Jun 11, 2019

News companies take Big Tech battle to Capitol Hill

Illustration: Sarah Grillo/Axios

News companies that have been lobbying for legislation that makes it easier to negotiate with companies like Google and Facebook will testify before Congress on Tuesday, in the first of several hearings probing the power of Big Tech.

Why it matters: The advertising-supported business model that underpinned journalism for decades has collapsed, leading to the closure of hundreds of newspapers across America.

How it works: Newspapers worry that outdated government rules about consolidation and collective action prevents them being able to join forces to compete for their share of digital advertising dollars.

  • So they're asking Congress for a four-year antitrust safe harbor that would allow them to work together to negotiate better deals with major internet platforms.

The details: The Journalism Competition and Preservation Act, the subject of Tuesday's hearing, is spearheaded by the News Media Alliance, a trade group that represents thousands of newspapers including The New York Times and The Washington Post.

  • Despite multiple drafts and proposals over the past two years, the bill never advanced.
  • In March, the bill was re-introduced by Rep. David Cicilline (D-RI), the main antitrust watchdog in the House.
  • The bill now has has a Republican co-sponsor, Rep. Collins, Doug (R- GA), which supporters hope will help persuade Republicans to rally behind the measure.
  • The bill was also introduced by a pair of bipartisan members in the Senate in June.

The Alliance is hoping to appeal to lawmakers whose local newspapers are dying in the wake of an economic market collapse for print media.

  • "The major tech platforms act as our regulators," News Media Alliance CEO David Chavern tells Axios. "They stand between news publishers and most of our readers, and determine everything about the relationship.  We need the ability to organize ourselves and fight for a sustainable future for quality journalism.”

Skeptics argue that, even with collective bargaining power, newspapers won't be able to rebuild their businesses.

Yes, but: Congress doesn't typically intervene in private negotiations around content distribution.

  • TV distributors and cable operators have for years unsuccessfully lobbied Congress to to intervene over rising "retransmission rates," or the rates they have to pay TV networks to carry their content.

The big picture: The battle between news companies and tech companies is increasingly bitter.

  • For example, Google is pushing back on the News Media Alliance's latest piece of research about how much money Google makes off of news companies.
  • “These back-of-the-envelope calculations are inaccurate as a number of experts are pointing out," a Google spokesperson said.

Be smart: Around the world, regulators and advocacy groups are looking to create a healthier news environment by targeting tech companies with new rules.

  • Most notably, earlier this year European Union member states approved a controversial Copyright Directive that would force Google to pay a tax for linking out to news articles. Google has suggested that the measure could force it to shut down its Google News operation in Europe.

Our thought bubble: Even if the bill does pass, don't expect newspapers to recover overnight. Forecasts project that social media and video platforms will continue to take the majority of ad growth away from publishers for the foreseeable future.

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