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Facebook and Google vs the Free Press

Summary:
Yves here. Australia and Maryland have both sought to tax Google’s and Facebook’s online advertising putting their broader role the spotlight. Both platforms make considerable use of traditional media content while pulling digital ad revenues away from them. Old school publishers had already suffered due to loss of classified ad income to Craigslist and in parallel, the dwindling of print subscriptions. One reason for getting a hard copy paper had been to get stock prices; when they became available on line, initially with a 20 minute delay, many readers deemed a hard copy paper to be frivolous. I confess to being a bit of fogey; I always buy a paper in the airports and find I scan a much broader range of stories, more efficiently, than I do online. Nevertheless, I spend so much time on

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Yves here. Australia and Maryland have both sought to tax Google’s and Facebook’s online advertising putting their broader role the spotlight. Both platforms make considerable use of traditional media content while pulling digital ad revenues away from them. Old school publishers had already suffered due to loss of classified ad income to Craigslist and in parallel, the dwindling of print subscriptions. One reason for getting a hard copy paper had been to get stock prices; when they became available on line, initially with a 20 minute delay, many readers deemed a hard copy paper to be frivolous. I confess to being a bit of fogey; I always buy a paper in the airports and find I scan a much broader range of stories, more efficiently, than I do online. Nevertheless, I spend so much time on the Web that getting a print paper on a regular basis seems like overkill.

Given this history, it’s not hard to see that having Google and Facebook eat the diminished revenues available to publishers is destructive to their businesses. Their domination raises questions of whether they are unfairly exploiting original publisher content. The problem is that no single publisher has the financial heft to carry out a legal fight without running considerable risk; even a group of publishers wouldn’t have the same firepower. And traditional notions of copyright don’t help them much either. So this is a legitimate area for government action. Yet as Steven Hill pointed out in his cover note:

There is a larger issue at stake here that recent media coverage has missed: are Facebook, Google, Twitter and other digital media platforms really the new public square? Or are they new techno publishers swiping content from other publishers without paying for it?

Many newspapers and news organizations have been devastated by this impact, including in Europe. Yet the European Commission and the Biden administration have been notably silent.

Some readers may be put off by the invocation of the “free press,” since today’s media outlets seem much less halo-worthy than in the Walter Cronkite era. However, the press performs the critical and costly function of fact gathering. That was getting hard even before newspaper revenues started shrinking.

In the early 2000s, I had lunch with a New York Times reporter who had joined the paper after he’d opened the Wall Street Journal’s office in China in 1993 and returned in 1999. He said there had been a sea change in reporting in the US in the six years he’d been away. Corporations had gotten much better in spinning the press and throwing sand in the gears of reporting. This had occurred as the Internet had greatly increased the pressure to publish quickly. The result, he said, was that it was now impossible to get to the bottom of a story in a normal news cycle.

And with an income-starved media, there’s seldom enough resources to keep digging after news has broken.

By Steven Hill, the former policy director at the Center for Humane Technology and author of seven books, including Raw Deal: How the Uber Economy and Runaway Capitalism Are Screwing American Workers and The Startup Illusion: How the Internet Economy Threatens Our Welfare

From France to Australia to the US state of Maryland, the free press is waging a battle for survival against Facebook and Google. Besides being gushing firehoses of COVID and election disinformation and QAnon conspiracies, another of Google and Facebook’s dangerous impacts is undermining the financial stability of media outlets all over the world.

Where is the Biden administration and European Commission in this fight? A lot is at stake, yet so far they have been quiet as church mice.

How do Google and Facebook threaten the Free Press? These two companies alone suck up an astounding 60% of all online advertising in the world (outside China). With Amazon taking another 9 percent, that leaves a mere 30% of global digital ad revenue to be split among thousands of media outlets, many of them local publications. With digital online advertising now comprising over half of all ad spendng (and projected to grow further), that has greatly contributed to underfunded and failing news industries in country after country, including in Europe and the US.

Australia’s situation is typical. Its competition commission found that, for every $100 spent by online advertisers in Australia, $47 goes to Google and $24 to Facebook (71%), even as traditional advertising has declined. Various studies have found that the majority of people who access their news online don’t go to the original news source, instead they access it via Facebook’s and Google’s platforms which are cleverly designed to hold users’ attention. Many users rarely click through the links, instead they absorb the gist of the news from the platforms’ headlines and preview blurbs.

Consequently, Facebook and Google receive the lion’s share of revenue from digital ads, rather than the original news sources receiving it. Note that Facebook and Google could tweak their design and algorithms to purposefully drive users to the original news sources’ websites. But they don’t.

So Australia decided to fight this duopoly with some rules-setting of its own. A new law will require large digital media companies to compensate Australian media companies fairly for re-packaging and monetizing their proprietary news content. Media outlets around the world are watching to see how this plays out.

Google initially fought the proposal, but finally negotiated deals with Australian news publishers to pay them some compensation. But Facebook flexed its digital muscles by cutting off Australia entirely from its platform for several days, preventing Aussie news publishers as well as everyday users, including important government agencies like health, fire and crisis services, from posting, viewing or sharing news content.

The result was jarring, the proverbial “shot heard ‘round the world.” Facebook censored Australian users more effectively than the Chinese communist government ever could, prompting charges of “big tech authoritarianism.” Facebook finally relented to Australia’s requirement, in return for some vague and uncertain concessions. But the message of raw, naked platform power was unmistakably clear.

Now a similar battle is playing out in the US state of Maryland. Over the last 10 years, US newspapers’ advertising revenue has declined by 62%, and without that funding newsroom employment dropped by nearly half. Squeezed by these economics, Maryland approved the US’s first tax on digital ad revenue (earned inside its state borders), targeting companies like Facebook, Google, and Amazon. The measure is projected to generate as much as $250 million in its first year, dedicated to schools.

But this battle has only begun. Lawsuits against Maryland are being threatened by the tech giants, even as legislators from the states of Connecticut and Indiana have introduced similar measures.

The Bigger Picture: What’s at Stake

Nelson Mandela once said, “A critical, independent and investigative press is the lifeblood of any democracy…It must have the economic strength to stand up…[and] sufficient independence from vested interests to be bold and inquiring without fear.”

One of the most important, unsettled debates of the Internet age is whether digital media platforms like Facebook, Google/YouTube and Twitter are the new “public square,” a kind of global free speech Agora, or just the latest techno variety of old-fashioned publishers and broadcasters. Or a hybrid in between.

Over the past year that debate has intensified, crisis after crisis. Following the US Capitol ransacking, Facebook, Google, and Twitter all decided to discontinue “publishing” the president of the United States. Before that, as the platforms tried to deal with their toxic pipeline of disinformation regarding the Covid pandemic, racial tensions, and the presidential election, they slapped on warning labels and removed inflammatory content of certain users.

Now, in response to Australia’s law, Facebook pulled the plug on an entire country!  That’s something only a giant monopoly publisher can do. In 2014, when Spain enacted legislation requiring Google to pay Spanish news outlets for the article snippets in its search results, Google bullied the government and closed its new service there.

Even before the past year’s seminal events, Facebook, Google and Twitter acted as publishers by turning over crucial decisions to its “engagement” algorithms about which content is featured at the top of users’ news feeds, and what is promoted and amplified. Its sophisticated “long tail” publishing machine uses precise content-targeting to niche users, showing different content to different people, including political ads. These are not passive online chat boards. They are “robot publishers,” in which algorithms perform the essential duties of an editor. From a legal or accountability standpoint, it should matter little that there is a supercomputer behind the curtain instead of a human.

So it’s pretty difficult at this point to argue credibly that these platforms are not in some sense publishers. Big Tech platforms are increasingly using their considerable publisher power to decide what content, sources and values should disappear or be amplified. These companies have more in common with the New York Times, Bild and Rupert Murdoch than they do with an online wikiboard or free speech corner in London’s Hyde Park.

Indeed, Facebook’s and Google/YouTube’s algorithmically-curated machines, with 2.6 billion and 2.0 billion users respectively, are the largest publisher and broadcaster in human history. Yet existing law does not treat these companies like a publisher or broadcaster, especially when it comes to liability or accountability. The digital media platforms hide behind the fact that they have billions of users generating content, which resembles an AT&T-like “common carrier” or public square role. But that should not obscure the centrality of their publisher role.

From that perspective, Facebook, Google and Twitter are completely within their publisher’s rights to decide it does not want to publish Donald Trump anymore, just as the New York Times would be. Or just as Rupert Murdoch has an editorial right to feature Boris Johnson on the front page of The Sun or at the top of a Fox News broadcast. Facebook’s Oversight Board should take note.

Threat to the Open Internet?

Critics of the Maryland and Australian approach claim it threatens the principle of an open internet. They also insist that traditional media outlets actually benefit when Facebook-Google-Twitter send user traffic back to the news outlets. The latter claim is easily debunked, since ad revenue at traditional media outlets has plummeted in the digital media platform era, while it has zoomed for the platforms. One study found that digital media traffic supplied less than 0.2 percent of total revenue to the news companies examined (while producing 24 percent of their total visitor traffic). So whatever revenue the traditional media outlets have received, it’s a drop in the bucket compared to what they have lost.

And the “open internet” principle must be balanced by the “copyright principle,” which was established years before the Internet was even invented. Copyright law mandates that any individual person or organization cannot swipe someone else’s content and monetize it without paying for it. The open internet principle essentially demands that traditional news sources bear the financial burden of continuing to produce quality news without fair compensation – much as it demanded that Napster be allowed to distribute copyrighted music for free without compensating musical artists and record companies.

The open internet principle is contributing to media financial instability throughout the world, and taken to its logical conclusion will cannibalize what’s left of the news media. With no credible news sources to rely upon, the digital media platforms would be even more overrun by the barbarian disinformation for which the platforms have become notorious. They are eating their own seed.

Already the digital media platforms have turned thousands of publishers and broadcasters into little more than ghostwriters for their platform content. Facebook has transmogrified from its initial hip mission of being a convenient place to post your vacation and puppy pics, and re-find your long lost college roommate, into a “re-publisher” that re-packages and monetizes product from the original producer without paying for it. In other industries, that’s called theft.

Democracies must stop this Big Steal before these companies steal away with our democracies. France and Austria have passed similar laws, Canada says it will adopt the Australian approach, and possibly India too.

But the EU and US have been noticeably silent. Both are known for encouraging competition and a vibrant media, so you would think their regulators would jump into action to aid the free press. Unfortunately, the reaction from the Biden administration has been nonexistent, though understandably it has a lot on its plate in its first months.

The European Commission’s silence has been more disappointing. Its two-year old Copyright Directive has been barely implemented, and now it’s championing its recently unwrapped Digital Services Act and Digital Markets Act. But those anodyne proposals lack regulatory teeth and, like the GDPR, do not fundamentally challenge the digital platforms’ toxic business model.

It’s time for governments on both sides of the Atlantic to step up their games, and ensure that Big Tech media respect the sanctity of copyright and stop undermining the world’s media and news outlets.

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