Media Viability: Tackling Big Tech

By Michael Pavičić


2020, and 2021 thus far, have proven to be an interesting time for those who are interested in the many challenges news media and journalists face in their attempts to become or remain independent and financially sustainable. The dominant position of Big Tech companies such as Google and Facebook vis-a-vis the news media industry is increasingly being scrutinised by governments across the globe through legislative and regulatory measures.

By disseminating media content for free on their platforms and monetising this content by scooping up advertising money through a business model with zero-sum outcomes for print and online media outlets, the financial viability of independent news media and journalism has been seriously eroded by tech platforms, Google and Facebook in particular. Admittedly, the lack of advertising income and failing business models are hardly the only big problem for the future of journalism.

Other big problems include media capture by self-interested political and business elites to control and gag a critical press. Impunity for crimes against journalists. Repressive laws and regulatory capture. Decreasing trust in media through the spread of mis- and disinformation and the attack on independent journalism through populist demagoguery. All these developments are equally, and in some countries simultaneously, threatening independent news and journalism. And COVID-19 has only added fuel to the fire.

The COVID-19 pandemic has led to a dwindling of economic activity and marketing budgets in 2020 around the globe and hence a contraction of advertising revenue for independent news media in Europe, Asia, sub-Saharan Africa, with a reported decline of 42% in advertising revenue for print media in the US. Some have argued that we are now looking at a ‘media extinction event’ for journalism. And while there is an acknowledgment of the essential role of public service media in G7 countries, and more broadly in public interest journalism, public and political attention is increasingly drawn to and, rightfully, needed for creating an economic enabling environment for independent and viable news media.

Governments and politics step in

Government action to support struggling (local) media is not a new thing. Measures to support survival of local news outlets include the New Jersey Civic Information Consortium, the Dutch Temporary Support Fund for Providing Local Information, the Swedish New Media Support Scheme or the Australian Public Interest News Gathering (PING) Program, to mention but a few.

But a recent New York Times article describes a global development in which ‘governments are moving simultaneously to limit the power of tech companies with an urgency and breadth that no single industry had experienced before.’ Not all countries’ motives are the same however. According to the NYT, authoritarian countries’ motives are ‘to silence protest movements and tighten political control’, like in Russia and China. In Poland and Hungary, measures have been introduced or are being considered to protect speech that actually breaches Facebook and Twitter community standards that aim to scrutinise misinformation and incendiary extremist viewpoints.

Concerns over a competitive level playing field and privacy concerns dominate in the United States, European Union, the UK and Australia. And in a number of countries, lawmakers have proposed or taken deliberate action to protect the news media from the power of dominant digital platforms such as Facebook and Google.

Google’s and Facebook’s responses to government action against their market dominance centre on their claim of actually being an added value to the news industry. According to Reuters, Google asserts ‘it is “one of the world’s biggest financial supporters of journalism” by virtue of the ad revenue and content licensing fees it provides to media.’  Facebook responded to Australian measures that introduced a bargaining code by stating ‘that the proposed news-payment code “fundamentally misunderstands the relationship between our platform and publishers who use it to share news content.”

Saving Journalism through competition law…

Against this background, Columbia University organised a webinar on April 15, 2021, titled Saving Journalism: Should Countries Copy Australia’s New Media Code? Professors Anya Schiffrin and Taylor Owen led a discussion with Rod Sims, chairman of the Australian Competition and Consumer Commission and architect of the Australian News Media Code. He was joined by his peers from France, Germany, South Africa and the UK

In 2020, Australia’s federal government introduced a mandatory code of conduct laid down in the News Media Bargaining Code that aims to leverage the bargaining position of large and small news media, individually or collectively (on top of a 12-month waiver of spectrum taxes and a support package for local media outlets). If an agreement cannot be reached, tech platforms are forced to enter into binding arbitration based on the net value that the platforms provide the media businesses and vice versa, with a government-appointed mediator. According to the Australian Competition and Consumer Commission (ACCC) – a market regulator:  

‘The News Media and Digital Platforms Mandatory Bargaining Code is a mandatory code to help support the sustainability of public interest journalism in Australia. It will do this by addressing bargaining power imbalances between digital platforms and Australian news businesses.’

The working of and complexities surrounding the negotiate-arbitrate model of the Code, allowed for a vivid discussion on the use of competition law and other instruments to curb the dominance of tech giants over the news media. ACCC chairman Sims argues that the code actually helps all media companies and that while 75% of the large platforms have made deals, many small publishers have already made deals too. But he also acknowledges that larger companies benefit in proportion to their contribution to journalism, that is, in proportion to the number of journalists they employ.

And then? By the time the Code was put into force, Facebook blocked news to Australians. And not just their news, as Facebook initially also blocked service pages of government health-department and emergency services. Facebook and the Australian Treasurer met soon after and amendments were made to the law.

Although lawmakers in other countries such as Canada, the UK and the EU have expressed interest in the Australian model, the Code is not without its critics. One of the critiques to the Code is that it will only help large media companies as smaller players in the media landscape lack the bargaining skills or means to negotiate with large tech companies. And Tim Berners-Lee, inventor of the world wide web, is fearful of a precedent that “would undermine the fundamental principle of the ability to link freely on the web and is inconsistent with how the web has been able to operate over the past three decades”. Adnews, an Australian magazine for the advertising and marketing industry, has listed a number of arguments against the Code, including the ones above and also alleged shaky legal and economic grounds to force revenue sharing of the Code and a breach of free trade agreements by targeting American companies. 

Participants in the webinar were also concerned whether measures such as the News Media Bargaining Code are future proof. Digital platforms tend to change quickly. So will this require new bargaining every time a new player appears on stage? On future proofing, Andrea Coscelli, Chief Executive of the UK Competition and Markets Authority, said:

‘legislators try to find a balance between a descriptive approach and more flexible broad approaches. The flexible approach is more future proof and can be used for different platforms. But it has become very complicated over the years. The more you want to keep discretion to the regulator the more you run the risk for lots of complexity and delays, which can also be beneficial for large players.’

According to Andreas Mundt, President of the Bundeskartellamt, Germany is lagging behind as compared to Australia. But a new prohibition in the German competition act came into force recently that is targeted at companies with a dominant competitive position. This may ultimately set standards for the relationship between big tech and media houses in regard to what big tech is allowed to demand from publishers. Mundt confided that the question to how this will play out eventually is on many lips, not only in the webinar. But only time will tell.

… or copyright protection?

Next to competition law, the participants in the webinar discussed the use of copyright protection measures to ensure payment for content. This is not a new approach and measures taken from the angle of copyright protection in Germany and in Spain, that allow newspapers to charge aggregators for linking to small out-takes from news articles, have led to different outcomes in their respective media landscapes. In Spain, such measures led to a total shutdown of Google News in 2014. According to a Stanford University working paper,

‘the shutdown of Google News [in Spain] reduces overall news consumption by about 20% for treatment users, and it reduces page views on publishers other than Google News by 10%. This decrease is concentrated around small publishers while large publishers do not see significant changes in their overall traffic. We further find that when Google News shuts down, its users are able to replace some but not all of the types of news they previously read.’

In Germany, a consortium of 200 publishers lost a lawsuit in which they demanded copyright fees worth 1 billion euros from Google-owner Alphabet. Google emerged victorious as the Court of Justice of the European Union (ECJ), ruled in September 2019 that the ‘EU executive had not been notified of the German technical regulation’ that formed the basis of the claim.

But this could well have been a Pyrrhic victory because during the course of the lawsuit, the EU adopted the EU Directive on Copyright in the Digital Single Market, a directive that needs to be transposed into national law by EU member countries and which confers wider and more robust rights to publishers than the 2013 German law. Andreas Mundt questions however if this is enough and whether it will lead to a strengthening of rights of publishers to ask for remuneration afterwards. Other than Australia’s bargaining code, the EU Directive, according to Mundt, has no provisions for including remuneration for display of hyperlinks or excerpts of press articles. He hopes that a combination of protective measures through competition law and copyright protection will have more effect.

Because of Brexit, the EU Copyright Directive is one of the first pieces of legislation that will not come into force in the UK, said Andrea Coscelli. Although the concerns in Australia and in EU countries overlap, the UK is not planning for similar legislation in the near term. In stead,

‘We want to give extra power to regulatory units to deal more quickly and effectively with a number of concerns. There should be an enforceable code of conduct that would regulate the relationship between tech companies and third parties, including publishers. We started working on draft code of conduct, specifically related to the imbalance in the relationship.’

Bargaining with the behemoths

Whether big tech companies are really interested in paying a fair price is questionable and they are being criticised for being opportunistic. Mundt for instance mentioned that in Germany big tech is already pro-actively responding to proposed legislation, and he sees contracts being negotiated between Facebook and Google with various publishers. In France, a deal was negotiated with Google by 121 news organisations following the transposition of the EU Directive into French law. According to the Sydney Morning Herald, Le Monde for instance will receive €4 million a year from Google. However, the formulas underneath the deals between French and Australian print and broadcast media are intransparent. As the Sydney Morning Herald article says: 

‘It’s ironic that deals being struck between digital platform giant Google and Australia’s major media companies designed to enhance information distribution are so shrouded in mystery and misinformation’

Meanwhile, in the webinar, it was suggested that international coordination seems like a vital measure to counter this lack of transparency as it appears that individual publishers in other countries are already coming to ad hoc agreements with the platforms unilaterally. This is leading to funding agreements being applied differently in different countries with different outcomes. Again, smaller media outlets are left with a worse deal as these agreements are biased towards large publishers who bring more weight, money and lawyers to the table. This is especially true in developing countries where most local media lack the ability or avenues to directly negotiate with big tech companies. Rod Sims argues that international cooperation is very much needed and that we should not wait. That said, Sims believes the nature of these deals, in the end, will become public as these are public companies.

And how about taxes?

Last February, the United States and the EU moved closer towards an agreement for a global tax on tech giants. France and Italy already impose a levy on digital revenues of Google, Facebook, Amazon and Apple. Now, should these taxes be earmarked to save journalism? According to Rod Sims, there is a massive case for targeted government funding. There is scope for more money to go to journalism as is happening in Australia and in other countries through support schemes for struggling local media. But if you want to fund journalism, Sims argues, you don’t want a system where you single out Google and Facebook. They need to pay their fair amount of tax and revenue through the Bargaining Code, but beyond that, their job is done. Proper fiscal policy says that you receive taxes and allocate them through democratic, political decision-making. Not just look for new taxes to gain money.

Suggestions for proper allocation were made in the webinar, for instance, tax credits to media houses, tax exemption on technological equipment aimed at the digitization of the press, subsidies to the access of the internet, all could be of great help. Tax credits could also be given to paying news consumers, although according to Anya Schiffrin, vouchers are more democratic and a more equitable manner of distribution as tax credits may end up in the lap of people privileged enough to actually being able to pay for their news.

Where to go?

Participants in the webinar raised the question in what direction we are leaning when we try to save journalism through government intervention. Thomas Owen Ripley, Director-General Broadcasting, Copyright and Creative Marketplace at Canadian Heritage said:

‘Are you trying to solve market imbalance or are you trying to support the production of journalism? The answer to this question will lead to different paths. The system should also be mindful of unintended consequences. We don’t want platforms to change the way that consumers can access news [as happened in Spain or in Australia- MP]. This may lead to different paths because determining the value question is not easy. How do you design a system that is inclusive of smaller media outlets. In Canada we have two languages, different local communities. How do you design a system that is mindful of unintended consequences?

Looking back at Australia, what the News Media Bargaining Code will not do is solve the conundrum of media viability and threats to media diversity and pluralism by supporting small businesses. As Sims says, the code is made to provide proper payment for content, right now. In other words: there is one measure for only one objective.

Whatever the solution is, through competition law, copyright protection and bargaining, all media houses, large and small, should benefit. The solution should not be discriminatory and should be made as transparent as possible. Solutions should be open to all kinds of publishers. As one of the participants stated:

‘It is so extremely difficult, this exercise is changing the game on the internet, this is the first time ever that we break through this everything-is-for-free mentality, not only of the user, but also a mentality of those who display offers on the internet. This is slowly going to change. This is not a singular change, it is changing the nature, this why you have to overcome resistance and take a careful look, make sure everyone benefits.’

This blog was made possible by the PRIMED project, funded by UK Aid, and in collaboration with BBC Media Action. The views expressed in this article are those of the author and do no necessarily reflect the views of the PRIMED Consortium members.