The bill’s sponsors sell it very much as a lifeline for “small, local, independent and conservative news publications,” given the law would not apply to network broadcasters or big digital news companies with more than 1,500 employees, such as the New York Times or Washington Post.
And, on that, they are unintentionally revealing. The closer you look at the bill, the less it seems like a neutral mechanism for a genuine negotiation in value exchange, and the more it looks like a hidden tax and subsidy policy — an industrial policy for smaller news outlets, as it were. That, though, raises the question: why even pretend this is anything to do with antitrust or ensuring open competition? This is about politicians taking money from businesses they don’t like and giving it to companies they consider virtuous. The method they use just keeps this redistribution off the government’s books.
What the bill does
The JCPA, in effect, creates something like a property right for eligible news websites’ content. It develops a process framework that allows news sites and non-network broadcasters to demand a negotiation of “terms and conditions” with Google and Meta for, one assumes, linking to or previewing their content.
Eligible content — i.e. what we’d just call journalism — is defined quite broadly, so we can expect a lot of legal uncertainty here. But the point is, the bill develops a route for digital journalism providers to, in principle, form joint negotiating entities to demand cash from platforms like Google and Meta for linking to their work. The digital platforms are expected to participate in these negotiations, and if the news outlets aren’t satisfied with the outcome or offers from such talks after 6 months, they can demand a final and binding arbitration of the dispute.
A freer market?
Now, given I’m skeptical about antitrust laws per se, my first reaction to this was ambivalence. In a completely free market, it might be natural for news outlets to collectively bargain as a defensive strategy. Google, Meta, or other covered platforms might well be willing to stump up if they think these sites’ contents help draw people to their platform network by improving their search or user experience. So, one might assume that chipping away at antitrust laws through an exemption actually takes us closer to free negotiations. Hence, I suspect, why the bill has won the support of the libertarian Senator Rand Paul.
But in a genuinely free market, news outlets taking such action would also face the risk that the digital platforms would just say “oh well, we’ll just stop listing your content.” That countervailing power, though, is curtailed under this legislation.
Indeed, this bill is not neutral on how the parties negotiate these value exchange tensions. Both must put forward their proposed “terms and conditions” estimating a “fair market value” for the digital platform accessing news content, for example, considering any advertising or promotional revenues that links or preview content of news sites helps Google or Meta to obtain.
Yet the bill explicitly compels both negotiators and even arbitrators to ignore any value conferred to digital journalism providers from being aggregated or distributed by the tech giants. In other words, the advantages to Google from hosting previews to The Columbus Dispatchshould be considered in working out how much is owed to the latter, but any value to The Columbus Dispatch of being listed or previewed on Google News or Facebook must be ignored.
If a media company demands payment for accessing their output, in fact, platforms like Google and Meta are specifically barred from retaliating against the former’s content. These clauses were no doubt formulated by lawmakers cognizant of Australia’s experience, where a similar law saw Meta block news articles being shared for a few days to try to avoid its effects. Google likewise shut down its Google News service in Spain for eight years to avoid paying a link tax.
Fearful of similar treatment being meted out to individual digital journalism providers as part of the negotiations, this bill would therefore disable digital platforms from “refusing to index content,” or from “changing the ranking, identification, modification, branding, or placement” of the news websites’ content.
Given the sensitivities of search engines and algorithms, such actions would no doubt be difficult to prove in court, especially for smaller outlets. [This, by the way, is one reason why the legislation will unavoidably benefit the biggest firms that are eligible]. But the legal risks of retaliation makes this process something much closer to a forced negotiation for Google and Meta.
It’s really an industrial policy
So, no, this legislation doesn’t liberalize negotiations from the shackles of antitrust. It instead delivers a special, one-sided carve out from current law to the financial benefit of a specific industry. For not only are Google and Meta given few routes out if news sites come asking for cash, but the option of seeking that cash is only available to digital journalism providers, not other content producers.
As Benedict Evans asked last year: What is the justification for separating news outlets from other websites for the purposes of being paid for links or previews? If Google and Meta linked or previewed the Cato Institute’s output, then why can’t we negotiate an appropriate payment? The answer to the first cannot be that there’s some fundamental power imbalance between digital platforms and digital journalism. If that were the reason, many other types of output would have a much better claim against Google and Meta in regard to “access” of their content than newspaper websites.
No, the fact that the legislators single out news publishers is because they think there’s something inherently valuable about digital journalism and they want to be seen to punish Google and Meta for their role in disrupting the traditional newspaper sector. They want to give online journalism more money — by forcing Google and Meta to pay for it. What this really amounts to, then, is a tax on certain companies deemed to have hurt local newspapers to, in effect, subsidize the new digital variants of those traditional papers and non-network broadcasters.
It isn’t a policy aimed at levelling the playing field for competition or solving a market failure. It’s politicians telling us what they think is good for society and transferring resources to their preferred sector.
The wrong boogeyman?
In reality, of course, it wasn’t inherently Google and Meta that squeezed local papers. It was the internet. As the figure below shows, newspaper circulation has been falling since the 1990s, coinciding with the world wide web’s advent. Local newspapers, in particular, used to roll-up local news, sports, investigative journalism, company adverts, dating adverts, and opinion pieces together. The internet, by allowing each of these to be produced separately to large, targeted audiences, stripped away readers *and* paying advertisers, so unravelling money-spinning content from stuff that was cross-subsidized.
