Regulation

Big Tech Antitrust Hearings Begin With Scrutiny Of Media Industry

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And so the long look at Big Tech begins.

Lawmakers held the first of several hearings into the marketplace power of online platforms such as Facebook and Google Tuesday (June 11).

The hearing is and was the first of many that seek to delve into antitrust issues in the digital world, where Big Tech holds sway across a number of facets of everyday life — and this time, the focus was on journalism.

Rep. David Cicilline, Democrat of Rhode Island and antitrust committee chairman, said the Tuesday panel marks “the first significant antitrust investigation undertaken by Congress in decades.”

In testimony provided to the committee, David Chavern, president of the News Media Alliance, a trade association representing more than 2,000 newspapers in the United States and globally, noted that “online platforms serve an important purpose. Today, 93 percent of Americans get at least some of their news online.” Against that backdrop, digital platforms help online users find news and other content.

But, he told the panel, according to a study conducted by News Media Alliance, as approximately 40 percent of clicks on “Trending Queries” and 16 percent on high-volume queries in Google Search are news content, “that translates into big money for Google. Our researchers estimate that links to news content have earned approximately $4.7 billion annually for Google in search advertising revenue — and that number does not even include the revenue Google generates from ads that appear on news organizations’ own sites.”

Facebook’s reliance on news content to drive user engagement (and revenue) is similarly high.

The combined ad revenues of Google and Facebook have skyrocketed over the past several years to $52 billion, he said, dwarfing the newspaper industry’s ad revenue of $16.4 billion, itself down 65 percent to $16.4 billion.

“Present trends in the news business cannot continue. Without action by the Congress, we will all experience the effects of deep financial stress in the industry, and the loss of great, important journalism in communities all across the country,” said Chavern.

As Gene Kimmelman, president and CEO of Public Knowledge, said in his own testimony, the digital marketplace “has effectively wiped out the market for print classified and display advertising. Because digital advertising is much cheaper, can be more personally targeted, and fits well with today’s disaggregated news delivery, it is hard to imagine that the newspaper and news media industry could replace its lost print advertising online, even if all ad revenue flowed back to journalism.”

Kimmelman, taking note of what he called mistrust of media and misinformation that spreads across the digital landscape, advocated for the creation of a sector-specific regulator with expertise in how digital platforms operate and authority “to affirmatively promote competition.”

Separately, Sally Hubbard, director of Enforcement Strategy at the Open Markets Institute, testified that “Facebook and Google compete against news publishers that must get through their gates to reach users, due to the two platforms’ concentrated power over the flow of information … because Facebook and Google control the playing field for this competition, publishers never had a fair shot. How can publishers compete against platforms that can tweak their algorithms at any time to bury them?”

With a nod toward the competitive landscape, she said policymakers should create “a new strengthened framework” that targets monopolization.

“Congress could implement rules by statute, or the FTC could use its Section 5 rule-making authority to bar exclusionary practices by dominant internet platforms,” she told the committee.

Bipartisan legislation is in place titled the “Journalism Competition and Preservation Act,” and as co-sponsored by antitrust committee chair Cicilline and Republican from Georgia Rep. Dough Collins. One of the tenets of the bill is that it would let newspapers negotiate arrangements tied to content (and monetizing that content).  Collins said the hearing would be the first of several, while Rep. Jerrold Nadler, chairman of the House Judiciary Committee, said examination of media concentration remains an urgent issue.

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