Google and Facebook collectively take 68 cents out of every dollar of online advertising revenue in Australia, the Australian competition watchdog has found.
The Australian Competition and Consumer Commission (ACCC) on Monday released a preliminary report into the impact of digital platforms including Google and Facebook on the media market in Australia, and has argued that there should be oversight of these companies to ensure their market power is not abused.
An ACCC survey found that 70% of Australians online used Google daily, while 58% used Facebook. YouTube was used by 29% of people every day and Instagram by 22%.
A majority of Australian readers click through to news sites via Google and Facebook rather than go directly to those news sites (53% versus 43%, according to the ACCC).
This market domination has meant Google and Facebook are eating up a massive chunk of online advertising revenue, the ACCC found. If you exclude online classifieds sites such as Gumtree, Google accounted for 47% of all online advertising spend in 2017, and Facebook accounted for 21%.
Online advertising now accounts for around half of all advertising in Australia, the ACCC said.
It said both companies have substantial market power in Australia and that if a media company chose not to use Google and Facebook to drive traffic to their sites, it would be difficult to replace the loss in traffic.
The ACCC said it was concerned about the lack of warning Google and Facebook give to news outlets when the algorithms change and affect the prominence of news stories.
"The ubiquity of the Google and Facebook platforms, and the lack of transparency in the operation of their algorithms, have had adverse effects on news publishers and their opportunities to monetise their content," the ACCC said.
This could be overcome by a new independent regulatory authority with investigative power to oversee the companies and how content from media companies is presented to users on those sites.
The ACCC has also called for more power to be given to consumers on what information companies such as Google and Facebook collect on them, including beefed up powers in the Privacy Act to provide more informed consent on what information users hand over to the big companies, as well as more powers to delete data from these sites, and increased fines for breaches of privacy.
The government hasn't yet indicated whether it would adopt any of the proposals. The inquiry itself was part of a deal the government made with Centre Alliance in order to pass media ownership reform legislation. The ACCC's preliminary report is open for public comment, and a final report will be handed to the government after the 2019 election in June next year.
Josh Taylor is a Senior Reporter for BuzzFeed News and is based in Sydney.
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