Google, Facebook under Australian competition body’s scanner

The Australian Competition and Consumer Commission (ACCC) said today it would investigate whether US online giants Facebook and Alphabet Inc's Google have disrupted the news media market in the country to the detriment of publishers and consumers.

This comes after the Australian federal government formally directed competition regulator ACCC to commence an inquiry into digital platform providers.

Like their rivals globally, Australia's traditional media companies have been squeezed by online rivals, as advertising dollars have followed eyeballs to digital distributors such as Google, Facebook and Netflix Inc.

The government ordered the probe as part of wider media reforms, amid growing concern for the future of journalism and the quality of news following years of declining profits and newsroom job cuts and the rise of fake news.

''We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers,'' ACCC chairman Rod Sims said in a statement.

The inquiry will look at the effect that digital search engines, social media platforms and other digital content aggregation platforms are having on competition in media and advertising services markets.

"The ACCC goes into this inquiry with an open mind to and will study how digital platforms such as Facebook and Google operate to fully understand their influence in Australia," Sims said.

"The ACCC will look closely at longer-term trends and the effect of technological change on competition in media and advertising. We will also consider the impact of information asymmetry between digital platform providers and advertisers and consumers."

Advertising expenditure in print newspapers has been in decline for a number of years. Recent ACCC merger reviews have shown that most advertisers are spending less on print newspapers and finding alternative ways of reaching target audiences, including through digital media.

"Through our inquiry, the ACCC will look closely at the impact of digital platforms on the level of choice and quality of news and content being produced by Australian journalists," Sims said.

The Australian probe will have power to demand information from businesses and hold hearings. The ACCC is expected to produce a preliminary report early December 2018, with a final report due early June 2019.

A Google spokesman said, ''We look forward to engaging with this process as relevant.'' Facebook did not immediately respond to a Reuters request for comment.

The idea for an ACCC investigation was hatched during media reform negotiations in parliament earlier this year, which resulted in a relaxation of ownership laws to allow the country's big players to boost their market share to better compete against online disruptors.