The Competition Commission of South Africa has proposed that Google should contribute between R300 million and R500 million to the South African media industry over a period of three to five years.

The payment aims to address the revenue losses suffered by local media outlets due to the uneven distribution of revenue generated by online news content.

The Commission on Monday released the much-anticipated provisional report of the media and digital platforms market inquiry, which was set up in October 2023.

The year-long investigation involved gathering evidence through various channels, including public and confidential hearings, expert testimony, a consumer survey and focus group discussions.

Commissioner Doris Tshepe said the report launch happens in the context of a media sector that has been under severe financial strain following the digitisation of news consumption.

“While the shift to online consumption has brought its own challenges, the inquiry was initiated to determine whether conduct by search and social media platforms that compete for digital advertising and playing intermediary roles may be exacerbating the difficulties facing news media due to the adverse effects of competition or inequitable competition,” she said.

Commission chairperson James Hodge said the proposed remedies aim to establish a more equitable balance between the value Google derives from local news content and the compensation received by South African media outlets for generating referral traffic.

Hodge announced that the inquiry proposed short-term compensation from Google to the South African media, totalling R300 million to R500 million, to be disbursed over a three to five year period.

“It is proposed that the funds are dispensed not only on content value and digital content volume but also a need to contribute to media diversity; it also must include the public broadcaster,” he said.

The proposed remedies also include long-term solutions to be implemented over the next three years, such as initiatives to drive traffic to vernacular and community media outlets, promoting greater online visibility and support for local media voices.

Panel member at the commission, Paula Fray, said Google generates between R800 million and R900 million in revenue from South African news content annually.

However, the search engine's dominance also results in the destruction of approximately R160 million to R200 million in potential value for local media outlets.

Fray estimated that this imbalance translates to an annual shortfall of around R300 million to R500 million for South African media.

She said AI Chatbots will pose threats to the news media by reducing referral traffic and capturing content value on their platforms.

The inquiry also discovered that digital platforms impose additional costs on news media outlets, requiring them to create platform-specific content formats, optimise content for algorithms and manage misinformation.

In response, many news organisations have diversified their revenue streams, exploring alternatives to advertising, such as subscriptions, donations, content licensing and events.

However, subscription-based models are not feasible for many South Africans, thereby limiting access to news and exacerbating existing inequalities.

Fray said despite social media platforms downplaying the significance of news on their sites, the evidence suggests that the majority of South African consumers rely on social media as their primary source of news.

This, she said, was supported by the inquiry's survey and the Reuters survey, which found that most social media users actively seek out news on these platforms due to their convenience.

Fray noted that social media differs from search engines, as the platform's algorithms determine what users see in their feeds, rather than responding to specific user queries.

On YouTube, for instance, she said the focus is on monetising video views through advertising, highlighting the need for news media to find effective ways to generate revenue from these platforms.

Stakeholders and the public have six weeks to make submissions in response to provisional findings and recommendations.

Cape Times