Australian media regulators face the challenge of dealing with global platforms Google and Facebook



‘Google and Facebook are global companies, headquartered in the US, for whom Australia is a significant but relatively small market.’
Shutterstock/Roman Pyshchyk

Terry Flew, Queensland University of Technology

With concerns growing worldwide about the economic power of digital technology giants such as Google and Facebook, there was plenty of interest internationally in Australia’s Digital Platforms Inquiry.

The Australian Competition and Consumer Commission (ACCC) inquiry was seen as undertaking a forensic account of market dominance by digital platforms, and the implications for Australian media and the rights of citizens around privacy and data protection.

The inquiry’s final report, released last month, has been analysed from perspectives such as competition policy, consumer protection and the future of journalism.




Read more:
Consumer watchdog calls for new measures to combat Facebook and Google’s digital dominance


But the major limitation facing the ACCC, and the Australian government, in developing new regulations for digital platforms is jurisdictional authority – given these companies are headquartered in the United States.

More ‘platform neutral’ approach

Among the ACCC’s 23 recommendations is a proposal to reform media regulations to move from the current platform-specific approaches (different rules for television, radio, and print media) towards a “platform-neutral” approach.

This will ensure comparable functions are effectively and consistently regulated:

Digitalisation and the increase in online sources of news and media content highlight inconsistencies in the current sector-specific approach to media regulation in Australia […]

Digital platforms increasingly perform similar functions to media businesses, such as selecting and curating content, evaluating content, and ranking and arranging content online. Despite this, virtually no media regulation applies to digital platforms.

The ACCC’s recommendations to harmonise regulations across different types of media draw on major Australian public enquiries from the early 2010s, such as the Convergence Review and the Australian Law Reform Commission’s review of the national media classification system. These reports identified the inappropriateness of “silo-ised” media laws and regulations in an age of digital convergence.




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What Australia’s competition boss has in store for Google and Facebook


The ACCC also questions the continued appropriateness of the distinction between platforms and publishers in an age where the largest digital platforms are not simply the carriers of messages circulated among their users.

The report observes that such platforms are increasingly at the centre of digital content distribution. Online consumers increasingly access social news through platforms such as Facebook and Google, as well as video content through YouTube.

The advertising dollar

While the ACCC inquiry focused on the impact of digital platforms on news, we can see how they have transformed the media landscape more generally, and where issues of the wider public good arise.

Their dominance over advertising has undercut traditional media business models. Online now accounts for about 50% of total advertising spend, and the ACCC estimates that 71 cents of every dollar spent on digital advertising in Australia goes to Google or Facebook.

All media are now facing the implications of a more general migration to online advertising, as platforms can better micro-target consumers rather than relying on the broad brush approach of mass media advertising.

The larger issue facing potential competitors to the digital giants is the accumulation of user data. This includes the lack of transparency around algorithmic sorting of such data, and the capacity to use machine learning to apply powerful predictive analytics to “big data”.

In line with recent critiques of platform capitalism, the ACCC is concerned about the lack of information consumers have about what data the platforms hold and how it’s being used.

It’s also concerned the “winner-takes-most” nature of digital markets creates a long term structural crisis for media businesses, with particularly severe implications for public interest journalism.

Digital diversity

Digital platform companies do not sit easily within a recognisable industry sector as they branch across information technology, content media, and advertising.

They’re also not alike. While all rely on the capacity to generate and make use of consumer data, their business models differ significantly.

The ACCC chose to focus only on Google and Facebook, but they are quite different entities.

Google dominates search advertising and is largely a content aggregator, whereas Facebook for the most part provides display advertising that accompanies user-generated social media. This presents its own challenges in crafting a regulatory response to the rise of these digital platform giants.

A threshold issue is whether digital platforms should be understood to be media businesses, or businesses in a more generic sense.

Communications policy in the 1990s and 2000s commonly differentiated digital platforms as carriers. This indemnified them from laws and regulations relating to content that users uploaded onto their sites.

But this carriage/content distinction has always coexisted with active measures on the part of the platform companies to manage content that is hosted on their sites. Controversies around content moderation, and the legal and ethical obligations of platform providers, have accelerated greatly in recent years.

To the degree that companies such as Google and Facebook increasingly operate as media businesses, this would bring aspects of their activities within the regulatory purview of the Australian Communication and Media Authority (ACMA).

The ACCC recommended ACMA should be responsible for brokering a code of conduct governing commercial relationships between the digital platforms and news providers.




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This would give it powers related to copyright enforcement, allow it to monitor how platforms are acting to guarantee the trustworthiness and reliability of news content, and minimise the circulation of “fake news” on their sites.

Overseas, but over here

Companies such as Google and Facebook are global companies, headquartered in the US, for whom Australia is a significant but relatively small market.

The capacity to address competition and market dominance issues is limited by the fact real action could only meaningfully occur in their home market of the US.

Australian regulators are going to need to work closely with their counterparts in other countries and regions: the US and the European Union are the two most significant in this regard.The Conversation

Terry Flew, Professor of Communication and Creative Industries, Queensland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Abbott suggests sacking bank regulators as ASIC feels the heat


Michelle Grattan, University of Canberra

Former prime minister Tony Abbott has strongly condemned the performance of financial sector regulators, suggesting they should be sacked and replaced by “less complacent” people.

With increasing attention on the apparently inadequate performance of the Australian Securities and Investments Commission (ASIC), Abbott raised the question of what the regulators had been doing as the scandals had gone on.

“We all know there are greedy people everywhere, including in the banks,” he told 2GB on Monday. “But banking is probably the most regulated sector of our economy. What were the regulators doing to allow all this to be happening?”

Abbott said his fear was “that at the end of this royal commission we will have yet another level of regulation imposed upon the banks when frankly what should happen is, I suspect, all the existing regulators should be sacked and people who are much more vigilant and much less complacent go in in their place.”

He said the analogy was, “yes, punish the criminals but if the police are turning a blind eye to the criminals, you’ve got to get rid of the police and get decent people in there”.

Meanwhile Malcolm Turnbull, speaking to reporters in Berlin, defended refusing for so long to set up a royal commission, although he said commentators were correct in saying that “politically we would have been better off setting one up earlier”.

Turnbull said that by taking the course it had the government “put consumers first”.

“The reason I didn’t proceed with a royal commission is this – I wanted to make sure that we took the steps to reform immediately and got on with the job.

“My concern was that a royal commission would go on for several years – that’s generally been the experience – and people would then say, ‘Oh you can’t reform, you can’t legislate, you’ve got to wait for the royal commissioner’s report.’

“So if we’d started a royal commission two years ago, maybe it would be finishing now and then we’d be considering the recommendations … With the benefit of hindsight and recognising you can’t live your life backwards, isn’t it better that we’ve got on with all of those reforms?”

Turnbull dismissed Bill Shorten’s call for the government to consider a compensation scheme for victims by saying this matter was already in the commission’s terms of reference.

Among the reforms it has made, the government highlights giving ASIC more power, resources and a new chair.

But Nationals backbencher senator John Williams, who has been at the forefront of calls for tougher action against wrongdoing in the financial sector, told the ABC that ASIC has got to be “quicker, they’ve got to be stronger, they’ve got to be seen as a feared regulator.

“That is not the situation at the moment,” he said.

He had sent a text message to Peter Kell, ASIC deputy chair, a couple of nights ago “and I said, mate, Australia is waiting for you to act”.

Asked how the culture within ASIC could be changed, Williams said, “I suppose you keep asking them questions at Senate estimates, keep the pressure on them, keep the message going on with the management of ASIC regularly.

“As I have said to the new boss [chair James Shipton], you’ve got to act quickly, you’ve got to be severe, you’ve got to be feared. If you’re not a feared regulator, people are going to continue to abuse the system, do the wrong thing without fear of the punishment”.

He welcomed the increased penalties announced by the government last week.

The chair of the Australian Competition and Consumer Commission (ACCC), Rod Sims, while declining to comment on ASIC, said he agreed with Williams “that you really do have to be feared. And frankly I’d like to think the ACCC is.

“I won’t comment on others but you want people to be really watching out – watch out for the ACCC, watch out that you don’t get caught because if they catch us it’s going to be really dire consequences. And I think we’ve got that mentality,” he told the ABC.

Updated at 4:30pm

The ConversationIn an interview on Sky late Monday, Finance Minister Mathias Cormann admitted, “With the benefit of hindsight, we should have gone earlier with this inquiry.” This was in stark contrast with his colleague, Minister for Financial Services, Kelly O’Dwyer, refusing to make the concession when she was repeatedly pressed in an interview on Sunday.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Charity regulators should not assume that donors always know best



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Whether charitable giving functions like a market is part of a broader and complex debate within the sector.
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Krystian Seibert, Swinburne University of Technology

Last week, the government appointed Gary Johns to head the Australian Charities and Not-for-profits Commission (ACNC), the independent national charities regulator.

In an opinion piece published in The Australian, Johns outlined some of his priorities in his new role. He wrote:

At its core, the [charities] sector is a market in charitable intentions.

Based on this, he said the ACNC should “assist donors to fulfil their charitable intentions”, by “helping the donor market drive the charity dollar to its most efficient and best uses” by providing information to donors they can use to judge the “state of the market”.

Johns’ approach seems to reflect a view that altruistic behaviour like charitable giving is based on similar motivations and drivers as economic decisions such as purchasing a good or service.

Consequently, if donors are given the useful and accessible information about charities, they will make decisions that reward charities that perform better than others. In theory, this will lead to a more “efficient” charities “market”.

Whether charitable giving functions like a market is part of a broader and complex debate within the sector. It includes discussion about the role of impact investing, and using business-based approaches to tackle social challenges. Some ideas and approaches show great promise; others seem to not quite fit.


Further reading: What is the impact of ‘impact investing’?


Many of the challenges charities seek to tackle arise due to market failure in the first place, or the uneven distribution of the benefits of markets working like they are supposed to. Therefore, to aspire to build the charities sector in the market’s image may be a flawed starting point. And in relation to market-based approaches to charitable giving, the US experience is very relevant.

Lessons from the US

In 2014, the Hewlett Foundation, a large US philanthropic organisation, decided to end its US$12 million Nonprofit Marketplace Initiative that started in 2006. Its ambitious goal was that, by 2015, 10% of individual donations in the US would be influenced by meaningful, high-quality information about charities’ performance.

As part of its strategy, it provided funding to “charity evaluators”, including Charity Navigator, GiveWell and Guidestar. They seek to assess charities’ financial and other information to give donors information they can use to guide their decisions.

The Hewlett Foundation’s own evaluation found that while the initiative succeeded at producing more information about charities, it did little to change donors’ decisions. Research undertaken in 2010, four years into the initiative, found that only 3% of individual donors compare information about relative performance when deciding which charity to support.

It also found that a majority of donors make giving decisions based on factors like loyalty, personal connections, and faith-based commitments.

Studies looking at the effectiveness of charity evaluators also back up these findings. They show just how problematic it is to expect donor behaviour to adhere to “market-based” frameworks.

A study that examined how donors respond to ratings of charities such as those provided by Charity Navigator found that, in general, they have a minor and often insignificant impact on donor behaviour. Another study found that changes in charity ratings tend not to affect donor support.

The Giving Australia 2016 report echoes these findings. It found that “making a difference, personal values and relationships motivate givers”. Charity performance was far down the list of motivations for giving.

What now for charities in Australia?

Charitable giving takes many forms and is driven by numerous and complex motivations – from reflexive and generous responses at one end of the spectrum to planned and structured giving in pursuit of specific objectives at the other. The latter approach is what we generally think of when referring to “philanthropy”.

One of philanthropy’s strengths is that it takes risks to help drive social progress. The outcomes of this risk-taking can often then be used to inform government policy.


Further reading: Twiggy Forrest donation: more philanthropy means more risk-taking – and that’s good


The Hewlett Foundation’s experience in this regard should provide a valuable insight into the extent to which market-based approaches should be applied to charitable giving in Australia.

It does not mean that we should disregard the value of providing information about charities to donors: quite the opposite. Financial and performance information is important for due diligence purposes regarding the operations of a charity. But we should not overstate the influence of such information on donor decision-making, nor assume that such information will necessarily drive improvements in charity “efficiency”.

There are two developments the ACNC could drive that would provide great benefit to the Australian charities sector:

  • Johns says he wants “to have the ACNC develop and apply a taxonomy of charitable causes to the ACNC”. It would certainly be worthwhile to adopt a consistent terminology for charitable causes in Australia. The global gold standard for this is the Foundation Center’s Philanthropy Classification System. CLASSIE is an Australian taxonomy that builds on the Foundation Center’s.

  • Although charities must submit reports to the ACNC consistent with the Australian accounting standards, there is great variation in how these standards are applied – for example, in relation to fundraising expenditure. This means meaningful comparisons of charities’ financial information is difficult. It would be beneficial to consider introducing charity-specific accounting standards in Australia, as the UK has done.

Whatever the next steps may be, the social challenges charities tackle are complex, and strategies to address them will take time to have an impact. Often conventional metrics of performance just don’t cut it when it comes to such long-term challenges.

And, in most cases, donors will have far less knowledge about social change than those working for the organisations they fund or the communities in which those organisations operate.

The ConversationDonors provide the funding that brings to life the expertise and experience of those who receive it for the public benefit. Donors play a critical role supporting Australian charities, but we should not attribute them with more knowledge than they actually have.

Krystian Seibert, Adjunct Industry Fellow, Centre for Social Impact, Swinburne University of Technology

This article was originally published on The Conversation. Read the original article.