It reads like a coroner’s report on the news business, 623 pages filled with charts and graphs detailing the devastating decline in local news and public policy reporting of the past decade. It landed on the Australian prime minister’s desk last summer, unnoticed by most news consumers in America and around the world.
But the report by Australian regulators left little doubt about what they see as the cause of local journalism’s demise — the near monopolistic power of Google and Facebook. And it has set off a chain of events that could shift the balance of power between big tech and the news at a dire moment for journalism.
“Global tech companies are not beyond national laws, especially when there is so much at stake,” Rod Sims, the chairman of the Australian Competition and Consumer Commission, and author of the report, texted me this weekend on WhatsApp.
Mr. Sims and a like-minded regulator in France, Isabelle de Silva, are challenging a universally accepted fact of the internet: that Google and Facebook can carry content created by news organizations without directly paying the organizations for creating it. Last month, as the coronavirus put hundreds of publishers out of business around the world, the Australian government instructed Mr. Sims to force the platforms to negotiate payments with newspaper publishers — making it the first country to do so.
Mr. Sims, a pugnacious 69-year-old who has spent much of his career tangling with railroads, ports and phone companies, sees echoes of those classic monopolies in this battle: “The digital platforms need media generally, but not any particular media company, so there is an acute bargaining imbalance in favor of the platforms. This creates a significant market failure which harms journalism and so, society.”
In France, where regulators are demanding that Google cut a deal to pay publishers, the pandemic crisis has added “all the more urgency,” said Ms. de Silva, the president of the French Competition Authority, which is enforcing a European Commission change to copyright law that will soon take effect across the continent.
Players on all sides predict the Australian and French decisions will set global precedents. Leaders from Ireland to Malaysia have indicated they’re paying attention. And in the United States, where antitrust laws are weaker and regulators have been more laissez-faire, starving publishers are licking their chops.
“It’s kind of neat watching the dominoes fall,” said Danielle Coffey, the general counsel for the News Media Alliance, which largely represents U.S. newspapers.
The battle between platforms and publishers is at once a matter of economic principle and an old-fashioned political brawl between powerful industries. For a decade, tech’s transformative power, glamour and enormous lobbying spending allowed it to dominate, resulting in a system in which the platforms could feature and profit off the content news publishers create without paying them directly for it.
But the power of the press, even nowadays, makes it a formidable political force. Rupert Murdoch’s bare-knuckled News Corp — born in Australia and broadly loathed by its more genteel and progressive global peers — has long led the fight to claw back revenue from the tech giants, and hostility to Google bleeds through the pages of The Times of London and Fox News’s airwaves. (Mr. Sims said he had never talked to Mr. Murdoch, though a spokeswoman confirmed that News Corp submitted recommendations to the inquiry.)
While much of the American media rejects the idea that it is crusading in its pages to support its publishers’ business agenda, most news executives in this country share a viewpoint on the platforms, having seen them pull advertising dollars from the news business and spread misinformation at the expense of professional journalism. And even as the platforms employ armies of powerful lobbyists, politicians remain eager to please the press that covers them.
“All governments are responsive to media in some way or another, because in all countries media is the filter through which things are seen,” Mr. Sims said.
Facebook and Google have approached new regulatory aggressiveness differently. Facebook, after taking a huge public beating for its role amplifying misinformation and disseminating user data in the 2016 election, has moved to give publishers what they want: money, mostly. The company began its news tab last October writing checks in the seven figures to publishers in exchange for three-year licensing deals. Facebook’s attempts to make amends culminated with Mark Zuckerberg submitting to an onstage interview with a triumphant News Corp C.E.O., Robert Thomson, who began by asking drolly, “What took you so long?” And publishers believed that Facebook had legitimately begun to address an important issue by compensating news organizations for their work.
Google has played the politics differently and, so far, much less deftly. The company has taken a patronizing approach to publishers, fronted by a gray-bearded former Salon executive, Richard Gingras, who has for years delivered the same set of talking points to increasingly irate news executives about the nature of truth and the true value of the internet — as though the year was still 2003. And while Facebook is paying publishers directly, Google has mainly handed out grants for experimental journalism projects built around Google’s technology.
Mr. Thomson, in a veiled shot at Google during a News Corp earnings call last week, accused it of trying to create “a system of petty patronage, through faux philanthropic handouts and sententious sops, seemingly designed to institutionalize a mendicant media.” (Mr. Gingras did not respond to an email inquiry.) And Google’s temporary grant-giving to news organizations appears to follow a pattern: The company is most generous when it feels most threatened by regulation.
Google maintains that it delivers value to publishers by driving them traffic.
“I do want to debunk a meme that I’ve heard that we don’t pay or provide real value,” the company’s vice president of news product, Brad Bender, told me in a phone interview, adding that “topical news” of the sort Google often aggregates “isn’t a significant source of revenue for news publishers” because they sell advertising against things like cars and fashion.
But the politics have changed drastically in the last few years, and Google’s proud defiance and lectures about technology now come across as a blend of arrogance and naïveté. And, perhaps showing the virtues of Facebook’s more conciliatory approach, the social media giant has also succeeded in France, for now: Facebook is arguing that voluntary posts by its users to social media are intrinsically different from the way a search engine scrapes the web, and negotiating to pay publishers, so far avoiding Ms. de Silva’s heavy hand.
“We found the argument by Google that they would never pay any form of payment for any content inconsistent with the law,” Ms. de Silva told me in a telephone interview about her efforts.
Google executives thought they’d found a way to dodge European regulation when, in Spain in 2014, they simply removed Google News from search results there rather than respond to regulators’ demands for compensation. But, in a sign of how things are shifting, when they tried a similar maneuver in response to France’s new regulation requiring payment for copyrighted “snippets” of news, Ms. de Silva pounced, ruling that the company’s take-it-or-leave-it approach was itself an abuse of market power.
“We looked at what happened in Spain,” she said. “This is not really an avenue that is open to them because in our decision we asked them to maintain the content is as it is today.”
Now Facebook is negotiating with French publishers to introduce a version of the program it rolled out in the United States, and Facebook executives told me they would expand that approach in other markets as well. The company hopes to “work with governments to help news publishers build sustainable business models,” its head of news, Campbell Brown, said in an email.
There are some signs that Google’s strategy is shifting. The company is in discussions with some publishers in the United States and France to pay directly to “feature full articles” on Google itself, without having to click a link, according to a Google employee who spoke only on the condition of anonymity because negotiations are in progress. (The talks were first reported in The Wall Street Journal.) But French publishers are cool to the notion of a new product in favor of a demand they be paid for use of their content on Google’s main search results pages. Mr. Thomson, of News Corp, said on the earnings call that he had seen “harbingers” of “a more enlightened, socially empathetic attitude to journalism” from Sundar Pichai, the chief of Google and its parent, Alphabet.
The European copyright negotiations were a long time coming, and are proceeding reliably through the continent’s legal systems. Ms. de Silva says Google has until August “to negotiate in good faith” with publishers to pay for content, and Germany is expected to move in a similar direction at the end of this year. The situation in Australia appears to be moving faster, and less predictably. Mr. Sims is expected to deliver a draft code, including a system for valuing content, by July.
Mr. Sims and Ms. de Silva can’t, alone, save a news industry that is still struggling to meet consumers where they are on the internet. Some publications have an enduring reliance on print, and others have styles of telling and thinking about news and revenue alike that hark back to the newspaper era. At worst, forced payments from platforms could merely prop up fading newspapers at the expense of new ways of telling stories and doing business.
But in this dire moment, the news business is starting to win some political battles. The platforms have begun to realize that while news isn’t as popular as baby pictures or celebrities, it’s the industry politicians care about most. The politicians who matter, at least, who are less and less to be found here in the United States.