By Canadian Press

Struggling media could get lift from Competition Bureau digital review: group

Sep 7, 2019 | 10:33 AM

VANCOUVER — The Competition Bureau’s examination of possible anti-competitive practices by digital giants like Facebook and Google could offer a reprieve to the traditional media they “decimated,” but industry watchers say the step feels years behind action taken by other world powers.

“Finally, finally, we have movement,” said John Hinds, president of News Media Canada, an advocacy group that represents hundreds of print and digital news organizations that has been pushing the federal government to take action for a long time.

The Competition Bureau announced Wednesday it wanted the public and businesses to provide it with confidential information on what companies in the digital economy may be doing to harm competition.

It declined to name specific companies, but said it is interested in those that work in online search and social media, among other core areas.

Facebook, one of the biggest players in the space, said in a statement that it was committed to working with and being accountable to governments across the world. Google, another giant of the space, did not immediately respond to a request for comment.

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Local advertising once paid for local news production, said Hinds, but since the entrance of Google and Facebook around the new millennium that circular economy broke.

“The traditional advertising market has been totally decimated by the rise of the digital players.”

About $6.8 billion in advertising dollars in 2017 went to Facebook and Google, according to the Canadian Media Concentration Research Project’s most recent report. That’s out of a total $13.8 billion spent across all commercial media, the report found, adding the two tech titans are carving out an enormous role in a shrinking advertising market.

The companies benefit from a tax system that advantages foreign suppliers, said Hinds. When companies purchase an advertisement in a local paper, they pay a tax, he said, but that doesn’t apply when they advertise products or services on digital platforms.

Current regulations also allow news aggregators, like Google, to take parts of articles produced by other organizations without payment and repurpose them, he said.

Canadian media struggled to adapt to this changing landscape with major newspapers seeing revenues slip and carrying out mass layoffs.

Since 2008, 235 local media outlets closed with a further 46 shuttering as a result of mergers, according to the Local News Research Project’s August report. Meanwhile, only 94 new local outlets opened, with 17 more produced through mergers during that same time.

Phillip Crawley, Globe and Mail publisher and CEO, welcomed the review in a statement.

“We believe that a review would be an important first step in ensuring there is healthy competition in digital markets. Other jurisdictions like the EU and Australia have already started looking at the practices of dominant digital players, so it is right for Canada to follow suit. “

Torstar Corp. and Postmedia Network Inc. did not immediately respond to requests for comment.

Hinds hopes the call for information leads to a broader investigation that could eventually create regulatory or legislative change.

He points to an inquiry by the bureau’s Australian counterpart that examined the impact of digital companies, predominantly Google and Facebook, on advertisers, media and consumers as a good example for how to tackle the problem.

The Australian Competition and Consumer Commission released a more than 600-page report in June with 23 recommendations that included developing and implementing a platform-neutral regulatory framework for all companies that produce or deliver content in the country, and providing stable and adequate funding for public broadcasters.

“They’ve come out with some very, very solid recommendations and a pathway to a new model,” said Hinds, adding he thinks there’s an opportunity for Canada to do the same.

But that’s not necessarily what the Competition Bureau plans.

The information gathered could lead to investigations, said Brad Callaghan, an assistant deputy commissioner at the bureau.

Those investigations would be carried out confidentially, he said, and it doesn’t intend to publish a report similar to the Australian one.

The bureau can’t comment on whether any of its possible investigations could lead to broader changes, he said, adding its work is investigative and enforcement oriented.

Callaghan couldn’t say whether the public consultation would benefit traditional media companies.

“Our work is really based on the information that’s available to us and it wouldn’t be appropriate for me to predict the way that something would play out down the road,” he said.

However, should the bureau find any evidence of wrongdoing, it wouldn’t hesitate to take action, which could mean bringing a case before the Competition Tribunal.

That process could be lengthy as the public consultation ends November 30 — though the bureau notes it’s always open to hearing from people or businesses.

And while the process is now underway, Canada still lags well behind other countries, said Christopher Waddell, program director for Carleton University’s bachelor of media production and design program.

“It feels like we’re about four or five years behind the rest of the world.”

The European Union has been exploring this issue for a long time, he said, dating back to a case that began in the late 1990s against Microsoft. The case concluded in late 2009 with Microsoft agreeing to give users a choice of which web browser to use rather than requiring them to use its Internet Explorer browser, and paying more than a billion pounds in fines.

The European Commission also recently announced it opened a formal antitrust investigation into Amazon, while the U.S. Department of Justice has opened one into major online platforms.

“They’ve been going on in other places for a long time,” said Waddell. “We don’t seem to have caught on to the potential anti-competitive practices that may exist until, I guess, now.”

Follow @AleksSagan on Twitter.

Aleksandra Sagan, The Canadian Press