House Starts Its Tech Antitrust Probe With a Focus on Free Press
House Starts Its Tech Antitrust Probe With a Focus on Free Press
(Bloomberg) -- A congressional panel conducting a broad antitrust investigation into the nation’s biggest technology companies is starting with scrutiny over how companies like Alphabet Inc.’s Google and Facebook Inc. have devastated the news industry.
The first hearing Tuesday afternoon of the House Judiciary antitrust subcommittee, led by Rhode Island Democrat David Cicilline, is set to explore the market power online platforms have over the news publishers, including their role in digital advertising, data collection and privacy.
Cicilline has said he wants to assess whether current antitrust laws are adequate to address any anti-competitive harm caused by the tech industry.
“I think we’re going to hear about what the impact has been on the news industry as a result of this huge market dominance,” Cicilline told reporters Monday night. He cited the “the danger of inaction in terms of just looking at the declining presence of local news and newspapers closing and people getting laid off.”
Big tech companies are already under pressure in Washington after learning last week that the Federal Trade Commission and the Justice Department have divvied up antitrust oversight of Google, Facebook, Amazon.com Inc., and Apple Inc.
David Chavern, the head of the publishers’ advocacy group News Media Alliance, is scheduled to testify at the hearing, along with a representative from the Computer and Communications Industry Association and consumer advocates.
Publishers say digital platforms benefit from their content without paying for it. The News Media Alliance released a study on Monday estimating that Google earned $4.7 billion in 2018 from news publishers’ content.
Digital advertising revenue is jumping, with Facebook and Google benefiting the most. The two tech companies raked in 52% of digital display advertising, according to the Pew Research Center. Total newspaper advertising revenue for 2017 dropped 10 percent from the year before to $16.5 billion, Pew estimated.
The decline in news publishers’ revenue from advertising has caused sharp drops in the number of journalists working in American newsrooms. Between 2008 and 2017, the number of reporters, editors, photographers and videographers plunged 23% from 114,000 to about 88,000, with most of the losses coming from newspapers, where jobs fell by 45% over that time period, according to Pew.
“There are key areas where the combination of Google and Facebook -- and I would emphasize Google between the two -- has so much control over the entire monetization scheme of news media,” Jason Kint, chief executive officer of Digital Content Next, an internet publisher trade group that counts Bloomberg News as a member, said in an interview. "There is no ability to negotiate as individual companies."
Tech companies should be more transparent about how digital advertising rates are set, how the algorithms that control how readers find news work, and share data on their customers, media organizations argue.
Lawmakers have also criticized social media companies for not doing enough to stem the spread of misinformation and fake news on their platforms. Last month, Facebook sparked controversy when it refused to take down a popular and doctored video of House Speaker Nancy Pelosi, saying the content didn’t violate its policies.
In the face of such criticism, tech companies have launched new digital news products, created fact-checking programs and offered training to journalists in an effort to support the industry.
Antitrust Reprieve
One issue that’s likely to be a topic at the hearing is a bill introduced by Cicilline and Representative Doug Collins, a Georgia Republican and ranking member on the subcommittee, that would allow publishers to collectively negotiate financial terms with tech companies such as Google and Facebook. The legislation would offer news outlets a reprieve from antitrust laws for 48 months after the bill is enacted.
“This concentration of power and huge market domination of these huge technology platforms has lots of implications in terms of our economy, in terms of competition and innovation,” Cicilline said Monday night. “But it’s particularly pernicious in the area of access that citizens have to trustworthy, reliable local news.”
Senator John Kennedy, a Louisiana Republican on the Judiciary Committee, and Senator Amy Klobuchar, a Minnesota Democrat on the antitrust subcommittee, last week introduced a companion bill. The proposed legislation has the backing of dozens of news organizations and the News Media Alliance, whose membership includes The New York Times, The Washington Post and News Corp.
--With assistance from Rebecca Kern.
To contact the reporter on this story: Naomi Nix in Washington at nnix1@bloomberg.net
To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Wendy Benjaminson
©2019 Bloomberg L.P.