission as “the opening gambit in challenging Google and Meta to be compensated for their content used on these platforms”.