Concerns over the impact of ‘fake news’, online advertising dominance and changes in media-market competition will all be under the microscope as the Australian Competition and Consumer Commission (ACCC) kicks off a year-long inquiry into the role of digital media giants on Australia’s highly concentrated media landscape.

That role has rapidly changed in recent years as such sites grew from acting as sites for connecting people, into go-to destinations for all manner of news, education, and other information.

Consumers’ implicit trust in the sites has reinforced their eminence – and paved the way for scandals such as the removal of over YouTube 150,000 videos after advertisers raised concerns about ads appearing opposite arguably paedophilic material.

Facebook has been front and centre in the issue, given its implication in Russian efforts to affect the outcome of the recent United States presidential election; its admission to errors in its self-reporting media consumption figures; and even Facebook’s own ill-fated experiment with fake news.

Brokered with the support of the Nick Xenophon Team (NXT), the ACCC inquiry comes amidst a growing chorus of global voices calling for Internet giants to be put on a level playing field when it comes to their role in the media landscape – and early wins have tightened the screws.

A US Federal Trade Commission inquiry into Facebook privacy compromises, for one, led to a settlement that forced the company to improve its privacy protections and subjected it to privacy audits for 20 years.

And, in June, Google was fined $US2.7 billion ($A3.5b) for privacy violations related to the way it leverages its search business into other areas.

Tipping the scales

The terms are designed to weigh the impact of the companies’ massive advertising businesses – Australia’s $7.6b in online advertising spend grew 11.7 percent last year, according to a PwC analysis. Search and directory advertising grew 12 percent in the last year to be worth $3.5b; mobile advertising grew by a third to be worth $2.6b, and video advertising grew 49 percent last year to be worth $900m alone.

This growth is pushing the advertising market past a tipping point this year, with the online figures representing half the $15.4b overall advertising market, with digital ad spending set to overtake TV advertising globally this year. This trend has significant implications for the Australian market, where digital and print revenues for conventional news media slipped by 10.9 percent in the last year and media buying in newspapers is down 18.4 percent.

Industry groups such as IAB Australia have previously moved to deal with the effects of this shift, with IAB Australia publishing a best-practice guide in 2015 around digital advertising policy and regulation.

But mass redirection of advertising dollars to online platforms has created new challenges for conventional media outlets, which have struggling to compete as content giants use ever more-intelligent techniques to personalise and place their ads.

Concerns over the impact of these tactics drove NXT to push for the enquiry, communications spokesperson Senator Stirling Griff said in a statement. The inquiry “will expose the tactics search engines and social media platforms have employed to hoard advertising dollars, the conditions they have forced media organisations to accept, and the part they have played in the gradual erosion of the media’s bottom line,” he said.

“They need to be called to account for their behaviour and lack of transparency, which is irrefutably having an impact on Australian media organisations.”

Weighing the impact

Terms of reference for the ACCC review – announced in the same week that US retail giant and content provision aspirant Amazon threatened further disruption after launching in Australia – include:

· the extent to which platform service providers are exercising market power in commercial dealings with the creators of journalistic content and advertisers;

· the impact of platform service providers on the level of choice and quality of news and journalistic content to consumers;

· the impact of platform service providers on media and advertising markets;

· the impact of longer-term trends, including innovation and technological change, on competition in media and advertising markets; and

· the impact of information asymmetry between platform service providers, advertisers and consumers and the effect on competition in media and advertising markets.

As conventional media consolidates to compete in Australia’s already heavily-consolidated media market, the ACCC inquiry will evaluate the potential effect of these changes on diversity of thought, content choices, and funding for development of new and Australian content available to consumers of news and entertainment programming. The process will down a framework for potential recommendations and enforcement actions to address any issues identified.

Facebook and Google have outwardly welcomed the inquiry, which ACCC chairman Rod Sims said will evaluate “growing concerns that digital platforms are affecting traditional media’s ability to fund the development of content.”

“The ACCC goes into this inquiry with an open mind and will study how digital platforms such as Facebook and Google operate to fully understand their influence in Australia [and] whether platforms are exercising market power in commercial dealing to the detriment of consumers, media content creators and advertisers.”

The inquiry will release an issues paper early in 2018 with a call for public submissions. A preliminary report will be submitted to the Treasurer by early December 2018, and the final report will be released in June 2019.