South Africa Proposes Tax on Google, Facebook, AI Platforms. South Africa’s Competition Commission has proposed a new tax on global tech giants, including Google, Facebook, and AI platforms like ChatGPT, to address the financial imbalance between digital platforms and local media companies.
If these platforms do not establish a fair compensation model for South African news publishers, they could face a digital levy of 5% to 10%.
Digital Platforms Under Scrutiny
The Competition Commission released its provisional findings from the Media and Digital Platforms Market Inquiry (MDPMI), highlighting concerns about the influence of global tech companies in the country’s media landscape.
Launched in October 2023, the inquiry examined how digital platforms impact the revenue and sustainability of news publishers in South Africa.
Over the past decade, traditional media outlets have struggled financially as news consumption shifts to online platforms like Google Search, YouTube, Facebook, X (formerly Twitter), and TikTok.
Major digital platforms, particularly those owned by Alphabet (Google) and Meta (Facebook), dominate online advertising revenue. Local publishers argue that this dominance has come at the expense of South African media organizations.
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South Africa Proposes Tax on Google, Facebook, AI Platforms: Findings and Concerns
The Competition Commission found that:
- While Google and Facebook drive traffic to news websites, their ad revenue does not sufficiently compensate for losses from declining print and traditional media sales.
- The shift to digital has resulted in a 50% decline in journalism jobs and the closure of several regional and community-based news outlets.
- Algorithms and platform policies control how news is displayed, affecting visibility and increasing operational costs for local publishers.
The Tax Debate: Who Benefits More?
The report estimated that local publishers gain approximately R200 million from traffic referrals through Google. However, Google itself is believed to generate around R800 million from South African news content, creating an estimated imbalance of R500 million.
Google has contested these figures, claiming it earned only R18 million from South African news-related searches in 2023. It argues that the traffic it sends to publishers is worth about R600 million, suggesting that local media benefits more than it does.
Beyond revenue, the commission also flagged concerns about:
- Google’s algorithm favoring international news over local sources in search results.
- AI-powered platforms scraping news sites to train language models without compensating publishers.
Proposed Solutions
To address these issues, the commission recommends short-term compensation and regulatory measures, including:
- Financial Compensation: Google should pay local media between R300 million and R500 million over three to five years to offset revenue losses.
- AI Content Control: Local publishers should have the option to opt out of AI-generated summaries without losing search visibility.
- Negotiation Rights: South African media companies should be able to negotiate revenue-sharing agreements with tech giants.
- Data Sharing: Google should provide anonymized data to publishers to help with search engine optimization (SEO).
- Algorithm Adjustments: Search engines should prioritize South African news sources in local search results.
- Restoring Visibility: Meta (Facebook) and X should improve the visibility of South African news on their platforms.
- Fighting Misinformation: Digital platforms should collaborate with publishers to combat fake news and ensure fair compensation for AI-driven content.
- Global Alignment: South Africa should implement regulatory reforms similar to those in the EU and the US.
- Language Inclusivity: Google AdTech should support all South African languages to promote broader accessibility.
