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A report by the Competition Commission into the state of the News Media Sector has shown that artificial intelligence (AI) chatbots pose a new threat to the sector.
At the same time, social media and search engines have become primary news sources.
The Commission launched the Media and Digital Platforms Market Inquiry report on Monday following severe financial strain in the media sector due to the digitalisation of news consumption.
The Inquiry determined whether this shift conducted by search and social media platforms competing for digital advertising and playing an intermediary role may exacerbate news media’s difficulties.
Paula Fray, one of the panel members of the inquiry, delivered the findings.
She outlined what the Inquiry examined to compile the findings and remedial actions that can be implemented.
The Inquiry examined the role of search and social media platforms in digital advertising and news distribution, the impact of AI Chatbots and AI-powered search on news media, and the AdTech industry and its effect on monetisation for news publishers.
She said there are now shrinking newsrooms as journalism jobs have halved.
“There is an increased casualisation of journalists. Many community and regional newspapers have shut down.”
Fray said AI Chatbots pose a new threat to news media by reducing referral traffic and capturing content value on their platforms.
The Commission’s report details that OpenAI’s ChatGPT, Meta AI, Google’s Gemini, and Microsoft’s Co-pilot will have the largest collective impact of all AI products on the news media due to their extensive distribution through standalone sales and partnerships, social media, Android devices, and desktops, respectively.
“The AI developers have already benefited from SA news media content in training and developing their AI Foundational Models and Chatbots.
“The South African news media continues to provide access to AI web crawlers to scrape their website content for training purposes, and as a result, appears either ill-informed or ill-equipped to protect their content from AI web crawlers due to the opt-out rather than opt-in requirements.
“Restricting access places SA news media in a better position to negotiate content deals with AI developers whilst still providing access for public interest GenAI projects that deploy their web crawlers.”
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The report said the unfair use of news media content to develop LLMs and Chatbots that now compete to inform consumers on news queries and monetise consumer traffic.
“Evidence of the effect is the actual use of news media to develop models and to respond to news queries on Chatbots, along with the limited referral traffic that AI summaries provide.
“Distorting competition amongst news media through degrading the prominence of SA media relative to contracted foreign media.
“Evidence of the effect includes the contractual provisions requiring the contracted news media to be used as the preferred source for news query grounding.”
The report outlines that the conduct harms the quality and consumer choice of SA news media, particularly the diversity of media through SME and HDP-owned media that offer community and vernacular media along with the public broadcaster.
Harm to the quality and diversity of media, along with the plurality of voices and the ability for citizens to get news in their home language, undermines citizens’ Constitutional rights. Hence, the adverse effect is considered substantial.
Outlining the Provisional Remedies was the chairperson of the Inquiry, James Hodge.
The provisional remedies are designed to form the basis for further debate and engagement.
“The Inquiry has primarily focused on addressing the source of adverse competitive outcomes and setting out the more competitive outcomes it would like to see, being open to different mechanisms to achieve those outcomes.
“Google, Microsoft, OpenAI, and Meta will put in place measures to ensure that there is no over-representation of global news media, for which content deals have been concluded at the expense of SA media.
“One proposal is for the AI companies to conclude SA deals and to ground SA user news queries using content from the SA media.
“To the extent that OpenAI and Meta develop their search web crawlers, these need to offer SA news media the ability to opt out of the training for their models separately.”
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Regarding social media’s impact, the Inquiry found that 87% of South Africans get their news online, mostly via mobile phones.
Social media and search engines have become primary news sources.
Younger audiences prefer news videos more than text and are primarily consumed on social platforms.
Traditional ad revenue for print media declined by 40%, and SABC ad revenue dropped by 47%.
TikTok is likely to become more critical in digital advertising as it improves the monetisation of an already large consumer base.
Whilst smaller, X is an influential platform given its role in breaking news and public debate.
“The public broadcaster is particularly affected by YouTube, making public interest broadcasting in vernacular languages far less financially sustainable.”
“The recent tactics of social media platforms have been to starve the news media of referral traffic, the value it offered in return for the content.
“The preferred outcome is that referral traffic is restored given the higher value ads that the news media can generate on referral traffic, rather than monetisation on those platforms with low-value ads,” read the report.
The remedies also include the Department of Communications and Digital Technology (DCDT) amending the Electronic Communications and Transactions Act(ECTA) to introduce liability for online platforms where they allow harmful content and amplify misleading content through their algorithms or where misinformation reaches a certain threshold of users through follower accounts.
“Additionally, ECTA needs to be amended to introduce a provision requiring platforms to adopt a policy of pro-actively removing harmful content and not providing an algorithmic boost to misinformation, including a prohibition on promoted posts or ads that contain misinformation.”
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The report says Google’s monopoly position and the media’s unequal bargaining position mean there has not been an equitable share of value between Google and news publishers in South Africa, both historically and currently.
“This inequity has materially contributed to the erosion of the media in SA over the past fourteen years and will continue to do so unless remedied.”
The unequal bargaining position has created an inequitable sharing of user data and insights between Google and news publishers.
“AI-powered search is likely to cause an even greater extraction of value by search engines from news publishers unless news publishers have the option to opt-out of AI summaries, and technological choices are made that ensure referral traffic to news publishers is not degraded by these tools.”
“A bargaining solution is unlikely to remedy the issues, and the large print media have, in any event, failed to reach an agreement despite negotiations with Google, while other media organisations, such as the public broadcaster, have been excluded from negotiations altogether.
“The inquiry has therefore determined the range for the remedial value that can be imposed or act as a guide for further negotiations between the media and Google.”
The Inquiry has also felt the need to set out how such funds may be dispersed given the divergent interests in the media and concerns that outcomes may favour the established large media in a market where media concentration already exists.
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