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Jamaica to explore hyper-tech giants impact on competition

Jamaica’s competition watchdog, the Fair Trading Commission, FTC, is undertaking a study of the impact of global digital giants, like Facebook and Google, on the local media, whose operators complain that the hyperscalers not only use their content for free, but hoover-up huge chunks of the domestic advertising dollar and threaten their survival.

The FTC’s scrutiny of Big Tech is the latest in a string of actions by international regulators aimed at checking the power of the firms – which up till now largely escaped serious oversight, and ensuring that they pay their fair share – whether in compensation to content creators or in taxes to governments.

In April the European Union approved new restrictions on how the companies can use the data they compile on users to drive business as well as to prevent them from using interlocking ownerships, such as in the case of Facebook and Whatsapp, to corral users and stifle competition.

“Based on the FTC’s preliminary review of the sector, hyperscalers appear to have only limited regulatory oversight in Jamaica,” the agency’s executive director, David Miller, told the Financial Gleaner.

While acknowledging many of the advantages that these companies bring to consumers worldwide, the FTC, in an explanatory document on its website highlighted the concerns of critics. “The literature also indicates that as these large-scale cloud computing agglomerations expand in related markets, issues of privacy, government coercion and general uncompetitive behaviour may be detrimental in the long run if effective policy is not soon developed and put in place,” the agency said.

The FTC will conduct its review in conjunction with the island Broadcasting Commission which regulates the broadcasting and related industries. While Miller was wary of predicting its outcome, he agreed that it was likely to inform any “updating extant regulations governing advertising in Jamaica”.

Across the globe a handful of Internet giants have amassed immense influence and economic power, having a hand in how people communicate, entertain themselves and do business. And in the context of the review being done by the FTC, they dominate the international advertising market, gobbling up an estimated 80 per cent of the industry spend.

For example, last year Google, famous for its search engine, had income of US$256.74 billion, from which its net profit was US$76 billion. Meta Platforms Inc, the parent of Facebook, WhatsApp and other social media, grossed US$119 billion. It carried US$39.3 billion of that to the bottom line. In most cases, the countries where the hyperscalers earn money get nothing back in taxes or other forms of income. For instance, neither Amazon, Facebook, Apple nor any of other hyperscalers maintain offices in Jamaica so have no costs in the local economy. Norr do they have to pay taxes, including general consumption tax on any of the advertising business they do on the island.

Yet, while a company like Google provides the technology to help media track advertising on their digital entities, the domestic firms wince at the fact that they collect only a third of the income Google places on their sites. They complain further that they pay for the development of the bulk content hyperscalers leverage in driving traffic to the sites.

Some countries, led by Australia, have made it a legal requirement that Big Tech negotiate reasonable compensation with media companies for their content, or have arbitrators impose the fees.

Fearful that, left unchecked, the hyperscalers’ widening encroachment on the domestic market would eventually make traditional media, and the journalism they provide, unviable, media companies last year brought the threat to the attention of the government and warned of the dangers it held for democracy. It was also suggested that the issue be raised with Jamaica’s partners in Caricom.

It is not clear, however, whether those initiatives directly influenced the FTC’s decision to do its review, but Miller said that key stakeholders, including the Media Association of Jamaica (MAJ) will be specifically invited to submit position papers.

The MAJ hasn’t yet commented on the specifics of the FTC’s plan or indicated how it intends to approach the review. Instead, it referred the Financial Gleaner to a joint statement issued last September by media organisations, covering 40,000 media outlets in 17 countries in the Americas, to which it was a party. That statement said that in the current environment, “the sustainability of journalism is at risk”.

“Coherent approaches at a global level [are needed] to enforce a right that is based on copyright and antitrust regulations,” the organisations said, “It is also essential to avoid abusive practices in the digital advertising market.”

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