How to Balance the Scales between Newspapers and Technology Giants

As newspapers around the globe continue to face declining subscription and advertising revenues, numerous politicians and government officials have put forward a mixed bag of ideas and overtures to prevent closure after closure of newsrooms. The latest legislative push to gain international momentum is a special authorization for news organizations to collectively negotiate revenue-sharing agreements with large digital platforms—primarily Meta (which owns Facebook and Instagram) and Google.

Last month, Heritage Minister Pablo Rodriguez introduced the Online News Act in Canada, proposing an exemption to the Competition Act to permit eligible media outlets to collectively bargain with large digital platforms. In 2018, 2019, and 2021, U.S. legislators repeatedly introduced a similar bill, the Journalism Competition and Preservation Act, which would allow news organizations to jointly mediate terms for the distribution of their content on large digital platforms. In addition, Culture Secretary Nadine Dorries is reportedly considering introducing comparable measures in the United Kingdom to compel large digital platforms to enter deals with news publishers.

The Effects of a Shifting Advertising Industry

Typically, Canadian and U.S. antitrust law would block such collaboration among news competitors. But legislators are considering these limited safe harbors on the grounds that large digital platforms wield anticompetitive structural advantages in digital advertising, thus diverting the primary source of revenue for many news organizations. As an increasing number of individuals turn to digital aggregators for information, news outlets often must permit Google (which dominates approximately 92 percent of the global search market) as well as Facebook and Instagram (which together control about 81 percent of the global social media market) to share their content to stay relevant. But by posting summaries and quotes from news articles, Google and Meta can drive user conversation within their platforms even without a reader clicking through to a publisher’s website. Newsrooms compete with digital platforms for the same pot of advertising dollars, but Google and Meta hold almost unparalleled access to personal information—in part due to the additional user activity and screentime spurred by trending news—which enables them to target advertisements more granularly than traditional newspapers can.

In 2021, Google and Meta respectively brought in $209.5 billion and $114.9 billion in global advertising revenue, demonstrating substantial growth from approximately $36.4 billion and $3.2 billion a decade prior. Yet many news outlets have experienced the opposite trend: the Pew Research Center estimates that advertising revenue across U.S. publicly traded newspapers depleted from $27.1 billion in 2011 to $9.6 billion in 2020, while U.S. print and digital news subscriptions, time spent on U.S. news websites, and number of U.S. newsroom employees simultaneously dropped. Print and local newspapers have disproportionately faced losses in recent years, but even digital-first and national outlets have announced massive layoffs, like Buzzfeed in 2019 and 2022 and Vice in 2019, 2020, and 2021. Meanwhile, news organizations in Canada, Australia, the European Union, and the United Kingdom have similarly struggled to stay afloat. And although Google and Meta have advanced paid partnerships with select news outlets in countries like the United Kingdom, United States, Brazil, Germany, Canada, and Argentina, there are still numerous publishers—especially local and smaller ones—that are not afforded equivalent compensation or bargaining power.

Historical Attempts at Regulation

Legislators have just cause to support newsrooms, but the proposed negotiation safe harbors in the United States and Canada should not replicate regulations that have seen mixed to little success elsewhere. On February 25, 2021, Australia enacted the News Media Bargaining Code to require mandatory arbitration for “designated digital platforms” to set payment rates with news publishers. But prior to the code’s passage, Google warned that it may end search engine operations in Australia in large part due to the mandatory arbitration clause, and Facebook temporarily disallowed news sharing within the country. Their opposition contributed to an eleventh-hour change in the final statute, which now allows digital platforms to avoid “designation” if they alternatively make “a significant contribution to the sustainability of the Australian news industry.” Facebook and Google primarily fulfilled that alternative option by entering revenue agreements with a few large publishers—like the Murdoch-owned News Corps—leaving many uncompensated Australian newsrooms to argue that the code provides little incentive for digital platforms to bargain with smaller players since no companies have actually been “designated” for mandatory arbitration.

Prior to Australia, several EU member states embarked on a separate endeavor to force digital platforms to compensate media outlets—but through copyright law, not antitrust. Germany passed the Leistungsschutzrecht in 2013 and Spain approved a revised Ley de Propiedad Intelectual (LPI) in 2014, which created intellectual property (IP) rights over headlines and short article excerpts and thereby required digital platforms to license content from news publishers. The outcome largely failed to meet the lawmakers’ goals: Google News shut down in Spain, eliminating a major channel for internet users to access news publishers’ content; it also stopped hosting “snippets” and photos from news articles in Germany, eventually causing even major publishers like Axel Springer to waive their right to copyright fees after their traffic significantly dropped.

A few years after Spain and Germany enacted their respective laws, the European Union extended copyright protections for article headlines and “snippets” across all member states through the 2019 Copyright Directive. But it is unclear whether this broader effort was any more successful than those in Germany and Spain. After France implemented the European Union’s Copyright Directive in 2021, Google—predictably—discontinued sharing all French news content, except for solitary links, kicking off a series of legal disputes that should raise questions about the Autorité de la concurrence’s maneuver to both assign IP protections to news excerpts and then force private digital platforms to license copyrighted content. But perhaps there is one silver lining to this saga: after Spain replaced its previous version of the LPI in 2021 with a new law to implement the Copyright Directive, Google News once again chose to resume operations in Spain.

Shifting the Regulatory Focus Away from Negotiation Safe Harbors

In several ways, these interventions are more limited or market-based; negotiation of this type allows Google and Meta to prioritize deals with news outlets that generate the most user engagement and clicks. Illustrating this point, Google recently announced that it would establish rates in France based on factors that included a newsroom’s “daily volume of publications” and “monthly internet audience.” In turn, this focus on metrics may reinforce incentives for some news publishers to either produce more attention-grabbing or provocative “clickbait,” or potentially devalue publications that center around niche topics or require more time and resources to produce. There is no guarantee that news publishers will use their negotiated revenue to hire and retain journalists, nor that they will prioritize newsroom diversity and uphold transparency in negotiations.

In addition, negotiation safe harbors primarily serve to reinforce the extent to which news outlets rely on Google and Meta for income or traffic. They do not address the core challenges that impact the long-term sustainability of the news industry, which include (a) shifts in consumer demand, as individuals increasingly seek news from online sources or digital aggregators and (b) the scope and scale of data collection by large digital platforms like Google, Facebook, and Instagram, which enable them to target advertisements to hundreds of millions of users with greater precision than even the largest newspapers. Moreover, the success of any negotiation measure depends on Google and Meta’s will to continue to host news articles in any given country—and not opt to disallow news sharing in a local market altogether.

If the crux of the problem is Google and Meta’s duopoly in the digital advertising market, then legislators should shift focus to the practices that entrench their competitive edge over newspapers. In the United States, Congress could directly impact Google and Meta’s processing of data to microtarget advertisements by passing a comprehensive federal privacy bill, such as the proposed Consumer Online Privacy Rights Act or SAFE Data Act. In addition, both the U.S. Congress and European Union are in various stages of negotiating broad antitrust legislation to target behaviors like self-preferencing, acquisition, and data accumulation by large digital platforms, both of which would affect Google and Meta’s dominant status in digital advertising. Canada’s Budget 2022 announced an objective to amend the Competition Act to address concerns that encompass the overall economy; this could include digital platforms, although it is currently unclear what changes may be forthcoming.

At the same time, it is also valuable for governments to study the evolving relationship between news publishers and social media platforms. As one example, Senator Maria Cantwell (D-WA) released a report in 2020 that detailed how certain practices by large digital platforms, such as Google’s requirement for news outlets to host content in an Accelerated Mobile Pages (AMP) format on their servers, harmed traditional news business models. The following year, the Australian Competition & Consumer Commission published research findings on Google’s dominant status in the digital advertising industry, concluding that “without a competitive and innovative ad tech supply chain, the ability of Australian websites and app owners, such as news publishers . . . to make important and valuable content available to many Australians is placed at risk.” It may be useful to build upon these studies to additionally examine the extent to which broader antitrust or privacy measures, including the European Union’s Digital Markets Act or U.S. American Innovation and Choice Online Act, could affect the dynamic between newsrooms and large digital platforms.

To conclude, journalism is often—and rightly—described as a public good, since newspapers can disseminate trustworthy and reliable information of critical importance to the community. That is why newsroom reductions and closures (a trend which then-prime minister Theresa May once described as a “danger to democracy”) is a problem that warrants a comprehensive and long-term solution to alter the status quo in the digital advertising market, and not a limited safe harbor provision that leaves local newspapers vulnerable to either social media shutdowns or market-based negotiation.

Caitlin Chin is a fellow with the Strategic Technologies Program at the Center for Strategic and International Studies in Washington, D.C.

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