How Lack of Antitrust Enforcement Undermines Press Freedom
How Antitrust Undermines Press Freedom
Facebook and Google dominate online ads, and news companies can’t join forces to compete.
By David Chavern July 9, 2017 6:15 p.m. ET
Whenever President Trump attacks CNN or berates the Washington Post, journalists and free-speech advocates rise up to defend the media and the First Amendment. Meanwhile, a greater threat to America’s news industry looms mostly unnoticed: Google and Facebook ’s duopolistic dominance of online advertising, which could do far more damage to the free press than anything the president posts on Twitter.
The rapid growth of digital connectivity has pushed demand for information to unprecedented heights. Never in history have so many people consumed so much news. This is a boon for democracy. Although reporting is often an irritant to those in power, high-quality news and analysis is essential to any political system that depends on giving citizens the facts so they can draw their own conclusions.
The problem is that today’s internet distribution systems distort the flow of economic value derived from good reporting. Google and Facebook dominate web traffic and online ad income. Together, they account for more than 70% of the $73 billion spent each year on digital advertising, and they eat up most of the growth. Nearly 80% of all online referral traffic comes from Google and Facebook. This is an immensely profitable business. The net income of Google’s parent company, Alphabet, was $19 billion last year. Facebook’s was $10 billion.
But the two digital giants don’t employ reporters: They don’t dig through public records to uncover corruption, send correspondents into war zones, or attend last night’s game to get the highlights. They expect an economically squeezed news industry to do that costly work for them.
The only way publishers can address this inexorable threat is by banding together. If they open a unified front to negotiate with Google and Facebook—pushing for stronger intellectual-property protections, better support for subscription models and a fair share of revenue and data—they could build a more sustainable future for the news business.
But antitrust laws make such coordination perilous. These laws, intended to prevent monopolies, are having the unintended effect of preserving and protecting Google and Facebook’s dominant position. The digital giants benefit from legal precedent against collective action that has a chilling effect on publishers. Yet each newspaper or magazine on its own has only limited negotiating power.
Antitrust enforcers have declined to address Google and Facebook’s growing dominance, enabling the digital giants to roll up the information economy. The Federal Trade Commission and the Justice Department let Google take over the online ad industry by buying Doubleclick, AdMob and AdMeld, as well as mapping competitor Waze. Regulators allowed Facebook to acquire two direct competitors, Instagram and WhatsApp.
The News Media Alliance, which represents digital and print publishers (including Dow Jones, publisher of The Wall Street Journal), is proposing a solution: a new law granting a limited safe harbor under antitrust for publishers to negotiate collectively with dominant online platforms. This would grant media organizations the flexibility to expand innovative digital models of news distribution, while also giving them more ways to sustain high-quality journalism.
A safe harbor would be less necessary if U.S. antitrust enforcers opted to apply the existing laws. European regulators already have begun to act, slapping Google with a $2.7 billion fine for violations of fair competition. So far, however, their counterparts in Washington have largely watched from the sidelines.
The unique role news media continue to play in American politics and history makes it crucial to ensure a fairer fight for revenue between news publishers and these massive information gateways. Today, antitrust laws are insulating Google and Facebook from market forces. News publishers are committed to unleashing those forces to defend their investments in great journalism.
Mr. Chavern is president and chief executive of the News Media Alliance, a trade association representing approximately 2,000 newspapers in the U.S. and Canada.
Appeared in the July 10, 2017, print edition.