The race for data-driven dollars will determine the future of a news industry in which journalists are already struggling to make money from news.
So says Rod Sims, chairman of Australia's competition watchdog, the ACCC.
In a speech to the International Institute of Communications' Telecommunications and Media Forum yesterday, he warned of the impact of financial pressures on social giants Google and Facebook, whose survival is dependent on substantial future growth.
"Their current share prices reflect a little of their current market position, but they also incorporate a huge margin for projected growth," he said, putting that proportion at 65-80 per cent of Facebook's share price and 40-60 per cent of Google's.
"If their profits were simply expected to stay at current levels their share prices would plummet."
Market valuation indicated its belief that both companies will be even stronger in the future and "whatever issues we have face today will only grow".
Sims described the question of how the proliferation of digital platforms was approached, and how they collected and managed data, as "one of the defining questions of our age".
The ACCC inquiry will explore four key questions:
-whether platforms have substantial 'market power' and, if so, how that market power was being used;
- the impact on consumers, whether digital platforms were sufficiently transparent in the collection and use of consumer data and were complying with Australian consumer law, and whether "users were 'selling' their data too cheaply" in exchange for convenience;
-whether digital platforms enjoy an unfair competitive advantage because of differences in regulation; and
-how digital platforms affected the quality of news and journalism - "whether the reduction in advertising revenue prevents publishers and broadcasters from delivering quality journalism, by which we mean investigative, verified and diverse journalism".
Sims likened the "highly valued profession" of journalism to that of medicine: "Just as we are well advised not to rely on amateur doctors, perhaps we should not rely on amateur journalists.
"I see professional journalists continually investigating stories to unearth the truth and provide analysis. I receive calls from journalists who have heard something exciting, but will not print it without confirmation.
"News can be anything, contributed by journalists or the person next door. It exploded in breadth from the 1830s with the invention of the telegraph. News is exploding again with digital platforms.
"Digital platforms mean that journalists now struggle to make money from news. The question is can they still make money from journalism?"
He also touched on telecommunications industry, and the ACCC's desire to promote competition in wireless communications markets. Trade-offs between promoting an early roll out of 5G and competition "must be carefully weighed" to avoid unintended consequences, particularly where a fourth mobile player was seeking to enter the market.
• Rod Sims' full address is here
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