House Judiciary Holds Second Hearing On Antitrust Reform, Focusing on News Industry

The House Judiciary Committee continues its look at antitrust reform with an eye on legislation akin to the new statute Australia put in place to help media negotiate remuneration from Google and Facebook.

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The day after a bill was reintroduced to give media the power to bargain collectively with Facebook, Google, and other online platforms to be paid for the usage of their content, the House Judiciary Committee resumed its series of hearings on crafting antitrust reform legislation. Not surprisingly, this hearing focused on the effects of dominant online platforms on the media in the United States (U.S.), with many Members and witnesses making much the same case the report on competition in digital markets made: the latter has suffered at the hands of the former. Moreover, much of this case was made through the prism that a thriving democracy needs a thriving media to educate the public and hold the government to account. In the age of mass online misinformation, this argument gained further resonance as the claim was made numerous times that as the traditional media shrinks, a vacuum is created that lies, misinformation, and disinformation are rapidly filling. However, where Members and witnesses diverged on the issue of whether tech platforms are censoring conservatives and their speech; whether this divergence in perspectives serves to scuttle legislation to help the news industry is unclear.

As mentioned, along with cosponsors, the House Judiciary Committee’s Antitrust, Commercial, and Administrative Law Subcommittee Chair David Cicilline (D-RI) and Ranking Member Ken Buck (R-CO) reintroduced the “Journalism Competition and Preservation Act,” (S.673/H.R.1735) “that will allow small news outlets to band together to negotiate with large online platforms like Google and Facebook” according to a press release. The Senate Judiciary Committee’s Competition Policy, Antitrust, and Consumer Rights Subcommittee Chair Amy Klobuchar (D-MN) and cosponsors reintroduced the bill in the Senate. Of course, this bill is being introduced in the shadow of Australia’s new law requiring bargaining between major media outlets and Facebook and Google and the decidedly anti-big tech mood in Washington. The sponsors further asserted:

  • The Journalism Competition and Preservation Act will establish a temporary, 48-month safe harbor that allows small news publishers to negotiate collectively with online platforms to protect Americans’ access to trustworthy sources of news online. Importantly, the safe harbor is narrowly-tailored to ensure that coordination by news publishers is only in the interest of promoting trust and quality journalism.
  • The bill introduced today only allows coordination by news publishers if it (1) directly relates to the quality, accuracy, attribution or branding, or interoperability of news; (2) benefits the entire industry, rather than just a few publishers, and is non-discriminatory to other news publishers; and (3) is directly related to and reasonably necessary for these negotiations, instead of being used for other purposes.

Australia recently enacted a statute that serves to ensure major media outlets will be compensated for the usage of their content, a process that resulted in Google and Facebook threatening to cut off the continent with the latter actually following through. As introduced in December, “Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021” “establishes a mandatory code of conduct to help support the sustainability of the Australian news media sector by addressing bargaining power imbalances between digital platforms and Australian news businesses” per the first explanatory memorandum on the bill. However, in response to Facebook’s ban, the government in Australia apparently softened some of the language. Notably, the government would now have to give a platform 30 days’ notice before it can designate it as a digital platform service, a title that triggers the provisions of the bill, including mandatory arbitration  if the platform and Australian media cannot reach a satisfactory monetary deal. Previously, there was no 30 day period. Moreover, designated platforms can now differentiate between Australian media companies, meaning they can pay different rates in a commercial agreement. Under the original bill, this was not the case. Another new feature is the requirement that the platform and news media company negotiate in “good faith” for three months. If no agreement is reached, then it will be mediation, and only after that does not work is arbitration required. (see here for more detail and analysis.)

In his opening statement, Cicilline stated:

  • A free and diverse press is the backbone of a vibrant democracy. Indeed, our democracy is strongest when we have a free and diverse press that informs citizens, holds power to account, and exposes corruption and wrongdoing. But in recent years, the local news that is delivered through newspapers, online, and in local broadcasts has been in a state of economic freefall.
  • Over the past 15 years, one in five newspapers closed, and the number of journalists working for newspapers has been cut in half. In 2019, America reportedly lost 2100 newspapers since 2004. Today, at least 200 counties have no local newspapers at all. The crisis in American journalism has become a real crisis in our democracy and civic life. Newsrooms across the country are laying off reporters and editorial staff or folding altogether, while the majority of counties in America are down to just a single publisher of local news—and many lack a local news option altogether.
  • This is happening to legacy news companies and digital publishers alike.
  • If this trend continues, we risk permanently compromising the news organizations that are essential to our communities, holding the government and powerful corporations accountable, and sustaining our democracy. In response to these concerns, the Subcommittee examined the effect of market power of the largest technology platforms on the survival of a free and diverse press as part of our bipartisan investigation last Congress. During our inquiry, we received evidence about the “significant and growing asymmetry of power” between several dominant online platforms and news publishers. In numerous interviews, submissions, and testimony before the Subcommittee, publishers and broadcasters with distinct business models and distribution strategies said they are “increasingly beholden” to Google and Facebook, which increasingly function as the gatekeepers for information online.
  • For example, Digital Content Next—which represents digital news publishers and content companies—notes in a statement for the record for today’s hearing that 64% of online referrals to its premium publishers came from services owned by Facebook or Google, underscoring the “extraordinary role” of these companies in “how the public discovers, searches and spreads information.”
  • As news publishers have noted, this gatekeeper power gives Facebook and Google the ability to distort the flow of information online. This means that Google and Facebook can divert their billions of users away from trustworthy sources of news with a single change to their algorithms, or through other subtle but meaningful ways, such as manipulating ad auctions. A second, related problem that we identified during the investigation is the market power of these firms over digital advertising. Facebook and Google control the majority of the online advertising market in the United States, and have captured nearly all of the growth in this market. Every year, advertisers pay billions of dollars to these two companies to serve highly targeted ads on Facebook and through Google’s advertising network.
  • Nearly a dozen Republican state attorneys general who are currently suing Google for monopolization described Google’s advertising network as the “largest electronic trading market in existence.” These companies continue to enjoy persistently high profit margins—a telltale sign of their substantial and enduring market power. At the same time, news publishers have seen a steep decline in revenue and a reduced ability to monetize journalism, particularly when it comes to these sources online. Overall, the market power of Google and Facebook is reinforced by the unprecedented amount of data collected by these companies, along with other factors that have tipped digital markets in favor of these firms and blocked rivals and new entrants from challenging their dominance.
  • Earlier this week, I reintroduced the Journalism Competition and Preservation Act with Ranking Member Buck. Our legislation would give news publishers an even playing field to collectively negotiate with dominant platforms to improve the quality, accuracy, attribution, and functioning of news online. As part of today’s hearing, I look forward to discussing recommendations to strengthen and improve this legislation. In particular, I am eager for a discussion on ensuring that this framework will provide for good-faith negotiation by all parties, and mechanisms to ensure that each and every hardworking journalist benefits from these negotiations.
  • While I do not view this legislation as a substitute for more meaningful competition online—including structural remedies to address the underlying problems in the market—it is clear that we must do something in the short term to save trustworthy journalism before it is lost forever. This bill is a life support measure, not the answer for ensuring the long-term health of the news industry.
  • We need an all-of-the-above approach to save journalism and to take on monopoly power. Doing nothing is not an option. In that vein, I’m also eager to hear other suggestions to reign in the power of these monopolies. At our last hearing, we heard bipartisan agreement from the members of our Subcommittee on structural separation, preventing self-preferencing and discrimination, and interoperability and data portability requirements.

Buck asserted in his opening statement he was pleased to cosponsor the “Journalism Competition and Preservation Act” with Cicilline. He characterized the internet as an incredible tool for expanding freedom and democracy in the U.S. and around the world. Buck said multinational corporations are sabotaging Americans’ access to information and advancing authoritarian regimes efforts to manipulate the internet for oppression. He harkened back to the initial view of many about the internet that it would help usher out the age of totalitarianism. Buck said “Big Tech” is making content-related decisions around the world, including the U.S. He contended that what information people see is driven by the political preferences of corporations and not what consumers want to find.

Buck contended people are not censoring themselves, and rather the “tech titans” are censoring material they disagree with. He added this is all possible because they achieved monopoly status in the market and can police the marketplace of ideas and dictate what consumers can see. Buck said this problem is being exacerbated because small and medium sized news sources are being squeezed out of the marketplace. He argued Google, Facebook, and other companies have decimated the ad revenue of small and medium media. Buck cited Google’s 2010 public disclosure of how much advertising revenue they shared with publishers: nearly 70%. He observed that an advertising trade association estimated in 2020 that publishers are only taking home 30-40% of revenue. Buck said this decrease in revenue share has harmed the media and since 2004 the U.S. has lost a quarter of its media outlets. He argued the closures are hitting small and rural communities hardest and noted the increasing disappearance of local television news sources as well.

Buck placed his concerns in the context of the “battle” conservatives are fighting against “cancel culture” that seeks to deny them a voice in the public square. He noted many of his colleagues argue that the market is working as it should and small and medium sized newspapers and television stations are dying because of competition in a healthy marketplace. Buck said he values the market but also values freedom of speech and the freedom of press. Buck stated the failure of antitrust policy has allowed “Big Tech” to grow at the expense of media because the former controls the advertising market and exercises gatekeeper control over speech. He claimed Congress sat idly by as these companies grew into monopolies but cannot do the same in allowing them to be the new public square and arbiters of truth. He asserted the tech giants possess the kind of power antitrust laws were enacted to dissipate. Buck called the “Journalism Competition and Preservation Act” a step in the right direction that levels the playing field for democracy and free expression. He stated it would be important that the bill not privilege certain outlets over others.

House Judiciary Committee Ranking Member Jim Jordan (R-OH) read from the testimony of two of the witnesses and claimed that the news media and “Big Tech” “teamed up” to deny Americans news they did not approve of (e.g., the New York Post’s questionable articles about Hunter Biden.)

The President and Chief Executive Officer Emily Barr testified on behalf of the National Association of Broadcasters (NAB) and asserted:

  • NAB commends Chairman Cicilline and Ranking Member Buck for their thoughtful approach to the competitive challenges facing local journalists around the country. To combat this threat – and to ensure that local journalism does not disappear altogether – we truly need an “all hands on deck” legislative approach. I will note here, as a broadcasting professional who has devoted my life to an independent and free press, I do not take government policymaking in the journalism arena lightly. However, we have reached a breaking point, where the market conditions affecting broadcasters and other local journalists must be reset in order that a free and diverse press is able to flourish. If we do nothing, local, independent journalism will not thrive. Indeed, it may not even survive. And what happens to our democracy if that happens?
  • One significant step toward curing the harms caused by the anticompetitive behavior of the giant online platforms would be the passage of the “Journalism Competition and Preservation Act” (JCPA), recently reintroduced by Chairman Cicilline and Ranking Member Buck. NAB strongly supports this targeted, commonsense proposal, which would give broadcasters and other news publishers the ability to level the playing field in negotiations with the tech giants, providing a mechanism for collective bargaining with these dominant platforms.
  • In addition to the JCPA, Congress should explore additional policy remedies to ensure that journalists and news organizations are compensated for the reporting and content they create, recognizing the inherent value of this original content.

News Media Alliance President and Chief Executive Officer David Chavern stated:

  • What do we need from Congress? First and foremost, local news publishers need the ability to collectively negotiate with the major platforms, as contemplated by the Journalism Competition & Preservation Act (JCPA). In the face of dominant intermediaries, it is unconscionable to prevent publishers from working together to fight for their own future. And the publishers most in need of collective action are local and community publishers who have no individual capacity to assert their value against the major platforms.
  • But experience from around the world has now taught us that this might not be enough. As we have seen in Europe and Australia, when pressed Google and Facebook will (i) refuse to negotiate, (ii) threaten (and in some cases actually) cut-off access to news content, and (iii) offer limited compensation to selected publishers in an attempt forestall legislation. We should all understand that these actions are, in and of themselves, fundamental expressions of market dominance.
  • We would suggest that Congress consider expansions of the JCPA that would include an oversight mechanism to ensure good faith negotiations by the platforms that would result in (i) equitable treatment for local and community publishers, and (ii) that any compensation model reward investments made by publishers in journalists and journalism.
  • Such a system could be structured in a variety of different ways, but fundamentally would be a limited and focused response to the challenge of ensuring a future for local journalism. All we are really asking for is a fair chance to fight for ourselves.
  • News is not just a form of “content.” Professional journalism is not only highly engaging and popular, it also sustains civic society in ways that other content forms simply do not. We’ve seen what happens when people don’t have access to the facts. A society without quality reporting is not one that we would recognize.
  • Today local journalism is under threat because the dominant digital platforms control access to audiences and refuse to fairly value what we provide. This committee has done tremendous work identifying the problem. We are hopeful that it will continue the work and support workable solutions.

Journalist and Constitutional Lawyer Glenn Greenwald claimed:

  • How Congress sets out to address Silicon Valley’s immense and undemocratic power is a complicated question, posing complex challenges. The proposal to vest media companies with an antitrust exemption in order to allow them to negotiate as a consortium or cartel seeks to rectify a real and serious problem – the vacuuming up of advertising revenue by Google and Facebook at the expense of the journalistic outlets which create the news content being monetized – but empowering large media companies could easily end up creating more problems than it solves.
  • That is particularly so given that it is often media companies that are the cause of Silicon Valley censorship of and interference in political speech of the kind outlined above. When these social media companies were first created and in the years after, they wanted to avoid being in the business of content moderation and political censorship. This was an obligation foisted upon them, often by the most powerful media outlets using their large platforms to shame these companies and their executives for failing to censor robustly enough.
  • Sometimes this pressure was politically motivated – demanding the banning of people whose ideologies sharply differs from those who own and control these media outlets – but more often it was motivated by competitive objectives: a desire to prevent others from creating independent platforms and thus diluting the monopolistic stranglehold that corporate media outlets exert over our political discourse. Further empowering this already-powerful media industry – which has demonstrated it will use its force to silence competitors under the guise of “quality control” – runs the real risk of transferring the abusive monopoly power from Silicon Valley to corporate media companies or, even worse, encouraging some sort of de facto merger in which these two industries pool their power to the mutual benefit of each.
  • This Subcommittee produced one of the most impressive and comprehensive reports last October detailing the dangers of the classic monopoly power wielded by Google, Facebook, Amazon and Apple. That report set forth numerous legislative and regulatory solutions to comply with the law and a consensus of economic and political science experts about the need to break up monopolies wherever they arise.

NewsGuild-Communications Workers of America President Jonathan Schleuss said:

  • The NewsGuild-CWA supports legislation that will increase news jobs and therefore news coverage for our communities. We speak for our members, employees across newsrooms in the United States, and for American democracy. The cuts to newsrooms threaten the very existence of a free press.
  • The predatory behavior of the online platforms needs to be addressed to return revenues to news organizations. By virtue of their size they are able to capture the bulk of digital advertising. Redressing balance between news organizations and platforms, however, will be most successful if accompanied by tangible proof that new revenues are funding jobs and meeting the information needs of all our communities, including those with small-to-medium sized news outlets or none at all.
  • Finally, we hope that chains can be reduced in size and investors interested purely in cash extraction will be encouraged to leave the industry. We encourage the chains to refrain from bulking up through additional acquisition. We encourage the chains to consider the sale of individual papers to nonprofit or low-profit organizations so as to make news coverage more local and more attuned to the needs of communities.
  • Most generally, Congress should pass the Stop Wall Street Looting Act to prevent the predatory practices that the private equity owners of many news chains have employed to suck resources out of the industry. While much attention has understandably focused on retail and other industries that have been hit hard by private equity, Alden and the other private funds have also looted the news industry and contributed to the shrinking of news.
  • More directly, simply getting these hedge funds to sell their papers would do a lot of good. There are promising examples of what can happen to a local newspaper when local, civic-minded investors have stepped up to take on the public service role the founders envisioned for the media.
  • We support a “replanting” of local news to get publications out of the grips of hedge funds and large chains and bring them under local control. Report for America President Steve Waldman has written about the need to support non-profit models and mission-driven owners to help fill news deserts.
  • The Philadelphia Inquirer had endured declines for years after changing hands multiple times, including through the clutches of Alden, before a group of local investors led by Gerry Lenfest purchased the paper and donated it to the Lenfest Institute, a non-profit organization. These new, non-profit owners have reinvested the profits of the Inquirer into improving newsroom technology and hiring staff, including doubling the size of the investigative reporting team.
  • In Salt Lake City in 2019, the Huntsman family converted the Salt Lake Tribune to a 501themselves3 organization, creating the first non-profit major city daily newspaper. In Chicago, a coalition led by local labor unions and philanthropists purchased the struggling Sun-Times and have expanded newsroom staffing to restore coverage of labor, business and the environment. In Baltimore, local philanthropist Stewart Bainum has bid to purchase The Sun and Tribune Publishing’s other Maryland newspapers with the intention of donating them to a newly-created foundation dubbed “The Sunlight For All Foundation.” This incredibly exciting proposition for Maryland residents, sadly, is contingent on the sale of all of Tribune Publishing’s other newspapers to Alden.
  • These sorts of transactions are to be celebrated, and public policy must do more to encourage more of them by ensuring that one large predatory news conglomerate does not simply buy another when it goes up for sale.

Microsoft President Brad Smith stated:

  • As this committee considers its focus near the start of a new Congress, we believe there are a few issues that are especially worthy of consideration:
    • Move forward with the Journalism Competition and Preservation Act and enable news organizations to negotiate collectively with online content distributors. We endorse this legislation with full recognition that Microsoft likely would be designated as an online content distributor subject to it. This is because, under the legislation’s proposed terms, we have more than a billion monthly active users, in the aggregate, for all our websites and online services worldwide. Hence this legislation would increase the ability of news organizations to negotiate collectively with us as well as others. We nonetheless believe that this legislation would advance a critical need by enabling more effective bargaining by smaller news organizations that are critical to sustaining local news across the country. Antitrust immunity that enables small publishers to negotiate collectively is not in any practical sense a departure from the principles that underlie the nation’s competition laws. To the contrary, this change is essential to advance the type of market competition that our antitrust laws were enacted to support.
    • Add to the proposed Journalism Competition and Preservation Act by imposing additional obligations on online content distributors. The Congress should review closely other terms in Australia’s recent law and incorporate elements from it. For example, this should include transparency requirements, an obligation to negotiate in good faith, and a duty to avoid retaliation. It should also provide a level of oversight and monitoring by an agency such as the FTC. To be clear, we’re sensitive to the argument that we must avoid enacting a law that would “break the internet.” We would not have endorsed the Australian law if we believed there was any real merit to Google’s argument that the country’s legislation would have done that. As we studied Australia’s legislation closely, we concluded that there was no foundation for the fear that people would have to “pay per link” to use the internet. This was confirmed explicitly when the final legislation affirmed explicitly what was apparent to us as soon as we studied the earlier drafts, namely that publishers could be paid through lump sums rather than “by the link.” (Ironically, the most prevalent place on the internet where people today pay per link is on search engines themselves, where this is applied to ad-sponsored links.)
    • Consider new legislative and regulatory codes to restore competition to the search and ad tech markets. One of the clear lessons from Australia’s recent experience is the need for more competition in the market itself. It’s not good news for democracy when a company as large as Google threatens to boycott a nation with more people than Florida if its elected legislators pass something it doesn’t like. One of the lasting questions from Australia is whether Google would have ever retreated from its threats if Microsoft hadn’t stepped forward with a promise to replace it. This is not the type of question that other states or countries should be forced to confront.
  • This requires new steps to bring back competition to the search and ad tech markets. This is not to offer an opinion on what antitrust enforcement agencies should do. Rather, it’s to suggest that Congress consider what it can do. For example, in the 1980s the authorities in the United States and Europe addressed dominant control of airline computer reservation systems by enacting codes of conduct that protected airline passengers by ensuring effective choices in learning about flights and fares. In a similar way, the United Kingdom and the European Commission today are addressing a lack of competition in key technology markets through new laws and regulatory oversight. In short, there is a potential future role for Congress that is worthy of consideration.

© Michael Kans, Michael Kans Blog and michaelkans.blog, 2019-2021. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Michael Kans, Michael Kans Blog, and michaelkans.blog with appropriate and specific direction to the original content.

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