South Africa wants to tax Google, Facebook and ChatGPT

The Competition Commission says that tech giants who control digital platforms that operate in South Africa need to find a fair way to compensate local media companies or face a 5%-10% tax in the country.

The commission published its provisional report for the Media and Digital Platforms Market Inquiry (MDPMI), which has placed a spotlight on Google, Facebook and other social media platforms in South Africa.

The inquiry was launched in October 2023 to investigate the imbalance between digital platforms and their impact on news media in the country.

News platforms in South Africa have suffered significant losses over the last decade or so as the distribution of news content has become digital.

Users increasingly access information online through Google Search and platforms like YouTube, Facebook, X, and TikTok—while legacy media like newspapers have continued to decline.

Digital platforms and their revenue structures are dominated by big tech companies like Alphabet (Google) and Meta (Facebook), with local publishers and media companies arguing that this is at the expense of local media production.

Following more than a year of investigation, the Competition Commission published its preliminary findings into this imbalance, which largely aligned with the views of local media.

The commission found that while platforms like Google and Facebook boost traffic to online news sites, digital advertising revenue cannot compensate for the losses experienced by the shifting models.

This has resulted in shrinking newsrooms, a 50% reduction in journalism jobs, the “casualisation” of journalists, and the shutting down of community, vernacular, and regional news outlets.

Meanwhile, digital platforms control how visible news media can be through algorithm “optimisation,” format restrictions, and misinformation management—all of which are opaque, rising the costs for news media to adapt.

The commission said that the situation has led to declining revenue for media while concentrating power among a few large media companies where diversity and pluralisation of views are lost.

Taxing Google

The commission found that local news media does benefit from traffic referrals from digital platforms, totalling R200 million.

However, a company like Google benefits from South African news content to the tune of around R800 million.

In effect, the commission said that the relationship between local publishers and Google is imbalanced by around R500 million.

Google has repeatedly refuted this, saying it makes very little from news searches. In December 2024, it submitted that it made only R18 million from South African news searches in all of 2023.

It has denied modelling that values local news at hundreds of millions of rands, saying this does not match economic reality.

It argued that the imbalance is the opposite—that it makes next to nothing while delivering circa R600 million in traffic to publishers.

However, the Competition Commission didn’t focus solely on revenue, flagging other problems.

These include things like the ‘bias’ of Google’s algorithm to push international news content for local searches, as well as pushing results onto its other platforms like YouTube.

It also flagged AI bots scraping news sites to train large language models.

To address this, the commission said that there should be some type of short-term compensation between digital platforms and South African media, along with government interventions to support an independent press.

This includes:

• Google paying R300 million – R500 million over three to five years to address lost revenue
• Allowing local media to opt out of AI summaries in search without losing search traffic
• Allowing local media to negotiate funding and policies with Google directly
• Sharing anonymised data with publishers to assist with Search Engine Optimisation
• Adjusting algorithms to support South African news media and reduce bias towards international platforms
• Meta and Twitter (X) restoring South African news visibility
• Expanding revenue sharing
• Fight misinformation
• Negotiate AI deals to ensure fair compensation for AI training
• Implement other global reforms in South Africa (including developments in the EU and USA)
• Ensure that Google AdTech supports all South African languages

From South Africa’s side, the Competition Commission has recommended:

• Government and businesses support local media, possibly with tax breaks or committed ad spending to sustain them
• Allow collective national ad sales to boost revenue
• Establish a donation-based fund to support media organisations

The commission stressed that the provisional report opened the window for stakeholders to debate and work towards “win-win” solutions before the final report is published.

It said that it wanted to find sustainable solutions to the problems raised, and previous inquiries showed that many groups subject to investigation came to the party by implementing changes on their own or providing further evidence that would inform the final report.

However, if this fails to deliver any results and no agreement can be reached between the players, the commission might be forced to impose a digital levy of 5% to 10% on digital platforms.

This would apply to search, social media and AI companies, it said.

Stakeholders and the public have six weeks to submit their responses to the Inquiry regarding the provisional findings, proposed remedies, and recommendations.

All submissions must be sent to [email protected] by close of business on 07 April 2025 and should include supporting evidence where relevant.

The final report will be published later this year after all submissions have been reviewed and the Inquiry has further engagements with stakeholders.