ACCC must look beyond Facebook and Google

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Via Domainfax:

Some big news in the media space today with the Australian Competition and Consumer Commission launching an inquiry into digital platforms, including Facebook and Google, and the impact they are having of competition in the media and advertising markets.

The highly anticipated inquiry, which was a condition of a deal the Turnbull government struck with Nick Xenophon for his party’s support for media reform, will examine the market power of Silicon Valley heavyweights who are vacuuming up digital advertising revenue while benefiting from the content created by traditional media, such as newspapers and television.

ACCC chairman Rod Sims said the watchdog goes into the inquiry with an open mind to see how digital platforms, such as Google and Facebook, operate.

“We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers,” Mr 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.”

The terms of reference include: the extent to which platforms are exercising market power in commercial deals with content creators and advertisers; the impact of platforms on the amount of choice and quality of news for consumers; the impact on media and advertising markets; and the impact of longer term trends on media and advertising.

Forget it, Rod. There is only one reason why these media titans are winning massive advertising market shares: they built a better mouse trap.

Google and Facebook advertising is so targeted in real time to specific needs and demographics that it makes the traditional media model of display advertising in front of mass eyeballs look like a caveman holding a club.

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MB got hammered by this like everyone else, watching our ad rates collapse from $30 per 1000 views to $1 in one year, which is why we erected the paywall (thank you guys).

Since then, the media market has continued to evolve at high speed as algos takeover where media buyers used to operate. Indeed, the entire supply chain of advertising between firms and media is being automated at astonishing speed.

And bring it on! These days we’ve managed to wrestle back a bit of the old ad revenue via new processes like pre-bid that inject some competition into those that bid to fill your ad inventory. But there are still bountiful middle men out there that sell media inventory to end-user advertisers for big numbers while giving publishers a pittance.

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That’s where the ACCC needs to look if it wants to increase media competition.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.