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Welcome to The Corner. In this issue, we explore how Big Tech behemoths have always controlled the destiny of digital media outlets like BuzzFeed News, which shut down last week.

Closure of Buzzfeed News Shows How Big Tech’s Business Model is Still Killing Good Journalism

Karina Montoya

Last week, BuzzFeed announced it will shut down [[link removed]] BuzzFeed News [[link removed]], the clickbait-driven digital newsroom that won a Pulitzer Prize in 2021 for international reporting. The decision is part of broader layoffs to cut 15 percent of the company’s workforce, which includes the HuffPost, Tasty, Complex, and First We Feast.

In a letter [[link removed]] to employees, BuzzFeed CEO Jonah Peretti lists several challenges that led to the closure of BuzzFeed News. Among them stands out that he “overspent” on investigative reporting by BuzzFeed News, and that he was “slow to accept that big platforms wouldn’t provide the distribution or financial support required for premium, free journalism purpose-built for social media.”

The rise and fall of BuzzFeed News is a clear example of how Big Tech monopolies have always had the upper hand in running the internet. Perhaps the big lesson of this story is that during the evolution of BuzzFeed News a key market transformation was ignored: the growing dominance of Google’s and Facebook’s business models across the web. Facing these tech giants, whose every move buttressed their monopoly power, newsrooms never stood a chance.

Let’s recall how BuzzFeed News was born. Like many new digital-first newsrooms during the 2010s in the U.S. and across the world, media executives were trying to maximize web traffic, in a bid to get more eyeballs through social media that they could then turn into an advertising profit. At first, quizzes, cat videos, and memes were turned into ‘listicle’ headlines and took over the feeds of Facebook users. “Native advertising” – advertising passing as headline news – was born.

Peretti’s approach collided with legacy media transitioning to digital. Wall Street Journal editor Gerard Baker famously decried [[link removed]] the type of virality and advertising BuzzFeed News pushed to make revenues.

At the same time, BuzzFeed News founding editor-in-chief Ben Smith was grappling with building a newsroom with “journalistic credibility.” By 2014, he had realized that would also mean sacrificing traffic, as Wired [[link removed]] reported that year [[link removed]]. Ultimately, his efforts earned BuzzFeed News many awards until his departure [[link removed]] in 2020. But all along, both Peretti and Smith were battling bigger powers that were gobbling up the internet.

The 2010s, after all, was also the decade when Google and Facebook started consolidating various key digital platforms. Search, video streaming, social media, email, digital advertising, and mobile were all starting to fall into the hands of those same two giants. Facebook, for example, launched a series of products that promised to be the “next big thing” for online journalism: Facebook News Tab, Facebook Video, and Instant Articles, to name a few. With all that, it disproportionately influenced what newsrooms produced.

By 2018, it was becoming clear that social media had developed the power to determine the destinies of even the largest of news publishers. As Nick Thompson and Fred Vogelstein wrote on [[link removed]] Wired [[link removed]] in February of that year [[link removed]], “Every publisher knows that, at best, they are sharecroppers on Facebook’s massive industrial farm […] If Facebook wanted to, it could quietly turn any number of dials that would harm a publisher – by manipulating its traffic, its ad network, or its readers.”

In June of 2018, both the New York Times and NewsCorp were willing to speak out in public about the threat, at an Open Markets Institute conference titled “ Breaking [[link removed]] the News: Free Speech & Democracy in the Age of Platform Monopoly [[link removed]].”

In response, Facebook simply downgraded the relevance of all news that showed on Facebook users’ feeds, unilaterally deciding to favor content posted or liked by friends and family. Perhaps even more insidiously, Facebook started to funnel special payments [[link removed]] to the New York Times, Wall Street Journal, Washington Post, and a few other highly influential publishers, at the expense of smaller and upstart journalism shops.

BuzzFeed will now revamp its news efforts on the HuffPost because — Peretti claims — it still has a loyal audience less dependent on social media. Smith, co-founder of the publication Semafor [[link removed]], now advocates for a “post-social media” vision for journalism. About the closure of BuzzFeed News, Smith wrote [[link removed]] it “signals a vast shift in digital media that those of us who live inside it are feeling intensely right now, the end of one era and the beginning of another.”

What remains to be seen is whether working journalists — and their readers — will find this new period any easier than the last. Or whether even harder times are in the offing.

Open Markets-Led Coalition Urges Complete Ban on Noncompetes and Similar Contracts

A coalition of 50 civil society groups led by the Open Markets Institute submitted a joint comment [[link removed]] to the Federal Trade Commission (FTC) calling on the agency to close any loopholes when it makes a final ruling on noncompete clauses. The comment explains that functionally equivalent restraints like training repayment agreement provisions, or TRAPs, also lock workers in place. Open Markets Legal director Sandeep Vaheesan this week also published an opinion piece in The Washington Post [[link removed]]calling on the FTC to ban TRAPs and other workarounds. Any failure to do so, Vaheesan wrote, “would render the FTC’s admirable initiative all for naught.” Read the comment here [[link removed]].

A coalition of 50 civil society groups led by the Open Markets Institute submitted a joint comment [[link removed]] to the Federal Trade Commission (FTC) calling on the agency to close any loopholes when it makes a final ruling on noncompete clauses. The comment explains that functionally equivalent restraints like training repayment agreement provisions, or TRAPs, also lock workers in place. Open Markets Legal director Sandeep Vaheesan this week also published an opinion piece in The Washington Post [[link removed]]calling on the FTC to ban TRAPs and other workarounds. Any failure to do so, Vaheesan wrote, “would render the FTC’s admirable initiative all for naught.” Read the comment here [[link removed]].

Open Markets Applauds New U.K. Tech Regs and Blocking of Microsoft Merger

The Open Markets Institute this week hailed the U.K. government’s new Digital Markets, Competition and Consumer Bill [[link removed]], saying it would place the U.K. at the forefront of global action to regulate digital markets. “The Bill contains many highly encouraging measures, including a new pro-competition framework for Big Tech firms, a tougher merger control regime, and new rules on harmful practices including subscription traps and fake reviews,” OMI Europe director Max von Thun said. Open Markets also hailed [[link removed]] the U.K.’s decision this week to block Microsoft’s $69 billion purchase of video game maker Activision Blizzard. Commenting on the move by U.K.’s Competition Markets Authority (CMA), von Thun said, “After unwinding Meta’s acquisition of Giphy, the UK’s CMA has once again demonstrated its willingness to stand up to Big Tech’s attempts to buy out the competition.” Von Thun was quoted by Wired [[link removed]], AP News [[link removed]], and PBS Newshour [[link removed]] discussing the decision.

Open Markets and Europe Allies Call on EU to Move Beyond Consumer Welfare

The Open Markets Institute and leading European civil society organizations urged the European Commission to formally abandon the consumer welfare standard for enforcement of competition law. The OMI-led submission was in response to a Commission call for evidence to help shape guidelines for the EU’s Article 102 TFEU antitrust law regime. The groups also called on the Commission to take measures to tackle corporate dominance itself, instead of only addressing abuses of that dominance, through greater use of structural remedies and preventing acquisitions that create or entrench dominant positions. Read the full submission here [[link removed]].

📝 WHAT WE'VE BEEN UP TO: The Open Markets Institute’s chief economist Brian Callaci gave testimony [[link removed]] on a California bill that would make fast food franchisors and franchisees jointly liable for employees. Speaking before the California Assembly Judiciary Committee, Callaci said, "Corporate franchisors enjoy the benefits of controlling their businesses without incurring legal responsibilities as employers of the people who work there.”

OMI’s strategic councilor on democracy and power, Caroline Fredrickson, published an op-ed in The American Prospect [[link removed]] calling on President Biden to counter the conservative legal movement’s success in capturing the judiciary by appointing more judges, in particular to protect recent policy moves by the Department of Justice and the Federal Trade Commission that have challenged monopoly power. Fredrickson wrote. “President Biden now needs to use his appointments process (ideally speeded along by Senate Democrats) to make sure that all the good work that the Justice Department and the FTC are doing now and will do in the future doesn’t meet an untimely end in the hostile courts.”

Open Markets’ Barry Lynn was quoted by Politico [[link removed]] in a profile on Margrethe Vestager, whose term as European Commissioner for Competition ends next year. “She has a hard time seeing that the Big Tech corporations pose a direct and immediate threat to democracy and individual liberty,” Lynn said of Vestager. “She doesn’t fully understand their game or what’s at stake.”

Open Markets Institute praised [[link removed]] an appeals court ruling siding with Fortnite maker Epic Games over Apple that prevents the tech giant from stopping app developers from telling their customers that there are other ways to make purchases — including visiting the developer’s website. “This will allow app developers to offer users a discount if they go through the website, but at the same time, allow users who are more comfortable with Apple’s payment system to stay in the app to make their purchase,” OMI policy counsel Tara Pincock said.

Bloomberg Law [[link removed]] quoted OMI’s senior legal analyst Daniel Hanley condemning a recent decision by the Supreme Court to allow enforcement targets to challenge the constitutional authority of the Federal Trade Commission and the Securities and Exchange Commission in court without waiting for an in-house judge’s decision. “This ruling is planting the seeds to undermine the capability of the administrative state,” Hanley said.

In a piece in support of mergers, the U.S. Chamber of Commerce [[link removed]] cited a statement by the Open Markets Institute’s executive director Barry Lynn, who said about Amazon’s 2017 purchase of Whole Foods, “This is the crushing of competition. Amazon is monopolizing commerce in the United States.”

🔊 ANTI-MONOPOLY RISING:

A bill granting the Federal Maritime Commission (FMC) authority to break up alliances between ocean carriers and marine terminals has received support from two FMC members. The bill before the House of Representatives would boost the FMC’s antitrust authority, enabling the body to block anticompetitive agreements. ( JOC [[link removed]])

Microsoft will stop bundling the Teams messaging platform with its Office suite to avoid an EU antitrust investigation. The company, whose deal to purchase Activision Blizzard was blocked by U.K. regulators, is facing increased antitrust scrutiny. ( Engadget [[link removed]])

Amazon suffered a setback in Europe after it was determined that parallel antitrust investigations by EU and Italian regulators can move forward. Both probes are looking into how the e-commerce giant unfairly treats sellers on its platform by favoring its own products through its Buy Box. ( Bloomberg [[link removed]])

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

DONATE [[link removed]] 📈 VITAL STAT: 80%

The percentage of cargo handled by the top three carrier alliances following the deregulation of the ocean shipping industry by Congress in 1984. ( FMC [[link removed]])

📚 WHAT WE'RE READING:

“After demolishing swaths of San Jose, Google puts campus project on hold.” [[link removed]] (Ars Technica, Ron Amadeo): The author highlights the damage Google has inflicted in downtown San Jose after the giant stopped construction on an 80-acre mega-campus. The project to build 7.3 million square feet of office space, 4,000 housing units, 15 acres of green space, and 500,000 square feet of retail and cultural space is now abandoned.

“Competition authorities need to move fast and break up AI.” [[link removed]] (Financial Times, Sarah Myers West): The author warns about the first-mover advantages of Big Tech corporations in developing generative AI products and the need to enforce competition law to avoid concentration in this new market as well.

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Written and edited by: Barry Lynn, Max von Thun, Ezmeralda Makhamreh, Karina Montoya, and Anita Jain.

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