Competition watchdog launches probe into effect of digital channels on traditional media

The Competition Commission has begun an investigation into how digital channels are affecting traditional media platforms and advertising revenues. The watchdog has opened for submissions from operators in the space and is set to hold hearings in early 2024. 

On Tuesday, the commission formally launched its latest project, the Media and Digital Platforms Market Inquiry (MDPMI) that it says is designed “to scrutinise the distribution of media content on South African digital platforms and the advertising technology (adtech) markets that link buyers and sellers of digital advertising inventory”.

The inquiry will be led by James Hodge, chief economist and acting deputy commissioner of the commission, with veteran SA media practitioner Paula Fray serving as a panel member. 

During an event to launch the investigation, Hodge said media consumers are increasingly relying on video-sharing platforms, news aggregators and social media to access news and generate revenue, and that there was a need to promote diversity in news and public interest journalism.

Fray pointed to the rise in digital platforms, which presents both opportunities and challenges to the media, including a need for sustainable business models.

“These [challenges] are driven by technological disruptions most recently, such as artificial intelligence, social media-fuelled pressures to tell stories faster, amid a tsunami of misinformation and disinformation, online harassment, global challenges such as the war in Ukraine, economic pressures, reduced newsroom resources, post-Covid and challenges to press freedom and freedom of information,” she said.

In mid-September, the commission gazetted the final terms of reference for the inquiry and has now released a request to platforms, adtech companies and media organisations to make their submissions.

During the initial phase, the inquiry plans to conduct two rounds of information gathering, with public hearings scheduled for March next year.

The authority says the inquiry is based on the view that “there may exist market features in digital platforms that distribute news media content, and associated adtech markets that impede, distort or restrict competition and that may have adverse implications for the news media sector of SA”.

Estimates by the Wits journalism department show internet giants, including Facebook and Google, have taken as much as 60% of local advertising revenue over the past decade.

In recent years, a number of media houses, such as Primedia and Media24, have announced retrenchments as companies streamline their operations to cope with the loss of advertising revenue, particularly for legacy businesses. This has resulted in media professionals losing their jobs, as well as companies, such as Associated Media Publishing, which ran titles such as Cosmopolitan, shutting their doors.

Much of this has been attributed to SA’s growing shift in the consumption of digital news sources due to the increasing adoption and usage of smartphones and more affordable access to the internet.

gavazam@businesslive.co.za