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Jun 19, 2019

Can anti-trust law save newspapers?

My June column for the South Carolina Press Association:

Federal and state anti-trust laws date from the late 19th and early 20th centuries, way before the emergence of the modern internet-fueled economy. But increasingly these old laws and concepts are being seen as the means of limiting the influence of the dominant internet platforms, and perhaps of helping the print media, particularly newspapers, remain viable.

Since their inception, anti-trust statutes have been used against a variety of unsavory business practices, including companies’ agreements to divide markets; bid rigging; collusion to fix prices; and a company keeping out competitors to maintain a monopoly. In the early years after their enactment, federal anti-trust laws were used against railroad consolidations and oil conglomerates.

Two of the most prominent anti-trust cases have been against AT&T, which resulted in the fragmentation of the telephone industry (which has since reconsolidated while the industry underwent a fundamental transformation), and Microsoft, in which the company agreed to limit integration of its Internet Explorer browser into its dominant Windows computer operating system so that competing browsers could not be used.

Now, members of Congress and federal regulators are contemplating applying anti-trust laws to the dominant internet platforms: Google, Apple, Facebook, and Amazon, known collectively by the acronym “GAFA.”

But there are two very different approaches being considered.

One approach would loosen application of anti-trust laws to allow competitors to GAFA to work together.

The rationale is that the GAFA aggregators often use headlines and lead grafs from news organizations, with links to the source articles, without any payment to the news source. While the law is uncertain on this point, this use has generally been defended as fair use of the news organizations’ copyrighted material. Also, the aggregators argue that it drives visitors to the news organizations’ web sites, which increases their audience and exposure to their ads. But critics say that most users do not click through to the original article, allowing aggregators to use news organizations’ content for free and to keep the resulting ad revenue.

The News Media Alliance released a study estimating that Google’s revenue from news content in 2018 was $4.7 billion, although the study’s methodology and conclusions have been criticized. Congressman David Cicilline of Rhode Island, chairman of the House Judiciary’s subcommittee on antitrust, said at the hearing that “Concentration in the digital advertising market has pushed local journalism to the verge of extinction,” according to The New York Times.

On June 4, a House subcommittee held a hearing on a bill that would give print news companies a limited, four-year exemption from anti-trust laws to allow them to collectively negotiate fees for usage of their content by online aggregators.

Another proposal would toughen application of existing anti-trust law to the major internet platforms.

The House subcommittee plans to explore this option, as well as the possibility of changing anti-trust law to reflect modern technology and business practices, as part of an 18-month inquiry into the platforms’ dominance. Meanwhile, the federal Justice Department and the Federal Trade Commission have reportedly reached an agreement divvying up anti-trust oversight of GAFA companies: the Justice Department will examine Google and Apple, while the Federal Trade Commission will look into Facebook and Amazon. Various state attorneys general are also considering taking action against the companies.

These efforts stem primarily from concerns regarding user privacy, and security of users’ data. But they could encompass the web portals’ overall business practices, including their increasing role as news sources and their relationships with traditional media companies.

A variety of arguments have been put forward on how to apply U.S. anti-trust law to online portals. Several of these mirror processes that have been applied by the European Union against these companies, including a recent fine of almost $1.7 billion against Google over its advertising practices, making the total of E.U. anti-trust fines against the company over $9 billion. While appealing the fines, Google has already changed some of its practices in Europe.

Depending on how they are implemented, the proposed changes in the language or application of anti-trust laws in the United States may have major impact on the modern media landscape, including the fate of the print news media. But this will be a legislative and policy fight, as well as a legal one in the courts, and the outcome is far from certain.

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