South Africa's Media and Digital Platforms Market Inquiry Kicks Off Public Hearings

Carlos Mureithi is a reporting fellow at Tech Policy Press.

Last week, the Competition Commission of South Africa probed Google over the financial impact of its dominance on news publishers in the country, adding to the push to make tech platforms pay for news.

In a session on March 12, part of the two-week Media and Digital Platforms Market Inquiry into the distribution of media content on digital platforms, the Competition Commission pressed Google executives over transparency on the money it makes from news searches, among other issues.

Google executives said there are no advertisements on news-seeking queries, and news searches are a small part of the overall searches. All Google Search components contribute to the system, but while the loss of any would be harmful to the search engine, the rest of the search engine would still exist, said Erin Simon, senior counsel for knowledge and information at Google.

“We just fundamentally don't think that the best approach to this is to try to arrive at the specific monetary value that news provides to the search engine,” she said.

But the commission argued that Google Search is sold as a package and that news is part of what makes it valuable.

“If you start to fail, not just on news, but if you started to fail on, say food recipes or other things, the confidence in the search engine would also fail,” said James Hodge, chief economist and chairperson of the Media and Digital Platforms Market Inquiry at the Competition Commission. “We need convincing that you're not selling a package.”

The commission also raised issues regarding Google’s system of offering news snippets. It said this enabled Google to make money from data or advertising while preventing publishers from making money, as it made consumers switch to simply browsing the news snippets.

The session involving Google executives came a day after the commission questioned Microsoft executives, who emphasized the importance of news to search engines, saying that besides being used to feed results, it's also used to attract and retain users.

The probe by South Africa’s Competition Commission is significant because it shows that African authorities are asserting authority on and demanding accountability from multinational tech companies, and it may pique the interest of other competition regulators across the continent to assess the impact of the multinationals on local information ecosystems, Nanjira Sambuli, a Nairobi-based policy analyst, told Tech Policy Press.

"For too long, it's been a de-facto laissez-faire approach to big tech especially, with the assumption that their presence is a net good that brings innovation and with regulation considered a hindrance or a ‘backward’ way of approaching their operations in African markets,” said Sambuli, a fellow at the Carnegie Endowment for International Peace and a Ford Global Fellow.

Sambuli said if the continent is to get any fair share of revenue from digitizing information, African governments and competition authorities should combine efforts by consolidating regulatory approaches in order to tackle disruptions by multinational tech companies.

Last week’s probe followed 2022’s Online Intermediation Platforms Market Inquiry, where South African news publishers said that the move to digital news and digital advertising had caused huge reductions in advertising revenue.

Like in other parts of the world, South Africa’s news industry is facing financial challenges due to declining revenues, leading to numerous closures of publications and retrenchments of journalists.

Globally, news organizations have protested for years that they don't receive fair remuneration for content that creates advertising revenue for websites such as Google and Facebook.

In some parts of the world, countries have found legislation key to making Google pay. In 2021, Australia made the payments mandatory, with Canada following suit in 2023. Also in 2022, Google signed payment deals with publishers in Europe following the adoption of EU copyright rules requiring online platforms pay journalists and other creators for use of their work.

South Africa’s recent inquiry is part of a growing number of investigations by competition authorities around the world on the impact of digital platforms on the news business. It also fits in rising interest by African governments to intervene in the work of multinational tech companies, such as Kenya’s scrutiny of TikTok last year that pushed the platform to moderate content on its app in Kenya following a citizen petition to ban it in the country.

The commission is expected to release a report about its findings.

The event featured eight speakers.

• James Hodge - chief economist and chairperson of the Media and Digital Platforms Market Inquiry at the Competition Commission
• Paula Fray – panel member of the Media and Digital Platforms Market Inquiry and a journalist, entrepreneur and media development trainer
• Dominique Costesec – senior competition counsel at Google
• Sulina Connal – managing director for news partnerships for Europe, Middle East and Africa at Google
• Abongile Mashele - head of government affairs and public policy in sub-Saharan Africa at Google
• Erin Simon - senior counsel for knowledge and information at Google
• Marianne Erasmus - news partner lead for sub-Saharan Africa at Google
• Laura-Lucia Richter – principal economist at Google

Below are transcripts of some key exchanges during the inquiry.

—

JAMES HODGE:

Google Search is a product, Google ad tech and YouTube are products. Different parts of them earn different revenues. And it's seen as one product delivering certain performance. So I did wanna just ask. There has been a lot of calls for some transparency on South African revenues on these products. Is Google willing to make that available, just for the purpose of transparency?

ERIN SIMON:

I think that what we disclose as a regulated U.S. public company is subject to legal restrictions that are even outside of the competence of anyone on this panel. But we can certainly take that back and look into it.

—

JAMES HODGE:

The challenge for the media is they feel they're in the dark. And, as a listed company in South Africa, you would be giving your revenues. And Google gives the U.S. revenues, but everything else is aggregated. We see a lot of the practice in South Africa at least is that South African companies with multiple country operations will report on each country.

—

JAMES HODGE:

As I understand even from your introduction (Dominique Costesec), the business model of search is to provide information in response to a query. That's what people go to a search engine for. And, and that Google's ambition, which is, I think, to organise the world's information links to exactly that.

And obviously you go search for many reasons but, Microsoft last night said that it's a well-known important use case for search is in fact news. And news is used to not just feed a result, but it's also to attract and retain users to the search engine. Is that your understanding, or does Google have a different position?

DOMINIQUE COSTESEC:

No, I think we seek to have all types of content, including news. And I think we're not suggesting in any way that that news has no value to that. So, yes, we want to have as much as possible all types of content that our users can search.

ERIN SIMON:

Yes. I would just emphasize that news is important to us. It's important to our users. Local information is important to us and to our users. Sports and entertainment are important to us and important to our users. And I think a lot of different information types that we can provide query intents that we can respond to. There is a temptation, when the focus of the inquiry is just one of them, to give outsized attention and importance to that one. But we could do that for each of those other sectors as well. And if we did, then we would end up saying that there was 800% of the value of search because every one of them is important when we are focused on it.

I don't wanna take anything away from the importance of journalism and the serious nature of the problems that the industry faces. But I do wanna make sure that it is contextualised appropriately, as one of many things that we provide – like that we help our users to find – and that contributes to being able to offer a good search product for them.

JAMES HODGE:

Obviously, you respond with many different sets of content. I think Microsoft was saying that news has at least an important use case. And that's consistent with also the fact that news was the first other vertical that Google put up and everyone else has put up. And Microsoft has said it's well known you need to have news, otherwise people will potentially leave your platform. So I think I just wanted to get your perspective because that suggests that the value goes beyond what is served as an ad on the page to a package that is provided to consumers about a search engine that's credible, that can be searched for all information, including news. And it’s the value of that full service that really matters.

ERIN SIMON:

Yeah. Just to speak to the initial launch of Google News. That happened as a direct result of the September 11th attacks in the United States. At that time, our ranking system was not sophisticated enough to recognise that a query for the World Trade Cente was no longer seeking tourist information about a local landmark. And so I think we actually ended up just hard coding a message at the top of the search results saying, "Please go to CNN. This is not useful". And we created Google News to better respond to the need for fresh information.

But that was a long time ago. And I think that user needs evolve over time. Our search engine has become more sophisticated over time. And so that moment in time is maybe not the best measure of where we are today.

—

PAULA FRAY:

The point I'm making is that people will go to search for news. It's the one constant that is new all the time. I'm not looking for shoes every day or a holiday every day, or a spa every day. But I might be looking for what happened with us.

DOMINIQUE COSTESEC:

I think that is unfortunately contradicted a little bit by, I think what we see. I think we see that news queries are a tiny part of our overall searches. And I think, unfortunately, the truth is that a lot of people don't search for election news. A lot of people don't read news, to be honest. I think a lot of people use search to look up, change a diaper, change a tire changer – I think there's many, many use cases, for news. And I think what we're seeing today – and it's not something that I'm happy about. But unfortunately news is not, doesn't seem to be a major part of what people are searching for today. I think there's, as Erin said, there is a big variety of sources. I think what we're seeing today also, is that in some social media, people seem to be maybe following news on places like, like, I don't know, Twitter. But, I think this is a bit contradicted by sort of what we're seeing in terms of the queries that people are, searching on or people.

—

SULINA CONNAL:

I heard last night that Microsoft said that they believed if there wasn't news content, that users would leave their platform and go to another easily available platform. We do not believe that users would leave our platform. I think they would go to direct sources and they would continue to look for all the other information, which is the majority of their activity on their site.

I think it's also worth pointing out that we often look at this with our own behavior pattern, which looks the way that you and I might – I'm in this job because I'm a news junkie, so I do look at a lot of news, but that's not the case of the majority of our users, as we see from the evidence.

LAURA-LUCIA RICHTER:

Obviously, the evidence that we put I think Sulina, you touched on it a couple of minutes ago already in terms of experiments or actual real-world evidence where news content or snippets of news content was removed. We did exactly not see an impact on Google usage, but we did see a significant jump up in traffic to news publishers. And the point that Microsoft made yesterday that users would leave the platform, That's a big statement.

...

And we need to be careful because competition and usage of search happens on the what we would say is a vertical level. Just because news content might not show on or the links to news content might not show on the search page does not mean that I will not do a shopping or travel query on search anymore. And the evidence we have seen supports exactly that point.

JAMES HODGE:

Obviously Microsoft and Google are in very different positions. Microsoft is 1% and Google is 97%. And one can't ignore the fact that given Google's pervasiveness and market position, that some of the behaviour may be slightly different. But I just wanna unpack – coz I think there's two separate concepts here that I wanna unpack. The one which I'll come to later is your 2% and how much people search for news but, I think the first is more a conceptual point about what are you selling. You're selling a search engine, which is telling people I can find the world's information through this easily and quickly. And that is the package I'm buying into. And so, if you start to fail, not just on news, but if you started to fail on, say food recipes or other things, the confidence in the search engine would also fail.

That's almost the 9/11 example is "We're not good at this. If you're not gonna to find it here, we failed. And the response from Google is "Let's improve". Because people really wanted that. That is, I suppose, the first conceptual point. Would you accept that you're selling a search engine? Coming separately to how much search is news-related?

ERIN SIMON:

Well, I don't think that's exactly right, because we make the search engine available free of charge. Users can enter searches and receive results free of charge. Web publishers can have their content crawled and indexed and ranked and shown to users free of charge. Website operators receive referral traffic free of charge. All of that is enabled by the fact that we sell advertising on a small fraction of queries. And that small fraction of queries, I think is where you could say we are selling something: The opportunity to show an ad to a user who has asked a particular query, right? And so what we're selling is always very specific to the query and what the user is interested in. And it turns out that because search advertising is so efficient and so valuable to advertisers, we are able to do that. But I also think that if we are not performing well in one vertical or in one set of queries, there are still many, many more. We serve over 2 billion queries a day. And, it's true that not everybody is searching for the same thing every day. But we do see patterns of behavior that are very common.

...

There are those very common query types that I think we would still see if we lost a category. Any category. Because a user who wants to know about a breaking news event might learn not to come to Google for that breaking news event if we were not able to respond to that query well. but they might still come for lyrics to their favourite song, upcoming concert dates, information about a sporting event, right? And it is not, I think, self-evident that a user interested in any of those multiple other search intents would be deterred from that just because they're not able to find information about news.

JAMES HODGE:

I'm gonna go back to the newspaper and we had some of that discussion last week. But the newspaper produces a variety of information. We used to go and we expect to find a range of information. but how much ads appear on a particular page is less important as to how much ads appear in the Whole package. And sometimes, large amounts of money were made from just simple inserts that gave all the specials for the particular weekend shopping, which, not linked to any page, but the paper is the carrier literally of that. And that doesn't come unless their audience is there. And so, it doesn't seem logical that the value is just based on the ads on the page. The package is what is the value. And within that we can discuss how much news makes up, but to me it’s not a logical proposition. This is a package. We put features on that don't earn money like weather in that precisely because it's building a package that sells, and sells advertising and audience.

DOMINIQUE COSTESEC:

What we sell is ads, right? search ads and display ads. And so that is really, I think, how we look at it from the business model perspective.

JAMES HODGE:

I think at the moment we need convincing that you're not selling a package, and that the correct approach is to look at ads on the page. And we haven't heard anything that that convincing, at the moment.

ERIN SIMON:

Well, I think what you're really trying to do is understand the value of news to Google. And that value has different components. You can arrive at an estimate from different directions. But I would say that it is important to separate out its social and democratic value from its financial one. Because, financially, it is not the primary driver of…like financial value to Google, right? There are not really ads on news seeking queries. We monetise based on commercial user intents. But it is still (a) socially, democratically, civically, important set of information.

In some ways I think that attempt to look at the financial package as a whole and then slice it up might not be the right way to approach this problem, but to say what are the challenges facing the industry and what can we all do together to better support it? What can government do to create solutions, but how can we work together to help them transition to a sustainable business model? That's the path forward, right? Much more than just "Let's try to slice up the search engine and arrive at a monetary figure", because any effort to do that is going to arrive at the conclusion that we generate more value for them than they generate for us, that the value of search referral traffic is so large that financial accounting is not going to arrive at a result that contributes financially to the news industry. But we are happy to contribute financially to the news industry. And so we want to focus on those solutions that are gonna be the best way to do that.

—

JAMES HODGE:

So I'm not trying to come to any number. I'm just trying to understand conceptually. And to me the most logical thing is all these parts contribute. Looking at the whole. That's how a newspaper used to do it. I'm sure a magazine and obviously a search can be slightly different. But, you look at how you drive the overall profitability even if some aspects don't make money themselves.

ERIN SIMON:

Yeah, I think in a competition inquiry in particular, it's often useful and difficult to explore the counterfactual, right? What would happen in a market that looked different than this one? But in the search case, I think what we do to find that counterfactual is go back to the past. Because the fundamental business model of Google has not changed since we launched. the fundamental way we use content – the crawling, indexing, ranking, snippettting. None of that. It's a little more visual now than it used to be, but the fundamentals are the same as when Google was a startup in a Palo Alto garage, not a market leader, not on a market radar. And in that time, no one paid for links, no one paid for snippets. In fact, the kind of financial pressure was to go the other way And, website operators would pay search engines for more prominent placement. And that is something Google reacted really strongly against when we were founded – that we owed our users the integrity to not accept payment for placement, except when we were selling clearly labelled advertising. And so, I just want to make sure that we are anchored in that reality of the fact that links are beneficial to the website that gets linked and, whatever value, we want to understand that the content in search has, it absolutely has value. But the reason that users choose Google over other search engines – which they could do with a single click, right? – Is our ranking technology, is our ability to show them the best results, to lead them to content that exists outside of our service. So I think whatever solution you're going to arrive at should take account of that economic reality.

—

JAMES HODGE:

People want a search engine with all the options. Whatever I'm searching for. And so yes, maybe more people would also say, "I'd like my food recipes", "I’d like my local news", but it is a package that ultimately is being sold.

...

But my second point is if Google thinks these are wild exaggerations, are you not doing yourself a disservice by not being transparent because people are forced to make assumptions when they have no information. If you think it's wildly off, why the resistance to transparency? If this has no value to Google or very little value, why not be transparent about it and then have a proper debate between the media and Google, not just mediated by ourselves?

ERIN SIMON:

To your question about transparency, I think we have been sharing information. We have provided figures about news-seeking queries and overall click volumes there. But there is attention because we are trying to preserve our ability to provide a good service to our users.

...

I think also we just fundamentally don't think that the best approach to this is to try to arrive at the specific monetary value that news provides to the search engine. Number one because I don't think that that answer really exists. Because everything is contributing and the loss of any one vertical or component, it would be harmful to the search engine, but the rest of the search engine would still be there. But also because I think that the solutions here are gonna be found in the collaborative business models and support that Sulina and Marianne were talking about.

JAMES HODGE:

The transparency that's being asked is, well, can we have it verified how much the search is, how much revenue you make in South Africa?

...

Look, I know you're not gonna give an answer. I just feel that Google needs to reflect on that because all it does is fuel speculation and distrust. And if there is a partnership, a partnership is about openness, not "I'm hiding my information and we have your information".

SULINA CONNAL:

We just want to highlight we don't believe that we're being resistant to transparency. We took time to work out and share the amount that was directly related to news queries. We don't have the finance people nor the information here candidly, to be able to answer some of the questions. But we're happy to set up a separate session, with you and the right people.