Naspers Owned Media Groupe Media24, the parent company of the country's biggest publication News24, told the Competition Commission that Google was abusing its “dominance” and threatening the viability of South Africa's fourth nation.
Media24 CEO Ishmet Davidson told the Competition Commission on Tuesday that Google was siphoning advertising revenue from South Africa, making it increasingly difficult for local publications to survive. . He said that despite its size, even News24 was losing money, and blamed Google and rival Meta Platforms, owner of Facebook, for the dire situation facing local publishers.
Mr Davidson said News24 was “forced” to put up a paywall on much of its content in 2020, but despite having more than 100,000 paid subscribers signed up, News24 was unable to make any cuts from subscription fees. Revenue “is not sufficient to offset the decline in advertising revenue,” he said. .
“In order to survive, we have been forced to control our costs as tightly as possible and have had zero cost increases for the past seven years…Despite cost interventions, we have reached 100,000 subscribers and 2,000 monthly users. News24 for 100,000 people is not profitable,” he told the committee. The Media and Digital Platforms Market Survey launched in Pretoria on Monday.
“This clearly shows that the business model is unsustainable, and combined with a moribund printing business, South African media is on the verge of extinction. The Fourth Estate is on its knees. Indeed. , one or two media companies may survive, but democracy thrives on multiple voices.”
And Davidson cited research from PwC and IAB that suggests media's share of the digital advertising market has fallen from 8% in 2015 to just 3% in 2022, at least in part due to this crisis. He argued in oral submissions that Google was responsible. Meta has come to 'dominate' South Africa's digital advertising market, leaving publishers with 'the wreckage'.
PAIA application
Ahead of the Competition Commission hearing, Mr Davidson said the Access to Information Act would “force” Google to disclose its South African revenues, operating expenses, intergroup expenses and pre-tax and after-tax profits. He said he has started the application. .
“They have flatly rejected claims of confidentiality for their competitors' confidential information, but this is a claim of convenience to hide the extent of their control and the truth of their cash-grabbing business model. “I think that would put us in even more equal competition with them,” he said. “That's impossible and it exacerbates what we think is a clear case of abuse of dominance.”
He said Google employs very few people in South Africa, “we estimate about 30 people”, so for South Africans “operating costs are minimal and job opportunities are very limited.” ' he claimed.
Read: Big Tech must be held accountable for news content: Sanef
“Sources say they charge platform fees to their South African operations from their headquarters in Ireland, resulting in very little taxable profit remaining in South Africa and South African income in Ireland subject to 12.5% tax. “It has been done,” he added. He provided evidence of this claim.
“I never said for a second that this was illegal, but in my opinion it is immoral. This will deprive South Africa of much-needed tax dollars and strengthen Google's grip on South Africa.” . We could be completely off topic… Prove us wrong and we will apologize.”
He said Google was unfairly profiting from South African media houses' content without providing compensation. However, he admitted that he also held Google responsible for driving large amounts of referral traffic to local news websites (in the case of News24 he had 44%).
However, he said: “We did not ask for Google News' efforts. In any case, it is aimed at increasing their control over the media industry. We do not want their philanthropy. We do not want their philanthropy. Our goal is to get paid fairly for our content.”
TechCentral has reached out to Google for comment on Media24's Competition Commission submission and will update this article if we receive feedback.
The committee hearing continues until Friday. — © 2024 News Central Media