The inquiry will be led by the Australian Competition and Consumer Commission, which will assess the practices of the two digital giants in regard to media publishers.
The ACCC will focus on five key terms of reference:
Facebook and Google have said they will cooperate with the inquiry.
The inquiry was a condition demanded by the Nick Xenophon Team for its support for the government’s media reform legislation.
Party leader and former senator Nick Xenophon has long advocated greater accountability and transparency of the digital companies.
NXT communications spokesperson, Senator Stirling Griff, welcomed the inquiry.
“This inquiry will be important as it will expose the tactics search engines and social media platforms have employed to hoard advertising dollars, the conditions they have forced media organisations to accept, and the part they have played in the gradual erosion of the media’s bottom line,” he said.
“They need to be called to account for their behaviour and lack of transparency, which is irrefutably having an impact on Australian media organisations.
“In the end the inquiry should tell us if the market is being distorted and dominated, the fairness and need for better commercial terms for content providers, whether advertisers are getting a good deal and what the future holds with innovation and technological change.”
Federal shadow communications minister Michelle Rowland criticised the timing of the inquiry and the terms of reference for being too broad.
News publishers have regularly criticised Google and Facebook for lack of transparency and their refusal to acknowledge the impact they have had on the media landscape and monetisation.
The Media, Entertainment & Arts Alliance CEO Paul Murphy supported the publishers’ calls.
“These internet companies don’t produce content, but their success spreads grief throughout our media sector. Belatedly, policy makers are beginning to realise that the success of these digital giants is contributing to the decline of media content makers and the jobs they sustain,” he said.
Facebook has been marred by metric inconsistencies, often bloated to over represent reach and interactions. Google also has had its fair share of controversy in 2017, with many advertisers pulling their branding from video site YouTube after advertisements appeared next to extremist, violent and paedophilic content.
News Corporation CEO Robert Thomson recently announced the publisher had come to an agreement with Google to scrap the search engine’s “first click free” program. The program ensured the users could bypass paywalls on a select number of articles per day if redirected from the digital giant’s news aggregator Google News.
It has since been replaced with a program called “flexible sampling”, which gives publishers more control of its product.
Digital giants Google and Facebook have been excluded from the Australian Government’s amendments to copyright safe haven laws, despite consistent calls from the companies for further protections.
Communications Minister Mitch Fifield introduced the Copyright Amendment (Service Providers) Bill on Wednesday, which extended the Copyright Act’s safe harbour provisions to the disability, education, library, archive and cultural sectors.
The safe harbour provisions give sites and services protections on content uploaded by users that could infringe copyright, so long as the sites take responsibility to promptly remove such content.
The government’s plans to introduce legislation in March were stalled when content creators and owners objected to Facebook and Google falling under the umbrella of protection.
News Corp Australia, Foxtel and Australian Recording Industry Association all argued against the inclusion of the two..
Telstra, Optus, TPG Telecom and Vodafone all hold safe haven protections. No internet service is currently included under this provision