To save journalism, regulate Big Tech… lightly

Something’s broken.
Something’s broken.
Image: Reuters/Dado Ruvic
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Google and Facebook recently reported bumper profits for 2018: almost $31 billion and $22 billion, respectively. It mattered little that both companies faced the wrath of lawmakers around the world for spreading fake news and allowing illicit actors to run influential disinformation campaigns using their platforms and technologies.

Meanwhile, news-media companies, including BuzzFeed and Vice, which compete with the big tech platforms for digital advertising spending, announced thousands of job cuts in the first weeks of 2019.

Juxtaposing the tech platforms’ growing might with newsrooms’ shrinking ranks may seem unfair. Google and Facebook aren’t solely responsible for the woes of the news industry. Publishers underestimated the changes that the internet would bring to people’s reading habits and are still struggling to catch up. Some digital players, like Mic, funded by venture capitalists initially succeeded by innovating in spaces, such as online video, ignored by legacy media. But their reliance on the tech platforms to grow their audiences cuts both ways; when the algorithms shift, so can their entire business models, forcing their financiers to rethink investments and valuations, leading to job cuts.

When you consider these troubles, it’s hard to ignore the negative impact of the duopoly of Google and Facebook on the news industry. For example, the two combined to capture 54% of the UK’s digital advertising revenue. News publishers are now left with barely 5%. It happened at same time as UK’s print advertising shrunk from 24% of all media advertising spend in 2007 to barely 6% of spend in 2017. The decline in print advertising proved to be disastrous, because revenues from digital advertising couldn’t make up for it.

Google and Facebook do contribute heavily to news publishers’ web traffic. They point to this when arguing that they are, in fact, good for the media business. But they don’t say how this traffic has contributed to clickbait and the de-prioritization of high-quality journalism. They also don’t say how the platforms benefit from the data they gather by sending readers to news sites and then tracking them across the wider web. These data allow the companies to command much higher ad revenue and strengthen their positions further.

The upshot is the platforms now have a stranglehold over publishers who, individually and even as a group, have little-to-no bargaining power when it comes to algorithmic changes, ad rates, and much else. Just this week, Apple announced that it will take 50% of the revenue from those signing up to newspaper or magazine subscriptions using its platform. The industry standard has been to take a cut of between 0% and 30% but, because Apple has a large audience, many publications agreed to sign up anyway.

There is little doubt that tech platforms provide value to their users—that’s why they are worth hundreds of billion of dollars. But what if this value comes at the cost of disabling a free and fair press? Studies show that, even just the loss of a local newspaper, creates a democratic deficit in the region—with lower voter turnout and increased frustration with political leaders.

That is why, in March 2018, the UK government launched an independent review to understand what, if anything, could be done to sustain high-quality journalism in this context. Both authors of this article were part of the 11-person advisory panel to veteran journalist Frances Cairncross, who published her findings this week. The Cairncross Review’s recommendations include regulating tech platforms, providing tax relief to publishers, clarifying the role of the BBC in the UK media market, and supporting innovation in the news industry.

Among the recommendations, those related to platforms stoked the most passionate debates within the panel. That’s because, although lawmakers in Europe, Canada, and Australia have called for some regulations, no one has implemented workable solutions. The review does not, for instance, suggest that a national government force a multinational company to be broken into pieces or levy large “sin taxes” on tech companies to funnel money in to journalism.

Instead, the Cairncross Review recommends that tech platforms should set out “codes of conduct”—overseen by a government regulator that sets deadlines and minimum expectations—to enable fair negotiations with news publishers. Its goal is to ensure, for example, that significant changes to algorithms, which can have a large negative impact on the traffic to and thus the revenues of news sites, are not made without notice. Crucially, the report also argues that the regulator should force platforms to support the dissemination of high-quality news, and the progress be evaluated through regularly published transparency reports. If the goals the regulator sets aren’t met, it should be given the power to “impose stricter provisions.”

To some, it might seem that the recommendations of these reviews don’t go far enough to rein in the platforms. That’s on purpose. There’s great risk in over-regulating the industry. Governments want tech platforms to be a force for good, but they lack the expertise of the highly paid engineers that Facebook and Google employ to figure out how to achieve this. The imbalance is so great that regulators must necessarily start as observers, push for more data sharing, and then decide what new rules to issue.

That said, the Cairncross Review’s recommendations, if adopted in full, we the authors of this article believe should start to correct the imbalance between publishers and platforms. They will incentivize the platforms to take responsibility for the content hosted and foster innovation in the news market.

The recommendations alone won’t fix the information crisis or the difficulties the media industry faces. If such a fix existed, it would already have been applied. Regulating platforms is not easy, and is certainly not the only issue in the news business. Even so, the Cairncross Review could, if adopted, come to be recognized around the world as a critical milestone in a long-overdue rebalancing of priorities.