Japan FTC Report: Quality News under Threat

A report on digital advertising released Wednesday by the Japan Fair Trade Commission included the concern that the quality of information on the internet may deteriorate as giant IT companies monopolize the market. As digitization permeates society, the accountability of IT giants is becoming more important than ever.

The price for accuracy

Digital advertising revenue depends on attracting consumers’ interest and attention. Since fake news that may contain falsehoods and provocative headlines has the power to attract attention, it may gain more advertising revenue.

Expressing concern about this situation, the report highlighted the importance of properly evaluating media that provide accurate news and useful content and providing a mechanism to ensure the quality of content.

The digital advertising market in Japan was worth ¥2.1 trillion in 2019, accounting for 30% of the overall advertising market. The scale was close to that of total advertising in such traditional media as newspapers, TV, radio and magazines, which came to ¥2.6 trillion.

Newspaper and TV companies spend a lot of time and money on coverage to ensure the quality of information, and that work is partly funded by advertising. On the other hand, according to JFTC investigators, most of the proceeds from digital advertising go to the IT giants. Behind the report is a concern that should the media that provide accurate information not receive fair compensation, their business strength will decline, adversely affecting the quality of information on the internet.

To alleviate the concern, the report suggested that websites should clearly identify the media entities that provide the articles the sites show. The report hopes that this will enhance the reputations of media entities that provide high-quality information.

Moves are underway overseas to require giant IT companies to pay for the use of information. In 2014, Spain introduced a regulation requiring news aggregation site operators to pay royalties to news organizations for using excerpts of their articles. The European Union has mandated the payment of royalties to news services, and Australia is working to build a system to require IT giants to pay royalties for news.

Explanation to consumers

The report warned that IT giants’ practice of collecting consumers’ personal information without sufficient explanation to consumers and using it for advertising and other purposes could be considered an abuse of their dominant position and an unfair acquisition of personal information.

IT giants provide terms of service when offering social networking and search services. However, according to a JFTC consumer survey, only 3% of consumers read the terms of use for search sites. There is a possibility that IT giants collect consumer information that consumers are not aware of, failing to provide detailed explanations.

There have also been cases in which advertisements continued to be delivered using consumers’ location and other information, even after users changed settings to prevent their personal information from being used for advertisements. The report said that such cases may also violate the Antimonopoly Law if there is no sufficient explanation to users.

The report urged IT giants to provide detailed explanations and consumers to deepen their understanding of how their information is being used. Users must be aware that information posted on social networking sites or submitted during registration, such as gender and date of birth, are used in digital advertising.