17 January 2023

Will Meta and Google be forced to pay media companies for news content in 2023?

The last few years have seen the emergence of a concept called ‘news deserts.’ These are towns and regions in the western democratic world, where there is not a single local news media provider.

This wasn’t always the case. Before the digital revolution most conurbations could boast at least a couple of competing titles.

Over the years however, the shift to digital has signalled a death knell for local media. Declining print sales has meant that cover price revenue has dropped and they have struggled to attract online advertising money which in the main has been syphoned away by the digital tech giants.

This doesn’t seem particularly fair or desirable. According to the US-based News Media Alliance “News publishers provide must-have content for the platforms to capture viewers. Between 16% and 40% of Google search results are news content. Publishers deserve fair compensation for the value they offer. By not paying them fairly for their content, Big Tech has driven many local outlets out of business.”

The organisation also estimates that “For every dollar made in digital advertising, the platforms take as much as 70% of the revenue, leaving publishers with a scant 30%.”

So what should the media and governments do about this? Surely fewer local media outlets is not good news for democracy?

The stick rather than the carrot

Politicians have up until recently adopted the ‘carrot approach, encouraging Meta and Google to compensate media with handouts and grants. Yet for some politicians, this isn’t enough and the end result has been legislation.

In 2021 Australia became the first major democracy to force Big Tech to pay for news with the enactment of the News Media and Digital Platforms Mandatory Bargaining Code.

It was the culmination of a year-long battle which at one point saw Facebook suspending news from its pages in the country.

The legislation obligated Google and Meta to strike deals with media outlets, allowing them to feature news content on their platforms. If the two parties could not agree then a government-appointed arbitrator would intervene to decide how much they should pay.

The US approach

The issue for the tech companies was not primarily that they feared losing the Australian revenue, rather that the legislation might set a precedent that would be adopted in bigger markets like the US and the EU.

And their fears have proven to be well-founded. In 2022 Canada introduced similar legislation in the guise of the Online News Act, and then rumblings in the US resulted in a proposal.

In December 2022 the issue came to a head as The Journalism Competition and Preservation Act, based on the Australian model, was incorporated into the National Defense Authorization Act defense spending bill.  For a few days it seemed certain that Google and Meta would be forced to agree deals with US media.

The US is not Australia though and within hours of it seeming a dead cert to pass, the section of the bill relating to the media was pulled.

So what happened to it?

Meta’s first tactic was to threaten to pull news from all of its feeds, a move it had deployed in Australia, which ultimately had little impact, but may have resonated more in the US.

Andy Stone, a spokesman for Facebook parent Meta, described the bill as “ill-conceived” and said the company would not “submit to government mandated-negotiations that unfairly disregard any value we provide to news outlets.”

Google and Meta’s powerful lobby groups were also called into action, chipping away at members of the Senate and the House.

Perhaps a little surprisingly Meta and Google could call on allies in the publishing world. A number of civic and trade organisations, who may have received cash from the big tech companies in recent years – though no one knows for sure as there is very little transparency – also opposed the bill.

The Washington Post reported “NetChoice and the Computer & Communications Industry Association, two trade groups that count Google, Meta and Amazon as members, on Monday announced that they were taking out six-figure ad buys online and in broadcast to oppose the legislation amid reports that it was under discussion.

A slew of consumer advocacy groups and think tanks had also lined up against the measure, arguing in a letter Monday that it could force tech platforms to carry extreme or harmful content and that it would disproportionately benefit large media conglomerates.”

Their arguments must have resonated with the politicians. The big question for the media is whether the concept behind the bill is completely dead, or will it re-emerge in the coming years, maybe in an altered format.

The future for US legislation

Writing in Columbia Journalism Review Emily Bell, says she thinks that “alternative potential federally mandated funding sources are unlikely to pass in a Republican-controlled House.” The recent undignified spat over the election of the speaker of the House would also suggest that enacting legislation in the coming years could also be problematic. So the bill in its current format is dead for now.

There are other groups and individuals who opposed the bill, as they felt it didn’t go far enough, yet are still keen that a legislative approach is adopted.

In Freepess Timothy Karr argues what he sees as this failing of the bill – namely that while it would be good for the medium and large media organisations it would do very little to help address the issue of media deserts.

“The companies lobbying the hardest for the JCPA to pass — including Gannett, Sinclair Broadcast Group and the predatory hedge fund Alden Global Capital — are the same ones that have cut local newsrooms to the bone even as they’ve continued to buy back stocks, go deeper into debt to acquire even more local outlets, and use other financial gimmicks to enrich their owners, executives and shareholders. These companies aren’t journalism’s saviours. In many cases they are to blame for the creation of news deserts, having shuttered local operations across the country. They shouldn’t be rewarded for such slash-and-burn tactics.

Karr thinks the legislation needs to be restructured to favour the companies that actually need the cash the most.

He concludes The JCPA is a corporate handout that uses “saving journalism” as a catchphrase for padding the profits of big media conglomerates. To really save local news we need legislation that supports local-accountability journalism by putting reporters back on local beats and expanding coverage in communities that the Murdochs and their ilk will never serve.”

The EU, UK and the rest of the globe

Interestingly, while the arguments raged in the US the Australian government was hailing its landmark legislation as a success and indicated that it was now considering extending it to cover social media platforms such as TikTok and Twitter.

Australia’s Treasury said in a report that media outlets had signed more than 30 deals compensating them for news shared on Google and Facebook.

“On the evidence available to the review, at least some of these agreements have enabled news businesses to, in particular, employ additional journalists and make other valuable investments to assist their operations,” the report said.

New Zealand has also indicated that following the ‘success’ of the Australian legislation it may follow suit with its own regulations.

The Minister of Broadcasting Willie Jackson told Reuters; “New Zealand news media, particularly small regional and community newspapers, are struggling to remain financially viable as more advertising moves online. It is critical that those benefiting from their news content actually pay for it,”

There is broad support for the move in the country and with the majority Labour Party backing the bill it is very likely to become law.

What about the big tech companies’ second key market – the European Union? The organisation has shown that it is not afraid of introducing continent-wide legislation to regulate the media.

In November the EU Digital Markets Act (DMA) entered into force. It is a landmark piece of legislation that – together with its sister regulation Digital Services Act (DSA) – will determine how large online platforms operate in the decades to come to ensure fair competition and more choice for users.

At the moment though the act is largely a feedback loop, an opportunity for concerned parties to express their views about the future of the media, It also focuses more on regulating social media platforms to ensure that they take responsibility for content they present to their readers, than any issues of news-funding.

In 2022 the UK Government also suggested it was considering Australian-style regulation forcing big tech to partner with the media. Press Gazette concluded that a similar deal to the Australian would yield as much as £170 million per year for publishers.

Given that the current government has only a year left before it is forced to call a general election, pushing the legislation through might seem tricky. If the Labour party were keen to support the move and indeed made it an election pledge, then the UK could see Australian-style legislation within a couple of years no matter which party is in power.

Ultimately then it appears that Meta and Google are off the hook in the US for the immediate future. Yet two questions remain. How do regulators ensure that the number of media deserts doesn’t grow any higher? And secondly is Australian-style legislation for news funding the right way to achieve this?