IT has been proposed that Google pay between R300 million and R500 million annually for the next three to five years to the South African media for its role in the decimation and continued benefit from the local news media industry.
This is according to the Competition Commission’s Media and Digital Platforms Market Inquiry (MDPMI) provisional report, which was released yesterday in Pretoria.
Read: SA publishers turn hostile in their fight against Google
The report found that the search engine’s monopoly position and the unequal bargaining position of the media mean there has not been an equitable share of value between Google and news publishers in South Africa, both historically and currently.
“This inequity has materially contributed to the erosion of the media in SA over the past fourteen years and will continue to do so unless remedied,” according to the report.
The inquiry was initiated in October 2023 under the Competition Act.
It seeks to determine whether digital platforms distributing news media content and related advertising technology (Adtech) markets hinder, distort, or limit competition, negatively impacting South Africa’s news media sector.
The commission said its remedies are broadly informed by the need to compensate the news publishers directly for a period to rebuild, innovate, and strengthen the news industry, including its capability to generate revenues in a digital environment.
This is given the historical erosion of revenues by Google that has left the media in a weak financial and operational position.
Google’s big secret revealed
Google has for years shown reluctance to disclose its advertising revenue from South Africa (read the requests for information sent to Google LLC and Google SA by Caxton, Media24 and the Campaign for Free Expression).
It has, however, now provided an estimate.
James Hodge, chair of the inquiry, stated that Google disclosed earning approximately R35 million solely from advertising revenue generated through news-related queries.
Read: Why Facebook and Google cannot be trusted
Hodge explained that most of Google’s ad revenue is generated on commercial queries, not just news queries.
Therefore, the commission’s estimate of how much Google owes considers the overall value the entire Google Search platform gains from answering news queries, establishing itself as an authoritative search source, and attracting users who might otherwise visit specialised search engines or niche websites.
“News constitutes substantially to that. News makes up a significant portion of this.
“With 10-15% of all searches being news-related, it follows that 10-15% of revenue can be reasonably attributed to the overall value derived from these queries,” Hodge said.
The value of news to the Google Search and Discover platforms was R800 million to R900 million in 2023.
Skewing competition
According to the report, the unequal bargaining position has resulted in an inequitable sharing of user data and insights between Google and news publishers.
Google’s algorithm skews competition among news media organisations by disproportionately favouring global news outlets in South African search results and Top Stories while underrepresenting vernacular and community media.
It also gives greater visibility to subscription-based publishers.
“Google also destroyed about R260 to R280 million engine value for the media with queries that result in zero clicks to their websites,” according to inquiry panel member Paula Fray, speaking at the launch of the report.
This happens when users consume news on Google’s search engine results page without clicking on the news article.
“The inquiry finds that the conduct of the digital platforms has exacerbated this by reducing traffic … continually changing algorithms and not addressing miscommunication that proliferates in the media,” says Fray.
Bias in the Google algorithm has disadvantaged SA media in general or segments of the media.
Alternative solution
These developments are not unique to South Africa.
Media industries, regulators and governments in many countries have taken on Google, Facebook and others, resulting in legislation forcing the platforms to pay for the news content they aggregate.
Such countries include Australia, Brazil, the United States, Canada and Indonesia. Similar processes are also ongoing in many other countries.
“This is an opportunity for Google, Meta and others to look at whether SA as a testing ground offers alternatives to the simple ‘pay and don’t resolve issues’,” said Hodge.
He continued: “Because we are giving these alternatives they should be interested because this issue is not going away around the world.
“At the moment there is one solution but we are offering another solution and that is about finding sustainable long-term traffic and allow for the media to earn money in the process.”
Some of these alternatives include imposing a digital levy or tariff of 10%, which will ensure that these big tech companies contribute fairly to the economies where they operate, especially in countries where they earn significant revenue but may not have a physical presence.
This type of levy is similar to policies seen in other countries, such as France and Australia, where governments have introduced regulations requiring digital platforms to pay news publishers for using their content.
Read: There’s a crisis in South African newsrooms
“If we can find sustainable long-term win-win solutions then that is the preferred for the media too because it offers more stability through that,” said Hodge.
“We have the power to impose a binding remedy, and the parties would have the option of an appeal if they wish.”
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