News media seek to wield antitrust law in negotiations with Google, Facebook

In the wake of the EU’s recent $2.7 billion dollar fine of Google, the US news media are seeking to both change and wield antitrust law in negotiating with Google and Facebook, which dominate online advertising. Two pieces in the The New York Times and The Wall Street Journal illustrate the strategy.

As Jim Rutenberg writes in the Times, the News Media Alliance, representing roughly 2,000 news organizations, is seeking to negotiate collectively with Google and Facebook over advertising and revenue. Rutenberg points out that there will need to be specific Congressional action (an antitrust exemption) to enable this collective bargaining to happen.

A News Media Alliance press release acknowledges this and lays out the rationale:

Antitrust laws are intended to address the injury inflicted by dominant monopolistic companies. Yet when it comes to the media, existing laws are having the unintended consequence of preventing news organizations from working together to negotiate better deals that will sustain local, enterprise journalism that is critical to a vibrant democracy. News organizations are limited with disaggregated negotiating power against a de facto duopoly that is vacuuming up all but an ever-decreasing segment of advertising revenue.

Effectively, the news media seek to “unionize” to wield more power in their discussions with Google and Facebook. Both Google and Facebook have made multiple efforts to support journalists and journalism in the past and profess a ongoing desire to work with news media as partners. The challenge is one of scale; individual publishers and media outlets simply don’t have the scale that Google and Facebook offer. Advertisers have gravitated toward that scale and reach for efficiency.

In addition to seeking an antitrust exemption for themselves, a piece in the The Wall Street Journal by News Media Alliance president David Chavern strongly suggests that the group will lobby regulators to be more aggressive in enforcing antitrust laws against Google and Facebook in the future. Chavern argues that past US antitrust enforcement has been too lax:

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.

In approving these acquisitions, the Justice Department and Federal Trade Commission probably did not consider their impact on journalism in particular, although they did assess the acquisitions’ broader potential competitive impact.

It’s not clear whether Congress will grant the requested antitrust exemption. Regardless, it would make sense for news organizations to speak with one voice in working out sustainable business models and revenue sharing with Google and Facebook. In Europe (Spain and Germany in particular), publishers have sought to impose legislation (subsidies or “link taxes”) on Google under the guise of copyright law. However, those arrangements have not been successful for anyone.

In this situation, all parties say they want the same thing: a vibrant and healthy fourth estate. The challenge will be working out a deal that everyone can live with.

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