Welcome to The Corner. In this issue, we take a look at the threat posed to local television news by the rise of internet-based live television platforms, especially as must-carry regulations haven’t caught up to the new streaming environment.
OMI Details How EU Can Protect Democracy From Attack By Online Platforms and Authoritarian Governments
Open Markets Europe director Max von Thun coauthored a policy brief urging the European Union to stand firm in regulating Big Tech platforms despite attacks from the Trump administration and U.S. tech billionaires, who have accused Europe of censorship and stifling innovation through overregulation. President Trump, Vice President JD Vance, and other Republicans have threatened to cut support for Europe’s security if the European Commission continues to regulate U.S.-based tech platforms. Von Thun, along with his coauthors at the European Policy Centre and Konrad Adenauer Stiftung, called on the EU not to “succumb to the orchestrated pressures from Big Tech and their political allies.” The brief urges the Commission to: (a) require the platforms to provide fair and equal service to all users; (b) use antitrust law to break up and otherwise restructure the corporations; and (c) directly respond to all attempts at foreign interference in European politics and coercion of European citizens and governments. “The message must be clear: Europe’s digital sovereignty is not for sale, at any price,” the authors wrote. The Financial Times covered the brief in its Europe newsletter.
Local News Left in Lurch as Disney, Amazon Strip Sports from Broadcast and Cable
By Austin Ahlman
Local television news, which is the only accessible source of local news in many parts of the country, has been hit particularly hard in recent years. Thousands of local TV journalists are being laid off each year, and entire local newsrooms have been gutted in favor of cheaper syndication of national news programming.
The trend is driven partly by changes in technology. As more and more households obtain access to high-speed internet services, cable and satellite networks now have to compete with ever faster steaming services that don’t carry local news. But while the shift in technology is largely inevitable, its damaging consequences for local journalism are rooted in a regulatory failure and are potentially fixable through public policy.
Historically, local television has relied heavily on the revenue that cable and satellite networks are compelled to pay them under “must-carry” rules. These are longstanding regulations that require those networks to host local news stations, give them prominent placement on channel listings, and pay them fair compensation for their content, including most importantly, their local news programing.
The networks could afford to make these payments largely because they made so much money distributing live sports programming, and because millions of sports fans had no other way to get the sports coverage they wanted. This use of regulation to effectively cross subsidize local news has applied to cable companies since the 1970s and to broadcasters for decades before that.
But that regulatory framework hasn’t caught up with the way programming, and especially sports programming, is increasingly delivered these days. First came streaming platforms like Netflix and Amazon Prime Video, which not only offer all kinds of compelling competing content, but which have been bidding more recently for licenses to national sports events, thereby giving sports fans access to much of the sports coverage they need without having to pay for content they don’t want.
And now a new development is hastening the cord-cutting trend and with it the threat to what remains of local television journalism. It’s the emergence of sports-centric internet-based live television platforms, which are functionally equivalent to cable and satellite networks, but which are not subject to “must-carry” requirements. (The difference between a la carte streaming services and internet-based live television services is best exemplified by Hulu and Hulu + Live TV. Whereas Hulu consists overwhelmingly of on-demand content, Hulu + Live TV has live programmed channels that are identical to traditional cable and satellite services.)
Adoption of internet-based live television services has been gradually chipping away at local television news syndication revenues for years. But recent litigation between internet-based live television service FuboTV and programming giants Disney, Fox, and Warner Bros. has led these programmers to begin allowing distributors to offer narrower sports-only live television services instead of bundling sports and non-sports programs. This new development is likely to be the death knell for traditional cable and satellite television services, with huge implications for local television news stations.
For example, when the largest traditional satellite provider, DirecTV, launched its first sports-centric service, MySports, last month, it opted to offer it only to the customers of its internet-based subsidiary and did not include local news content. As the decline of cable and satellite is accelerated by this recent and sudden unbundling of sports content, local television news is set to be left in the lurch entirely unless we modernize our regulations to expand “must-carry” requirements to these internet-based services.
The last major update to the Communication Act, which establishes those requirements, was in 2014, when lawmakers clarified and extended those requirements for satellite television services. Meanwhile, other nations like the Czech Republic have taken steps to expand “must-carry” requirements to internet-based providers. The European Union’s adoption of the Media Freedom Act last year is expected to extend similar requirements across the continent.
Last month, Representative Mike Flood of Nebraska and Senator Ron Wyden of Oregon sent a bipartisan letter to executives of major internet-based live television services asking them to follow the example of legacy cable and satellite television providers by continuing to at least carry C-SPAN’s federal government coverage. But if policy makers are serious about preserving sustainable public interest programming, and especially local television journalism, they must do more than make polite requests of the internet-based platforms that now dominate television markets. These corporations much be compelled to serve the same public purposes, and to play by the same rules that have governed television since its earliest days.
Open Markets Announces Sally Hubbard Will Return as Fellow After Leaving DOJ
The Open Markets Institute is pleased to announce the return of antitrust pioneer Sally Hubbard, who recently left her position as senior counsel at the Department of Justice’s antitrust divsion. Under a fellowship from the Knight Foundation Federal Alumni Fellowship Fund at The Miami Foundation, Hubbard will develop competition policy proposals to address concentration within our communications systems. “I’m excited to work once again with the Open Markets Institute to use competition policy to help shape media and technology to be de-concentrated, resilient, and thriving,” Hubbard said.
📝 WHAT WE'VE BEEN UP TO:
- Open Markets submitted a letter to the French Competition Authority calling for revisions to France's merger control thresholds to address concerns over "killer acquisitions" by dominant firms, especially in Big Tech and Big Pharma and emphasizing the need for a more robust and flexible regulatory framework. The letter in the original French is available here.
- Open Markets Institute submitted a comment to the UK Intellectual Property Office calling on the body to implement an opt-in protocol for AI training data collection to protect creators' rights and compel technology companies to respect these rights through fair compensation. “The UK's proposed opt-out approach fundamentally undermines copyright principles and unfairly privileges the AI industry instead of its longstanding creative industries, with perilous implications for not just the UK economy but for democracy as well,” said Dr. Courtney Radsch, Director of the Center for Journalism & Liberty at Open Markets.
Read the full comment here.
Open Markets’ policy counsel Tara Pincock and senior legal analyst Daniel Hanley published “Rules of the Game: Sports as a Lens for Understanding Fair Competition,” a paper that uses sports as a framework to refine antitrust law’s notions of fairness. Just as per se bans on performance-enhancing drugs or soccer’s offside rule ensure fair play, antitrust law needs clearer boundaries to distinguish between fair and unfair competition, the article explains. Read the paper here.
Open Markets senior reporter Karina Montoya contributed her expert opinion to a roundup in WalletHub on the deterioration in quality of Google’s search results, in which she noted that in its search trial, the tech giant admitted increasing prices for search text ads while it degraded the quality of those ads. “I can only see Google attempting to build a bigger walled garden, in which the quality of search results can continue to be easily manipulated to generate more ad revenues,” she wrote.
The Center for Journalism and Liberty commended a ruling by the Paris Economic Activities Court to uphold a ban on Google’s controversial test that limits access to news in France following an emergency injunction. “The decision to halt Google’s experiment to selectively suppress media articles in search results is a critical check on the unbridled influence of a dominant digital platform and should be made permanent,” Dr. Courtney Radsch said.
In an interview with German news outlet DW Akademie, CJL director Dr. Radsch issued a warning about the dire threat AI companies pose to journalism and urges players to work jointly to master the threats posed by the corporations that dominate AI. “We need coalitions across sectors; partnerships with creative industries, small businesses, or advertisers to build a coalition domestically to push for greater control,” she said, calling for a three-pronged strategy involving licensing, litigation, and legislation to address AI's impact on journalism.
The Daily Upside quoted OMI senior legal analyst Daniel Hanley on the future of the Federal Trade Commission under new chair Andrew Ferguson. Hanley notes that test for Ferguson is whether he maintains his predecessor Lina Khan’s approach to ongoing cases like the one against wine and spirits distributor Southern Glazer under the Robinson–Patman Act.
An article from World Today News recounts how Keldon Bester, founder of the Canadian Anti-Monopoly Project (CAMP), was inspired to challenge corporate power following a summer internship at the Open Markets Institute. “He learned how to wield ‘a powerful set of ideas’ to foment change,” the article read.
Davis Vanguard cited a Harvard Business Review article by Open Markets’ legal director Sandeep Vaheesan and chief economist Brian Callaci in an op-ed calling for rent-stabilization laws. “Callaci and Vaheesan argue that relying solely on market solutions is insufficient,” the op-ed reads.
🔊 ANTI-MONOPOLY RISING:
- California lawmakers, with the backing of the state’s attorney general, introduced legislation to significantly expand enforcement capacity and penalties against market manipulation through algorithmic price-fixing. (The Business Journal)
- South Africa’s Competition Commission issued provisional findings in a probe against Google, Meta, and other tech platforms showing the corporations have unfairly discriminated against South African news media organizations. The ruling could unlock tens of millions of dollars in annual support for local journalism outlets. (Reuters)
- The Federal Trade Commission created a task force to examine corporate behaviors that hurt labor markets and suppresses the wages of American workers. Noncompete, no-poach, and no-hire agreements are set to be major areas of focus for the new body. (Bloomberg Law)
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📈 VITAL STAT:
90%
The amount shares of education technology corporation Chegg have declined over the past year following Google’s rollout of AI summaries. Chegg has filed an antitrust lawsuit against the tech giant for practices that force companies like Chegg to supply proprietary content in order to be included in Google’s search function. (TechCrunch)
📚 WHAT WE'RE READING:
Superbloom: How Technologies of Connection Tear Us Apart — Pulitzer prize finalist and technology critic Nicholas Carr analyzes how digital communications platforms and advances in generative artificial technology are increasingly flooding average people’s attention with a deluge of unverifiable information. In his account, Carr takes a broad look at the way market incentives are influencing this new information environment, which he argues is reshaping the social order by fueling alienation and polarization.
Order Legal Director Sandeep Vaheesan’s new book:
Sandeep Vaheesan, the legal director at the Open Markets Institute, published his first book Democracy in Power: A History of Electrification in the United States on December 3. Vaheesan examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives.
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