No images? Click here Welcome to The Corner. In this issue, we explore how Big Tech giants like Facebook are reacting to a proposed law in California that would require platforms to pay news publishers a fee for using their content in a bid to revive decimated newsrooms in the state.
Karina Montoya Last week, the California State Assembly passed AB 886, the California Journalism Preservation Act (CJPA), a bill that would require Big Tech platforms — primarily Google, Facebook, and Microsoft — to pay news publishers a fee for using their content. Increasingly, platforms have shifted the design of their content display in ways that allow users to read most of the news without clicking on links, which drives more ad revenues to the platforms but not the news outlets. As a response, Facebook is threatening to pull all news links from its Facebook and Instagram platforms in California. Google hasn’t reacted to CJPA yet, but based on its response to similar dealings in other countries, it’s reasonable to expect that it will follow suit. This makes the first time a Big Tech platform has threatened U.S. citizens, and demonstrates how Big Tech is willing to go to maintain its dominance, even if it involves suppressing fundamental liberties to share news and information. The California bill requires large platforms to pay a usage fee directly to news publishers for featuring their news content. Unlike what some media have reported, the state of California will not collect the fees, according to the Office of Assemblymember Buffy Wicks, the bill sponsor. To determine such fee, CJPA mandates a binding arbitration between the platforms and digital newsrooms. There will be specific arbitration periods where platforms will negotiate with all newsrooms that give notice of their right to receive compensation. Facebook and Google’s responses to these regulatory efforts in countries around the world have created chaos for news publishers and the public. Australia is a particularly serious case. When the Australian government was about to approve its News Media Bargaining Code in December 2020, Facebook pulled news from its social-network feeds in the country to pressure lawmakers into loosening the effects of the legislation. The harm went beyond news, as Facebook ended up blocking all sorts of Australian websites, including hospitals and emergency services. Although Facebook characterized it merely as a “mistake,” whistleblowers who spoke to the Wall Street Journal showed that it was a deliberate tactic to wreak havoc in the country. The ban was lifted after the Australian government amended the code to make the arbitration process mandatory only if Big Tech failed to cut deals directly with news outlets. Google initially took a similar tact in Australia, and threatened to block use of its search engine in the country. It soon shifted course, however, and moved to strike secret deals with the largest media companies in Australia, in anticipation of the modified News Media Bargaining Code that would allowed it to do so. During that same period, Google also ran “an experiment” to remove local news sites from search results in Australia. The corporation defended the “experiment” arguing that people would still be able to access news stories in the Google News tab. Canada, which is in the process of passing its own news bargaining law called Bill C-18, or the Online News Act, is now being subjected to the same scare tactics. In February, Google started limiting access to news results in its search engine in that country. This month, just as in California, Facebook also announced it would block news on both Facebook and Instagram in Canada if Bill C-18 is passed. There are key difference between CJPA and the Australian and Canadian approaches. CJPA, for instance, does not require an individual negotiation between digital platforms and news outlets prior to entering arbitration. Also, it explicitly allows the platforms to enforce their content moderation policies — a concern for some organizations opposing the bill. Additionally, the bill requires news outlets to use 70 percent of the funds in employing journalists and to generate public reports on how the funds are spent. “Big Tech is waking up to the reality that governments can indeed govern digital platforms,” said Keldon Bester, co-founder of the Canadian Anti-Monopoly Project. Thus far, however, it’s not clear that any of this first-generation of efforts is the most effective way to protect journalists and citizens — especially as they do not address the ability of the two platforms to simply cut off access to the news. But for the moment, such details appear to be irrelevant for Big Tech. As Bester notes, “it doesn’t matter if it’s the best legislation or not, Big Tech will fight against it if it doesn’t fit their interests.”
Open Markets Institute will host a half-day event, “The Next World System: Can US Trade Policy Make Us More Secure?” on Thursday, June 15. U.S. Trade Representative Katherine Tai will headline the event, sharing President Biden’s new vision of trade, which aims to reinvigorate U.S. manufacturing and technological innovation, defend American workers and small businesses, and ensure the security and resiliency of supply chains. Other participants include Tim Wu, the former White House Special Assistant to the President for Technology and Competition Policy, FT Columnist and author Rana Foroohar, former OIRA director Sabeel Rahman, and AFL-CIO International Director Catherine Feingold. Get tickets to attend in-person or virtually here. 📝 WHAT WE'VE BEEN UP TO:
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We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter. 📈 VITAL STAT:$500 MillionThe amount Ford alleged it overspent on insurance for its employees between 2009 and 2013 due to a price-fixing conspiracy by Blue Cross Blue Shield. The auto manufacturer has filed a suit in a district court in Detroit. (Detroit Free Press) 📚 WHAT WE'RE READING:“Breakthrough Supply Chains.” ( McGraw Hill, Christopher Gopal et al.): Written by four leading experts in supply chain management, the book describes how supply chains should ideally work in a resilient and sustainable world. 🔎 TIPS? COMMENTS? SUGGESTIONS? We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue. |