How Google and Facebook are the biggest threat to South African news media

The phenomenal growth of Google and Facebook as conduits of information and entertainment has devastated traditional media, whose share of advertising revenue is projected to decline even further. But anxiety over the scale of their market domination, scattergun approach to advertising and lack of responsibility has led to calls for greater regulation of the tech behemoths.

The media industry calls it the "two giants problem". Or the "two elephants in the room". Or "the biggest threat to our industry". Grappling with the conversion of their traditional media assets to digital platforms, SA’s industry leaders cite a common problem: the overwhelming and growing dominance of the big two of social media, Facebook and Google.

Esmaré Weideman, CEO of Media24, says Google alone took about 70% of local online advertising, and social media, of which the biggest is Facebook, another 12%. After others — like classified sites and mobile operators — took their share, the major media groups had only 8% between them.

"We are up against the duopoly, and we have to fight for what is left over," she says.

"They are the two elephants in the room," says the Independent group’s head of digital, Walter Madzonga. "We take that for granted, and we work around it."

"Carnage," is the word used by Lisa MacLeod, head of digital at Tiso Blackstar (owners of the Financial Mail).

"It is the biggest threat to our industry," says Toby Shapshak, digital media analyst and publisher of Stuff magazine.

The problem is global. In the US, Google and Facebook together took 77% of online advertising spend last year, and their share is growing annually. Though the spend grew a significant 21.8% last year to reach US$72bn, an astounding 99% of this growth went to these two companies, according to Pivotal Research. Their closest rivals, Microsoft and Yahoo, were under 4% of the market, leaving a huge gap between the big two and the rest.

PwC’s Entertainment & Media Outlook puts Internet advertising in SA at R4.4bn for 2016. While this is well below newspapers and television and about the same as radio, growth levels are projected at 14%-16%/year for the next few years, whereas the other media face far more modest growth or, in the case of newspapers, serious decline.

Google and Facebook do not give figures for their SA advertising revenue. "Because they do not break out the numbers, there is no visibility," says industry analyst Arthur Goldstuck.

The continued growth of the big two could have a devastating effect on the media’s role in defending democracy

But he has "an increasingly uneasy feeling that Facebook and Google are using their message of trying to do good things to actually hide what is an insidious strategy.

"It sounds like a conspiracy theory, but I think it is not that. It seems it is part of their company strategy to become not just dominant advertising platforms but the only advertising platforms.

"You might argue that business is business, but we know the media has an important role in SA. This is not just business. It is dramatically undermining the role of media in society."

Their dominance is based not just on the vast number of users (Facebook claims 16m users a month in SA), but their capacity to collect data on their audience and use it to target segments with much greater, almost clinical, accuracy than traditional media, who have been slow to keep up.

"Because search and social media are built on advertising and are so data-driven (they know where you live, how you access and use their media and they have all the information we have willingly given to them about our lives and our preferences), they are able to do a much better job than traditional media in segmenting audience and being specific about who you can direct your advertising to," Shapshak says.

Google and Facebook have always made much of the good they do in bringing communities together, facilitating communication and spreading knowledge. Famously, Facebook’s original mission statement was to "make the world more open and connected" and more recently "to bring the world closer together". Google only recently dropped its "Do no evil" slogan.

But discomfort with the power and scope of these two companies is growing, particularly with the role they have been playing in allowing the spread of fake news and racist speech.

"The problem for society," Shapshak says, "as we have seen with the spread of hate speech and anti-Semitic advertising and the placement of anti-Hillary Clinton advertising by Russian agents, is that Google and Facebook and all the other social media publishers are more interested in income than in democracy and freedom of speech.

"So, what we have is this huge engine that is exceptionally good at selling the right advertising to the right person and doesn’t mind if you are a nefarious agent for a foreign regime, a raving racist, a white supremacist or any other crazy ideologue.

Shapshak says the consequences for society are pretty terrifying.

Essentially technology companies, these behemoths like to see themselves as platform-providers rather than content-creators. But they carry — and have some responsibility for — a ton of content, and take an enormous amount of the global audience’s attention and time.

They are now also prime carriers of the content of traditional media companies, who find much of their audience through social media platforms. Their power and influence are growing beyond anything imagined.

Facebook’s Mark Zuckerberg was slow to respond to Russian attempts to use Facebook’s advertising to influence the US election, and this has led to calls for congress to intervene to regulate the advertising market. Zuckerberg moved pre-emptively by announcing steps to "make sure that Facebook is a force for good in democracy".

But, as The Guardian commentator Julia Carrie Wong put it, "more and more people are waking up to the fact that Facebook is less little piggy than it is out-of-control Tyrannosaurus Rex whose creator thought he was building a fun and profitable theme park until it was too late".

As if to emphasise that they won’t be held accountable, Google SA, when approached for comment last week, gave a terse "we unfortunately will not be available". Facebook’s local office would say nothing on the record about its advertising sales, but were prepared to address the problem of fake news in broad terms.

"People want accurate news on Facebook — and we want that too," says Facebook’s local "PR engineer", Janina Boezaart.

She says Facebook is working to disrupt economic incentives for false news, build new products to stop the spread of false news and help people make more informed decisions when they encounter false news.

"Everyone has a responsibility to do their part ... the goal is to empower people to identify misleading news content ... and send a strong signal that we are against false news."

There are two problems with this that show a continued failure to grasp the full scope of the problem: Facebook hands the responsibility to identify and block fake news back to the audience, rather than accepting it as its own obligation; and it relies on tools and technology which don’t always have the ability to judge what is fake, malicious or harmful. This leads to embarrassing gaffs like the recent banning of pictures of the Zulu reed dance because nipples are easier for software to identify than hate speech.

Part of the problem is the shift to what is called programmatic advertising — the automated sale and placing of advertising using algorithms to auction off available space and to match products with target markets with great precision. "It is a clever solution, but it is easy to manipulate," Shapshak says.

This was graphically demonstrated recently when investigative journalists at ProPublica used Facebook’s internal technology to place anti-Semitic advertising aimed at the audience most likely to respond to it. This targeting meant it would also be hidden from those who might object to it.

These practices are leading to a backlash. In the European Union, Google was fined a whopping €2.4bn this year for abusing its dominance of the search-engine market. It was found to have artificially promoted its own price comparison services in searches, denying consumers real choice. Google is appealing against the finding, but is also under investigation by the commission for other alleged legal infringements.

In the wake of the Russian advertising scandal, two US senators recently wrote to their colleagues calling for legislation to enforce transparency in social media advertising, in the hope that this would allow them to track abuses.

Such rules already apply to political adverts in broadcasting.

Traditional media companies may be able to exploit these vulnerabilities. Where they offer known, trusted and reliable brands, advertisers can feel more comfortable that they will not appear in inappropriate places and that they will get accurate information.

"Brands are getting much more specific about where they place their advertising," says Shapshak.

"We have seen a notable uptick in advertising from brands that want to reach a specific audience in a specific form of media as opposed to the scattergun approach of social media," he says.

"We are hearing from advertisers that they have anxiety because of programmatic advertising and the possibility that their advertising can appear next to a beheading or a white supremacist rant."

In addition, it appears the numbers given for how often online adverts are viewed may have been exaggerated. A US study in 2015 found that as many as one-third of online advertising "views" may have been by robots. Since most of this advertising is "pay-per-view" or "pay-per-click", this means the social media platforms might have been charging advertisers for fake clicks.

"People had learnt to game the system," Shapshak says.

"The software-driven advertising world is rife with problems that advertisers are starting to pick up."

So far, though, the big two have been elephantine enough to ignore or respond very slowly to pressure from the ants they are trampling on, which is why legislators are looking to intervene.

But many commentators are cautious about allowing government intervention in issues of media content and are uncertain it can work.

"There needs to be greater control from the tech companies themselves, and the reason they aren’t able to do that, as we have seen with Facebook, is because they want to get software to do a human’s job, and the software does not have good enough judgment," says Shapshak.

"I am always nervous of regulation," says Goldstuck, "but when you have market domination at that level, then regulation becomes necessary. So it is in their interest to rein themselves in."