Hello once more from Scottsdale. Smart Brevity count: 1,297 words/<5 minute read.
1 big thing: Antitrust waiver may not save news biz
News publishers told Congress yesterday that they need an exemption from antitrust laws to shore up their revenue in the digital age, in the first hearing of a series on "Online Platforms and Market Power" by a House Judiciary subcommittee.
Why it matters: Everyone agrees that trustworthy journalism is essential to democracy, but that's where the consensus ends, Axios' Scott Rosenberg writes.
Driving the news: Representatives from both parties are backing a proposed Journalism Competition and Preservation Act that would grant news publishers a waiver from antitrust laws so they could bargain as a group with Google and Facebook.
"No publisher on its own can stand up to the tech giants. The risk of demotion or exclusion from the platforms is simply too great. And the antitrust laws prevent news organizations from acting collectively. "— David Chavern, president, News Media Alliance, at the House hearing
The big picture: The internet broke the dominance that TV networks and newspapers had for decades over the U.S. local advertising market.
- Some in media, including speakers at the hearing like News Corp general counsel David Pitofsky, argue that Google and Facebook are "free-riding" by linking to publishers' content without paying for it or cutting them in on related ad revenue.
- Tech leaders and some media critics maintain that the decline in news revenue isn't directly correlated with the dominance of online advertising by search and social networks, and that Google and Facebook benefit news organizations by sending them readers.
The catch: Publishers still sell ads — lots of them — on their own pages. Now they're asking for a cut of Google's revenue from Google's search traffic, too.
Be smart: Google and Facebook own most of the online ad business, largely because the ads they sell work better than publishers' ads. But even if publishers win both their waiver and a revenue deal from the platforms, it's likely to be a much smaller amount than they think.
- The News Alliance released a report on the eve of the hearing claiming that Google earned $4.7 billion from news content in 2018 — but that number's accuracy was widely criticized.
- Quality journalism is an important public good but less valuable as a vehicle for targeted ads. Product recommendations, travel advice and real estate listings drive much more revenue than investigative features.
Reality check: Google and Facebook would get by fine if publishers collectively threatened to pull their content from the platforms (which they could individually do right now).
The question no one at the hearing asked: Why did people decide in the first place that they prefer to look for news on Google or Facebook instead of news sites or apps?
- Much of the public voted with their feet, choosing to read articles their friends recommend or that answer their immediate questions over those editors have selected.
Our thought bubble: If lawmakers give publishers an antitrust exemption, they could use it to build their own platform for trustworthy journalism — and a killer news app to go with it.
2. Tech held to account at Code Conference
The attacks on the tech industry were many and frequent throughout the first two days of the Code Conference.
Driving the news:
- Hate speech: On Monday night, executives from Facebook, YouTube and Twitter were all peppered with questions about their role in allowing hate speech and harassment to flourish on their platforms.
- Immigration: On Tuesday, the CEO of immigration rights center RAICES, Jonathan Ryan, argued that the tech industry is enabling the Trump administration's violation of immigration rights at the border. He called out Palantir, Amazon, Salesforce, Dell and Hewlett Packard Enterprise as among the firms making the work of ICE possible. "The tech industry deserves a lot of blame for what is happening on our borders," Ryan said. (Full video here.)
- Accountability: Later in the day, author Baratunde Thurston highlighted some of the points in his New Tech Manifesto. He called on attendees to push for a tech industry that collects less data and is more transparent and accountable, but also is attuned to the potential misuse of their creations. He added, "we should start treating people's data as a part of their property."
Why it matters: There has always been a measure of skepticism on stage at Code, but this year the negative side of tech was the primary focus, with only occasional mentions of new products or technology.
Go deeper: Ahead of Code Conference, founder Kara Swisher published her own manifesto on the tech reckoning.
3. DOJ antitrust chief lays out tech road map
The top Justice Department official in charge of antitrust on Tuesday laid out more details of how he is evaluating competition in digital markets and Axios' David McCabe has the details.
Why it matters: DOJ and the Federal Trade Commission have already divided up who would have authority to examine the major tech firms for competition violations. DOJ has reportedly claimed Google and Apple.
What they’re saying: “While antitrust is not a panacea for every policy challenge presented by the digital market, the Antitrust Division will not shrink from the critical work of investigating and challenging anticompetitive conduct and transactions where justified,” said Makan Delrahim, who leads the division, during a speech in Israel.
- Delrahim gave examples of the kinds of behavior that could raise concerns among antitrust enforcers, including exclusivity deals and some mergers.
- He also framed the discussion in terms of companies accused of monopolistic practices by the government, like Microsoft and Standard Oil.
Go deeper: Read Delrahim's full remarks.
4. Big Tech's untenable deepfake defense
Facing a widely predicted onslaught of fake political videos before the 2020 election, social media companies are the bulwark that will either keep the videos at bay or allow them to flood the internet, Axios' Kaveh Waddell reports.
But these platforms are loath to pass judgment on a clip's veracity on their own — an approach experts say could lead to a new election crisis.
Driving the news: The issue came up again Tuesday after a falsified video was posted on Facebook-owned Instagram showing Mark Zuckerberg giving a rather ominous speech on his domination over others.
- Instagram told Vice it will "treat this content the same way we treat all misinformation. ... If third-party fact-checkers mark it as false, we will filter it from Instagram’s recommendation surfaces like Explore and hashtag pages.”
The big picture: Edited videos, from the most basic tweaks to the most convincing AI-fueled deepfakes, are swiftly becoming easier to create. So far we've only seen simple manipulations — "cheapfakes," they're sometimes called — but experts almost universally believe that more sophisticated forgeries are coming.
"A deepfake could cause a riot; it could tip an election; it could crash an IPO. And if it goes viral, [social media companies] are responsible."— Danielle Citron, law professor, UMD
Facebook, Twitter and YouTube have long insisted that they're not media companies and shouldn't decide what is true and what isn't.
What they're doing: Axios attended a content moderation meeting last month at Facebook's Menlo Park headquarters, where the company began considering rules to reduce the exposure of, or even take down, manipulated media that's presented as true.
- For now, when bad information starts to spread, platforms generally reduce its reach and/or add fact checks from outside organizations.
Go deeper: Kaveh has more here.
5. Take Note
- Code Conference wraps up in Scottsdale, Arizona, with a series of live podcast tapings.
- Video game trade show E3 continues in Los Angeles.
- Bitnami founder Erica Brescia is joining Microsoft's GitHub as COO, reporting to CEO Nat Friedman.
- Space firm Vector has hired former Blue Origin treasurer Stephanie Koster as CFO.
- FinTech startup Jumo has hired Fábio Matos as VP of engineering.
- Apple is reportedly again talking to Intel about a potential acquisition of part of its cellular modem operations. (The Information)
- Contract manufacturer Foxconn said it has the capacity to manufacture U.S.-bound iPhones outside China if the trade war worsens. (Axios)
- Mary Meeker gave her annual "State of the Internet" talk at Code, serving up 330 pages worth of slides and quotes. (Bond Capital)
- Slack could be valued at up to $17 billion when it goes public next week. (Bloomberg)
- After shutting down its Onavo and Facebook Research apps, the social network is back with a new effort to monitor what apps users are running on their phones in exchange for compensation. (TechCrunch)
6. After you Login
Move over Bay Area Rapid Transit (BART), Fairfield used to have its own transit system. It was called, you guessed it, Fairfield Area Rapid Transit, or FART.