Congress Should Not Break Big Tech to Fix Local News

Senator Klobuchar (D-MN), chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights held a hearing earlier this month about the role of competition on the press in the United States. The hearing served as a platform to promote the Journalism Competition and Preservation Act, bipartisan legislation introduced in both the House and the Senate that would create a four-year safe harbor from antitrust laws to allow news media companies to negotiate compensation terms with large online platforms collectively. While legislators are pitching the bill as a solution to what they see as unfair market dominance by Big Tech, in reality, it is nothing more than Congress trying to “rob Peter to pay Paul.”

Those pushing for this legislation argue that they are singling out Google and Facebook because their dominance of the online advertising market gives them monopsony power that results in them taking too big of a cut of the revenue from online ads on news content. As Sen. Klobuchar wrote in a recent op-ed, “These two companies don’t just control the majority of online advertising; they’ve built power over the news, crushing local outlets along the way.” Despite Sen. Klobuchar recently stating, “We must push for competition and allow for competition,” she proposes that Congress should allow print and local media outlets to form a cartel with collective bargaining power so they can negotiate for greater compensation from these large tech companies for their content.

It is certainly true that this legislation would likely result in news publishers obtaining more revenue from Google and Facebook than the status quo. But why stop there? If the goal of this legislation is to maximize revenue for news media, why not allow them to also collectively negotiate for any other news aggregator platform, like Twitter, Reddit, or Flipboard? Or why not allow news media companies to negotiate with newsstands, bookstores, or libraries collectively? And Sen. Klobuchar’s reprints full-text news articles about herself on her U.S. Senate website (notably without a link back to the original, so it is definitely cutting into ad revenue), so why shouldn’t these news companies be allowed to collectively negotiate with congressional offices about what they pay to feature these news clips?

The rationale for this legislation breaks down even further upon a closer examination of the facts. For example, news media companies are under no obligation to list their content with Google News—there are several simple technical controls they can employ that will prevent Google News from indexing their articles. Of course, most news publishers choose to stay on these platforms because they benefit from the clicks back to their sites in terms of subscriptions and ad revenue. The critique that Google and Facebook take too big a share of the ad revenue is misleading because news publishers have many different ad networks to choose from. The reason many choose to use Google and Facebook—indeed the reason they are so popular—is that these platforms are often more efficient, easier to use, and earn publishers more revenue than the alternatives.

Unfortunately, many legislators in the United States and abroad have proposed privacy legislation that would make it harder, if not impossible, to deliver targeted ads, which would significantly shrink the available revenue for news publishers since these ads often earn more revenue than the alternative. Likewise, some policymakers advocate for changes to antitrust and intermediary liability laws that could raise costs and decrease efficiency for large ad networks, resulting in lower revenue for news media.

The Journalism Competition and Preservation Act is not new—Rep. Cicilline (D-RI) first introduced it in 2018 with strong backing from the news industry—but the legislation has taken on new momentum this year as legislators have found growing support to pass legislation aimed at Big Tech. While legislators have every right to be concerned about the future of U.S. news media, simply taking money from Big Tech using the argument “they can afford it” only opens the door for other countries to justify similar action against American tech companies for any budget shortfalls they see in their domestic industries.

Sen. Klobuchar has co-sponsored other legislation that may be more reasonable for promoting journalism in the United States. These bills include the Local Journalism Sustainability Act, which would provide individual taxpayers a $250 tax credit for subscriptions to local newspapers, and the Future of Local News Act, which would establish a committee to examine the impact of the COVID-19 pandemic on local news and options to support local news, including establishing a national endowment for local journalism. As Congress considers its next steps on this legislation, it should recognize that fixing local news does not need to come at the expense of U.S. tech companies.