South Africa Proposes Tax on Google and Meta to Support Local Media
News platforms in South Africa have suffered significant losses over the last decade or so as the distribution of news content has become digital.
South Africa’s Competition Commission has placed major tech companies like Google and Meta (Facebook) under scrutiny, calling for a fairer distribution of revenue between digital platforms and local media companies. In its provisional Media and Digital Platforms Market Inquiry (MDPMI) report, the commission has proposed a 5%-10% tax on these digital giants if they fail to adequately compensate local media. This move highlights the growing global debate on the dominance of tech platforms in digital advertising and their impact on traditional news media.
The Struggle of Local Media Against Big Tech
Over the last decade, South African news outlets have faced a steep decline in revenue as the media landscape has shifted online. Platforms like Google Search, Facebook, YouTube, and TikTok have become primary sources for accessing news, drastically reducing the readership of traditional newspapers. However, despite driving traffic to news websites, these digital platforms capture a disproportionate share of advertising revenue, leaving local media companies struggling to survive.
The commission’s investigation, launched in October 2023, examined how this digital shift has affected the sustainability of South African news organizations. Its findings confirm what many local publishers have long argued: big tech benefits disproportionately from local news content while contributing little in return.
The Revenue Imbalance: How Big Tech Benefits
One of the key revelations of the MDPMI report is the financial imbalance between digital platforms and local publishers. The commission estimates that Google alone benefits from South African news content by approximately R800 million annually, while local media companies collectively gain only R200 million from the referral traffic Google provides. This suggests a R500 million gap in revenue distribution, reinforcing the argument that digital platforms should contribute more to sustaining local journalism.
Google, however, disputes these figures, stating that it earns only R18 million from South African news searches annually. It claims that the real value lies in the R600 million in free traffic it provides to publishers. Nevertheless, the commission argues that the issue goes beyond mere financial compensation, extending to algorithmic biases, AI training on local news content, and the visibility of South African news in search results.
Key Concerns Raised by the Inquiry
The Competition Commission’s report identifies several critical issues affecting local news media:
- Algorithmic Bias: Google’s algorithm allegedly prioritizes international news sources over local publications, reducing the visibility of South African news.
- AI Scraping of News Content: Tech companies use AI bots to scrape news websites and train large language models without proper compensation.
- News Visibility on Social Media: Platforms like Meta’s Facebook and X (formerly Twitter) have reduced the visibility of local news content, further harming media companies.
- Shrinking Newsrooms: The shift to digital has led to a 50% decline in journalism jobs, the closure of many local and regional news outlets, and the increasing precarity of journalism careers.
Proposed Solutions and Recommendations
To address these concerns, the commission has proposed a series of measures aimed at ensuring fair compensation and supporting an independent press in South Africa. Among the most significant are:
For Google and Other Digital Platforms:
- Direct Compensation: Google should pay between R300 million and R500 million over three to five years to local media.
- AI Opt-Out Without Penalty: Local news publishers should be allowed to opt out of AI-generated summaries without losing search visibility.
- Algorithmic Adjustments: Google should prioritize South African news sources in local searches rather than international outlets.
- Revenue Sharing Agreements: Meta, X (Twitter), and other social media platforms should restore the visibility of South African news and implement expanded revenue-sharing models.
- Transparency and Data Sharing: Tech giants should provide anonymized data to local publishers to assist with Search Engine Optimization (SEO) and audience insights.
- Combatting Misinformation: Digital platforms should work with South African news outlets to improve fact-checking and misinformation management.
- AI Negotiations: Media organizations should be able to negotiate fair compensation for their content being used in AI model training.
For the South African Government and Local Businesses:
- Tax Incentives: The government should provide tax breaks or dedicated advertising budgets to sustain local media.
- Collective Ad Sales: Allowing South African media companies to sell ads collectively to strengthen their bargaining power against tech giants.
- Donation-Based Media Fund: Establishing a national fund to support independent journalism through public and corporate donations.
A Possible Digital Tax: The Last Resort
While the commission hopes for a negotiated solution, it has also warned that if digital platforms fail to reach agreements with local media companies, the government may impose a digital levy of 5%-10% on tech companies operating in South Africa. This tax would apply to search engines, social media networks, and AI-based companies profiting from South African content.
What’s Next?
The provisional report opens the door for further debate. Stakeholders, including Google, Meta, local publishers, and the general public, have six weeks to submit their responses. The deadline for submissions is 07 April 2025, after which the Competition Commission will finalize its recommendations.
If no meaningful changes are made by the tech giants, South Africa could join other countries, such as Australia, Canada, and the European Union, which have already implemented laws forcing digital platforms to compensate local media.
South Africa’s Competition Commission has taken a bold step in challenging the dominance of global tech giants in the digital news ecosystem. While Google, Meta, and others have defended their positions, the report underscores the urgent need to protect local journalism and ensure fair revenue distribution.
Whether through voluntary agreements or regulatory measures, the future of South African news media hinges on finding a sustainable model where both digital platforms and local publishers can thrive. The coming months will be crucial in determining whether the tech giants are willing to cooperate—or if South Africa will be forced to introduce one of the world’s first digital taxes on Big Tech.
