The Corner Newsletter: The Real Reason for Journalism’s Demise No images? Click here Welcome to The Corner. In this issue, we identify the real cause behind this year’s recent wave of layoffs and shutdown in journalism, which is the monopoly power of Google and Facebook.
January marked a new low in the precipitous decline of the American journalism industry, as newsrooms across the country laid off unprecedented numbers of reporters. The hundred-plus jobs slashed by West Coast newspaper of record, the Los Angeles Times, grabbed the most headlines, while magazine Time trimmed dozens of staff roles and leading digital news publisher Business Insider reportedly cut eight percent of its workforce. Meanwhile, landmark publications like Sports Illustrated and Pitchfork — which helped develop and define the industries they covered — were all but shuttered. As if to put a fine point on the carnage, the much-publicized digital media startup The Messenger folded altogether on January 31. The series of layoffs set off another wave of hand-wringing across the industry. The New York Times lamented that “The News About the News Business is Getting Grimmer.” Axios and Fox Business both described the layoffs — and the ones that preceded them in recent years — as a “bloodbath.” And in The Atlantic, longtime media reporter and analyst Paul Farhi — who grappled with the realities of the new media ecosystem himself when he took a buyout from the Washington Post just last year — pondered whether “American Journalism [is] Headed Toward an ‘Extinction-Level Event.’” But while journalists across the industry have awakened to the existential nature of the industry’s crisis, these and other leading media writers remain obtuse to the underlying reason: the predations of illegal monopolies. Tens of billions in annual advertising revenue that should be going to support the cost of producing journalism is instead being siphoned into the vaults of Google, Facebook, and Amazon through their control over and manipulation of the markets for digital ads. The Department of Justice has brought a massive antitrust case against Google over such abuses. Though the suit has been dubbed the “biggest tech monopoly trial of the 21st century,” it is rarely given serious weight in most accounts of what has gone wrong with the business model for journalism. Instead, columnists like the New York Times’ Ezra Klein have used their increasingly rare real estate to muse over the economics of Substack subscriptions and mourn a missing “middle” in an industry that is experiencing disaster across the board. Klein is far from an outlier. Take Farhi’s piece, for example. His explanation of why “the meltdown has come amid — and in seeming defiance of — a generally booming economy,” is woefully insufficient. While he makes a passing reference to the “ad revenue-gobbling tech giants Google and Meta,” he focuses mainly on amorphous problems like “news and subscription fatigue” and “trust in media.” While these trends are no doubt a factor, Farhi never stops to consider whether they, too, are part of a larger story. By the time his lamentation reaches its solutions section (if one were generous enough to call it that), readers are left with the impression that the gradual collapse of American journalism is an unalterable act of fate, rather than the clearly traceable result of decisions made by policymakers and tech monopolists in recent decades. In Farhi’s telling, the only hope for salvation is the charity of private donors and foundations, or the creation of novel compensation systems that take the current platform-ad tech monopoly dynamic as a given. Open Markets first warned of these threats in June 2016 and in June 2018 held an all-day conference on the threat, with speeches by Senator Amy Klobuchar and the CEOs of the New York Times and NewsCorp, among others. Policy director Phil Longman updated and expanded the analysis late last year in a definitive report on the industry’s woes titled “Democracy, Journalism, and Monopoly.” In a cover story for the Washington Monthly in mid-January, Longman crystallized that report’s argument when he ascribed journalism’s collapse to the “repealing or failing to enforce basic market rules that had long contained concentrated corporate power.” In prior eras, policymakers took a positive approach to using market rules to protect free speech and thought from corporate power. Today the News Media Alliance and a few members of Congress continue that effort. Yet the very people who should be leading the fight — America’s journalists — are failing to do the most basic forms of reporting on their own plight. Allowing communications monopolies to exploit the data of their users was unthinkable before the platform era. And it can be made unthinkable again today. As the Open Markets team and some of our allies have made clear repeatedly in Congressional testimony, articles, amicus briefs, and public policy statements, there is a simple solution, one that has underpinned all telecommunications regulation since the invention of the telegraph in the 1830s. This is to understand that the platform monopolies provide essential infrastructural services and to impose traditional common carrier, non-discrimination rules to their behavior. The first task is simply to do a better job of explaining this to the public and policymakers, which is where today’s generation of journalists if failing. As Longman warns, to “ensure that policy makers have the political cover they need to take on today’s unprecedented concentrations of corporate power over what we can say and hear, journalists have to understand, and help the public to understand, what the real stakes are.”
Amazon has abandoned its proposed acquisition of iRobot in light of the European Commission’s investigation of the deal, which it opened after Open Markets Institute and its European partners made a detailed submission highlighting concerns that Amazon would gain a dangerous foothold in the nascent market for smart home devices. OMI Europe director Max von Thun welcomed the breakup of the deal, saying, ”Today’s momentous news isn’t just about robot vacuums — it’s about checking the growing power a handful of giants have over our increasingly digital lives, including the devices we use within the four walls of our homes. The Commission should be applauded for standing up to Amazon and stopping it from adding yet another fiefdom to its sweeping digital empire.” Von Thun’s comments were reprinted in The Guardian.
The Open Markets Institute filed an amicus brief in two combined cases, Moody v. NetChoice and NetChoice v Paxton, currently being heard by the Supreme Court over whether states have the ability to apply common carrier regulations to corporations that operate in the public interest. Written by Open Markets policy counsel Tara Pincock, Open Markets legal director Sandeep Vaheesan, and Jay Himes, the counsel of record and a strategic advisor to Open Markets, the brief examines how internet platforms differ from news publications: “Platforms do not resemble newspaper editors making considered decisions based on human judgment —sometimes individual and sometimes collective — about what content to include or exclude in a publication. Instead, they are more like shopping center owners anxious to connect shoppers with retailers,” the authors write. They go on to argue that because the court has ruled that states can impose common carrier-like rules on shopping centers — as well as on railroads and telecommunications companies that the public can also broadly access — states should also be able to apply common carrier-style rules to internet platforms. Read the full amicus brief here.
Open Markets’ executive director Barry Lynn welcomed the news that the Federal Trade Commission will investigate partnerships between dominant tech giants and artificial intelligence companies, including Microsoft and OpenAI, Amazon and Anthropic, and Google and Anthropic. “This action makes clear that regulatory authorities in the U.S. — as well as in Europe and the UK — are paying attention to our warnings and those of other leading public interest groups that Microsoft, Google, and Amazon are already positioned to dominate AI technology and services up and down the tech stack.” In November, Open Markets and the Center for Journalism and Liberty released a report, entitled AI in the Public Interest: Confronting the Monopoly Threat, that details many of the threats posed by these partnerships and calls on U.S. and European law enforcers to clearly separate the platforms from ownership of these technologies. 📝 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:$7.4 millionThe amount Cygient has agreed to pay in a federal lawsuit accusing the Connecticut-based engineering services firm and others of suppressing wages and agreeing not to hire one another's employees. The other companies involved in the suit have also agreed to settle for undisclosed terms. (Reuters) 📚 WHAT WE'RE READING:The Rebels: Journalist Joshua Green traces the resurgence of populist economics within the Democratic party through the careers of Elizabeth Warren, Bernie Sanders, and Alexandria Ocasio-Cortez. Building off his previous book Devil’s Bargain, which looked at populist trends within the Republican party, Green explores how Democrats strayed from their class-based roots beginning in the late 20th century and extending into the early 21st, before the shocks of the financial crisis forced a reckoning over growing coziness with corporate interests. In the process, he makes a compelling argument that the movement to rein in corporate power — which has found an ally in the Biden administration — will determine the fate of the United States itself. 🔎 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. |