Big Tech vs. the News
Hi friends –
I have to admit, when I first heard about Australia’s plan to demand that Big Tech negotiate content licensing agreements with news publishers, I was skeptical.
It seemed to me that the worst possible way to fund the news was to put financially struggling news publishers in a cage match with tech giants. But, strangely, after some fits and starts, it actually worked.
The Australian code prompted the hiring of more than a hundred reporters and generated more than $130 million in annual payments to Australian news outlets large and small, according to Rod Sims, former chair of the Australian Competition and Consumer Commission.
But what really convinced me was what happened when Canada passed a similar law in June that required the companies to equitably distribute a very small portion of Canadian revenue (4%) to news publishers. Meta began blocking all news content in Canada – Facebook and Instagram users there cannot post or read links to news articles even to this day – and Google threatened (and did a trial run) of blocking all news from search results.
This type of bullying behavior made the stakes really clear: big tech is willing to fight to be able to pick winners and losers in journalism. And that would be a very bad outcome for democracy.
In this week’s article for New York Times Opinion (gift link), I write that the free press needs to stand firm against Big Tech's bullying behavior, and that it needs governments to step in to level the playing field.
Here’s my argument in a nutshell:
What’s the Problem?: Google and Facebook are gatekeepers to the news. It used to be that news organizations had some say over how their work was distributed - either by negotiating with newsstands, or cable companies, or hiring their own delivery networks. But in today’s world, news is largely distributed on social media through algorithms that Google and Facebook control.
And while news is what drives a lot of traffic on social media, news outlets don’t make much money from it. The platforms rake the vast majority of the money. In the past twenty years, global newspaper revenue has plummeted to $32 billion in 2022 from $107 billion in 2000 – while online ad revenue has soared to $540 billion.
The destruction of the business model for news has led to rounds of layoffs, shrinking newsrooms, the rise of clickbait and most disturbingly, a rise in impunity. Studies show that voting decreases and corruption increases in communities lacking strong news outlets.
What is Being Done?: For the past few years, Google and Facebook have been cutting deals with news outlets to provide funding. Google, for instance, says it has committed $1 billion to journalism and has cut deals with news outlets in more than 22 countries since 2020. For instance, both The New York Times and The Wall Street Journal have each reportedly cut deals with Google worth about $100 million.
But much of the deal-making is secret, the dollar amounts are rarely disclosed, and some outlets are shut out. In Canada, for instance, David Skok, the founder and chief executive of The Logic, a business and tech news publication, said his publication was one of only two Canadian national non-broadcast news publications that had not already signed a deal with Google or Meta before the legislation’s passage.
“The internet is supposed to be a level playing field. Instead these platforms are picking winners,” Skok told me.
Australia and Canada have stepped in with laws designed to ensure that these deals are reported to the government and are equitably distributed. After hardball negotiations, Canada and Google cut a deal last month that would require the company to pay Canadian news outlets about $73.5 million a year – much less than the $126 million that Canada originally sought. That is far less than the $550 million that the author of a new working paper on the value of news to Big Tech estimates Google owes to Canadian publishers.
Similar laws have been proposed around the world, from Brazil to South Africa to California. All are being greeted by threats from Big Tech. When Brazil considered its law last year, Google posted ads on its search page stating that the law would “force Google to fund fake news.”
Is it enough?: Of course, it will take more than small payments from Big Tech to save journalism. There are many other options for funding news – whether it is governments taxing Big Tech to support journalism or philanthropy stepping in to support the field.
But given the current landscape of uneven distribution of corporate funding, I think it makes sense for governments to ensure that Big Tech doesn’t become a kingmaker in the important field of journalism. Without oversight, Big Tech could reward outlets that promote its interests and financially starve outlets that are critical of its business or political interests.
And in a world that needs more accountability - not less - letting Big Tech choose who is in the accountability business seems like a recipe for disaster.
As always, thanks for reading.
Best
Julia