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.
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