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The Australian government has ordered the competition watchdog to investigate Google and Facebook's impact on the media

Australian Prime Minister Malcolm Turnbull meets with Facebook staff in Sydney. Photo: El Pics/Getty Images.

The market power of Facebook and Google and their impact on the Australian media will be the subject of a new investigation from the Australian Competition and Consumer Commission (ACCC).

Treasurer Scott Morrison and the Communications Minister directed the competition watchdog to look at the impact digital companies are having on the media and advertising sectors. The inquiry honours a commitment to former independent senator Nick Xenophon to examine the behaviour of the global digital giants as part of a deal to support media reform.

Xenophon, who resigned to pursue a career in state politics in South Australia, has been a vocal critic of Google and Facebook deriving revenue from the journalism of media companies struggling with cutbacks amid dwindling revenue streams.

The inquiry will be held under a provision of the Competition Act that gives the ACCC wide-ranging powers, including compulsory information gathering.

ACCC Chairman Rod Sims said the inquiry will look at the effect that digital search engines, social media platforms and other digital content aggregation platforms are having on competition in media and advertising markets.

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

Sims said there were growing concerns about the impact of Facebook and Google when it comes to the media’s ability to fund journalism, adding that ACCC merger reviews revealed most advertisers are spending less on print newspapers and looking to digital media instead.

“The ACCC will look closely at the impact of digital platforms on the level of choice and quality of news and content being produced by Australian journalists,” he said.

“We are keen to hear the views of content creators, mainstream media outlets and smaller media operators, platform providers, advertisers, journalists, consumers and small business interest groups.”

A preliminary report into the issues is expected within 12 months, with a final report due early June 2019.

Details on the terms of reference for the inquiry are available here.

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