ACCC's Anti-competitive Code: A threat to Australia's democracy
Australia is at a critical turning point in its history. One such turning point relates to whether we will remain a free and open democracy.
According to the Australian Competition and Consumer Commission (ACCC), public interest journalism is an essential prerequisite for a “well functioning” democracy, as is “the ability of consumers to recognise high-quality news”. However, the ACCC is concerned that public interest journalism is under threat in Australia due to the rise of online platforms for information searches and sharing. In response to lobbying by the commercial news media businesses about their losses of advertising income and jobs for journalists in the non-digital platforms of print, radio and TV, the ACCC has conducted a “Digital Platforms Inquiry” in which they have canvassed the impact of the rise of the online information market on journalism in Australia.
In the last two decades the world has transitioned from a pre-digital era – when print, radio and TV platforms held a bargaining power imbalance over advertisers – to a post-digital era, when online platforms provide a cheaper and better targeted alternative for advertisers and all content publishers. The ACCC has concluded that this market shift has produced a new bargaining power imbalance in which two digital platforms – Google and Facebook – are putting the viability of news media businesses at risk. It contends that this is a threat to democracy and that this can only be corrected by introduction of a “News Media Bargaining Code” which compels Google and Facebook to:
pay arbitrarily determined amounts for the content of certain Australian news media businesses (and only those businesses);
provide these news media businesses access to “user” data currently not provided to any content publisher on digital platforms; and
provide advance notice to certain news media businesses (and not other content publishers) of algorithm changes.
The attached essay rejects the ACCC’s assertions about the news market and bargaining power imbalances and asserts that their Code, as drafted, is an extremely unbalanced anti-competitive market intervention that will have the opposite effect to that intended on democracy and free exchange of information. It examines:
how the information market structure is likely to be changed for the worse by the Code,
who will gain information market dominance,
whose interests will be served and who will suffer,
the adverse effect of this change on our democracy, and
how the foundations are being laid in the Code for a cross-media/cross-platform takeover by Australia’s news oligopoly of the information market in a manner that is wholly contrary to the public interest.
The essay also proposes a suspension of the process for passage of legislation on the News Media Bargaining Code pending the establishment of a community engagement process for development of a rational program of regulation of Australia’s modern digital age information market – a regulatory framework that is consistent with the aims and values of Australians in democracy.
The essay is called "Prospects for journalism, the free information market and democracy in Australia under the ACCC's News Media Bargaining Code. Suffice to say the prospects are not good - not good at all. Click on the link at the bottom of the page for the full essay.
Here's an extract from the essay on the most alarming potential consequence of the ACCC's Code - the potential for Murdoch to achieve a cross-media/cross-platform takeover, where he owns or controls both news publishing and search services in Australia:
One the great follies of the Code is that the advertising market transition problems for the news businesses will not be resolved by the massive market intervention of a Code seeking to address a supposed bargaining power imbalance that isn’t causing the loss of advertising revenues for the news content originators in the first place. With or without the Code, the advertising income will not revert to the non-digital platforms, and the Code does not and cannot address the cause of Murdoch’s, Nine’s, Seven’s and Ten’s problems in attracting advertising.
But as I have already pointed out, this is no matter to the big news businesses. Even if it fails – as it will – to increase the share of the advertising market available to non-digital platforms, the Code will still act as a bail out to the news oligopoly. And if its members are lucky enough to drive Google and Facebook completely out of the market, perhaps they can step in to begin domination of the online advertising market down the track. They might even be able to take over the search engines themselves. What a ghastly piece of vertical integration and monopolisation that would be. Just imagine how the content of Murdoch’s competitors would be pushed down in the search results then. It’s a chilling prospect but it is not at all a remote one. Murdoch will have thought through to that step and the Code, designed as it is, is the perfect facilitator of such a market takeover. That the ACCC doesn’t seem to see it coming is scary. They are the ones who should be protecting us from such a prospect but they are enabling the biggest cross-media takeover of all.
If Australians wish to assert that things are bad in our information market and democracy because one company like Google has gained dominance in just the search part of the wider digital information market (note: not the whole information market, just a part of it), we might still do ourselves the favour of taking a moment to consider whether that dominance in a part of the information market – the presence of a giant money-making company in search engine expertise – is evidence in this case of a risk to the public interest. The fact is, the current market structure and the split between the roles of players within it – information seekers and creative content producers on one side and information finders and distributors on the other – is strongly in the public interest. The Code has the potential to upset this and drag us back to the dark ages of controlled information flow and suppression of facts that do not fit with the preferred view of a few corporate powers. It is an Orwellian dystopia in the making.
The fact that the information market is not afflicted by this vertical integration nightmare at the moment should stand as an indication to any market analyst that the market has at least some features of a healthy, efficiently competitive structure that should not be threatened. The ACCC should have been able to think forward to the potential impacts of its Code but it has not. On the contrary, the Code as designed has the potential create a new, completely different bargaining power imbalance in place of the one it claims to be correcting. It will set up the pre-conditions for a cross-media/cross-platform takeover which could indeed produce a bargaining power imbalance, the like and scale of which we have never seen before. It could produce a truly monstrous corporation controlling all aspects of the information market.
The evidence in support of the contention that there is a bargaining or market power imbalance in 2020 between the digital and the non-digital seekers of advertising revenue is not strong. Nor is there unequivocal evidence that the imbalance, if it exists, is the thing causing harm to democracy. But if there is an imbalance of the type described by the ACCC, and if it is doing more harm than good, this imbalance and the harm it may do will be nothing in comparison to the potential harm from the imbalance that is capable of growing up under the Code insofar as it can facilitate a convergence of control on parts of the market not currently controlled by any one player. The new imbalance would be between those media moguls who own all the platforms, digital and non-digital – or one mogul, most likely Murdoch – and every other competitor in news and information exchange who is seeking to use the platforms.
In its Final Report on its Digital Platforms Inquiry, the ACCC provides some good examples of the real problems that need to be resolved as the digital information market transitions from infancy into youth. There are consumer issues such as online scams, false representations, data security, user rights, and of course the now ubiquitous fake news. But the Code doesn’t begin to address any of these; it just caters to the concerns of the commercial news oligopoly. More than that, the Code is so demonstrably in the oligopoly’s favour and so demonstrably capable of destruction of the operation of our open media platforms in Australia that Murdoch’s lawyers may as well have written it.
If we want to travel through this transition safely, we still have time to avoid the problems that the Code would propel us into. We only have to ask ourselves a simple question: do we want to revert to the old non-digital market structure that can be dominated by Murdoch and Nine, or do we want to stick with the trend towards diversification of the information market made possible by the present organisation of the online information market? If we prefer the latter, well and good; the ACCC can then skip the Code, save us all a lot of trouble, and get on with solving the real problems for consumers of information.