Fran O'Sullivan: NZ inquiry needed into Google and Facebook

COMMENT:

Rod Sims' report on the impact of Google and Facebook on Australian media and advertising could just as easily have been written for New Zealand.

Pity it wasn't.

The preliminary findings from the Australian Competition and Consumer Commission's (ACCC) Digital Platforms Inquiry confirm what most of us in the New Zealand news business are so painfully aware — Alphabet's Google and Facebook have decimated the revenues of traditional news media (print and digital) as they siphoned up the bulk of the advertising market.

Reading the Sims report, I was struck by the recommendation for a new regulator to monitor the digital behemoths.

If this does happen, please make it a genuine transtasman regulator as it is quite clear our Government is not so fussed by declining news media fortunes here that it wants to do anything about the issue anytime soon.

I may be doing Cabinet Minister Kris Faafoi a disservice. Faafoi has gone out of his way to take soundings from media companies large and small.

But despite the trend being obvious, Governments — current and prior — have not been troubled sufficiently by the behemoths predatory behaviour in the advertising market to do anything about it.

Contrast this with the ACCC. It has been backed by successive Governments which have given their competition regulator the power to launch market inquiries.

New Zealand has finally done the same. But the departing Commerce Commission chair Mark Berry has said the regulator will be tied up with the Government-directed fuels market probe and does not have the resource to tackle other targets.

The ACCC's preliminary findings and recommendations are geared to establish oversight of the behemoths as their influence and reach grows.

The Australian regulator has isolated five potential cases alleging breaches of both competition and consumer law.

Sims — the ACCC chair — doesn't stand on the sidelines indulging in wimpish handwringing. He is made of stern stuff.

He's put up a raft of recommendations to curb the digital behemoths' market dominance and lend a hand to traditional media to compete and survive.

This gets so much harder in the news business when print advertising revenues are under pressure and the digital giants are swallowing 50 per cent of online advertising flows in Australia and a higher percentage here.

The ACCC says, in Australia, for every A$100 spent by their advertisers — $A47 goes to Google and A$21 to Facebook. The rest to traditional media.

In May 2016, when NZME and Fairfax NZ (now Stuff) sought clearance from the Commerce Commission for a proposed merger, Google was said to have 37 per cent of the then $180 million digital advertising market here followed by Facebook with 16 per cent.

What is admirable about the ACCC report is the forensic probing of the way Google and Facebook have effectively ripped off journalists' work.

"This reduces value for the news businesses that have invested a lot of money and time in creating the content. Journalists may work many days or weeks to break an exclusive online story and a competitor can quickly reproduce that story, post it on a rival site which, due to the reach of the digital platforms, may draw traffic away from the original source of the story," says Sims.

He views journalism as a public good. He is critical of the behemoths's tolerance for "fake news".

Among the ACCC recommendations are tax offsets for news media producing journalism of "high public benefit" and making personal subscriptions for publications tax deductible.

So, why can't we have a similar inquiry here?