Google urged to pay SA news media up to $27M annuallyGoogle urged to pay SA news media up to $27M annually

The Competition Commission of South Africa (CompCom) has asked Google to compensate the local news media between R300 million (US$16.3 million) and R500 million ($27.2 million) annually for a three- to five-year period for alleged anti-competitive behavior.

This was one of the key recommendations from the CompCom's provisional report from its 16-month Media and Digital Platforms Market Inquiry (MDPMI) which outlined provisional findings, recommendations, and proposed remedial actions for digital platforms operating in South Africa.

With most people accessing news via search engines like Google or social media platforms like TikTok, Facebook and X, the Commission flagged issues with unfair revenue distributions for the local media companies producing the original content.

The Google recommendation was because of what the CompCom described as the "imbalance in shared value." It said there was a need for changes to search that will sustainably create shared value with the media through increases in referral traffic.

This includes the removal of search bias in favor of foreign media and YouTube and the promotion of local language and community media.

The provisional report presented a series of findings against tech giants including Google (YouTube), Meta (Facebook), Microsoft, OpenAI, X (formerly Twitter) and TikTok, along with provisional remedies across search, social media, generative AI and digital advertising to address conduct that adversely impacts competition for digital advertising and journalism in South Africa.

Related:SA competition watchdog takes on Google, Apple, other online platforms

The competition watchdog warned that if these companies don't initiate remedies, they could face digital tariffs or levies of 5% to 10% to compensate the local media industry.

Reasons behind the inquiry

The inquiry was initiated because the Competition Commission had reason to believe there are market features on digital platforms that distribute news media content "that impede, distort, or restrict competition" or undermine the purposes of South Africa's Competition Act.

"Whilst there have been initiatives around media bargaining with digital platforms in other jurisdictions, this Inquiry has been far more inclusive and ambitious by extending the terms of reference to include radio and television broadcasters, both commercial and public or community media, the impact of artificial intelligence (AI) chatbots and AI-powered search, and the AdTech industry which affects the monetisation of traffic on news websites," the CompCom said in a statement.

The Commission said the news media is essential for free expression and democracy, informing citizens and holding institutions accountable.

Related:SA competition watchdog questions Google's dominance

"Globally, the media industry is undergoing rapid change due to the shift to online news consumption, challenging traditional revenue models and necessitating changes to business models," it said.

"Traditional advertising revenue is rapidly declining and whilst some media have pivoted to subscriptions, replacing traditional ad revenue with digital ad revenue has been elusive," the Commission added.

It acknowledged that challenges faced by the news media are part of the "disruptive effect of digitalization" but said that these challenges are exacerbated by the conduct of platforms that hinder the ability of the news media to secure and monetize digital traffic.

It also said that these digital platforms do not produce news themselves and cannot replace journalism's role.

The CompCom said the inquiry conducted extensive evidence gathering, public and in-camera hearings, expert report submissions, consultation with industry role players, a consumer survey and focus group discussions.

Stakeholders and the public have six weeks to submit their responses to the Inquiry's initial findings with the final date for additional submissions set for April 7, 2025, after which a final report will be released.

This is not the first time that the CompCom has taken on global tech companies.

In 2023, it demanded remedial actions from Google, Apple and Uber Eats, as well as local online retailers and classifieds as part of its Online Intermediation Platforms Market Inquiry.

In 2022, the Commission also took on Meta Platforms – the parent company of Facebook and WhatsApp – for alleged abuse of dominance, and asked the Competition Tribunal to fine Meta 10% of its local turnover. The outcome of the case is still pending.

Proposed media fund

The CompCom said that Google's compensation can include funding support for projects that build digital news capabilities with the objective of improving revenue generation, but most of the funding must be transfers to support and strengthen journalism.

It suggested that a way to address inequity was through payment into a media industry fund.

News media and broadcasters are eligible for compensation from the fund if they predominantly service the SA market, report on current issues or events of public significance for South Africans at a local, regional or national level and adhere to the regulatory oversight by the Press Council or Broadcasting Complaints Commission of South Africa (BCCSA).

The CompCom stipulated that the South African Broadcasting Corporation (SABC) must be included in the compensation.

"The compensation for individual news publishers should consider weighting based not only on relative content levels, but also relative needs and contribution to media diversity and pluralism in SA," the Commission said.

A potential option put forward was to split the fund into three: with a third dispensed on content levels, a third on relative needs and a third on contribution to media diversity.

The compensation must be in place for at least three to five years it said.

Google responds

"We will review the report in detail but we disagree with the claim that Google has taken disproportionate value from publishers," a Google spokesperson told Connecting Africa via email.

The company said that in 2023, its products like Google Search and News generated an estimated R350 million ($19 million) in referral traffic value for South African publishers while Google earned less than R19 million ($1 million) from ads displayed next to news queries.

"Alongside this, we have invested in products, training and partnerships to support publishers and the broader news ecosystem, and will continue to do so," the spokesperson said.

Meta also singled out

Facebook's parent company Meta was flagged because the CompCom said Facebook is the most used social media platform in SA as a primary source of news.

The recommendation was that Meta must stop "deprioritizing" SA news media posts with links in the home feed algorithm and ensure the organic reach of SA news media posts with links is on average similar to the organic reach of SA news media posts without links.

It said it must restore the Facebook referral traffic for SA news media through algorithm changes that result in a 100% increase in SA news media referral traffic, or to match peak referral traffic to the news media in the past eight years.

Meta did not respond to a request for comment.

Some other key provisional MDPMI remedies include: