Google and Facebook are facing new competition to their online business models after President Donald Trump signed a bill putting internet service providers on a path to being able to monetize online users the same way these technology giants do. Next up is the threatened unwinding of the Obama administration’s “net neutrality” rules, which could put these companies in a double bind, because they could soon have to pay internet service providers a metered rate to move their content to customers’ screens.
Google and Facebook will argue — as they did during our fight on net neutrality in 2015 — that internet service providers should not be able to prioritize and price the flow of online content. The problem is that they make the exact opposite argument in their role as distributors of news content crucial to our democracy.
The two digital giants increase or reduce users’ exposure to news content based on whether publishers — such as the Wall Street Journal or the Indianapolis Star — agree to play by their rules. Those rules are crafted to maximize the flow of advertising revenue, not quality content.
Proponents of net neutrality, including Google and Facebook, persuaded the Federal Communications Commission to treat internet service providers as “common carriers,” akin to traditional telephone companies. Under decades-old law, such entities are subject to high levels of government regulation on price, access and other consumer issues, all in the name of the public good. Because of the elevated levels of regulation, internet service providers aren’t permitted to favor any content, regardless of consumer demand.
Now that Ajit Pai — who has said that net neutrality’s “days are numbered” — has become chairman of the FCC, many think the agency will help internet service providers reclaim the ability to set their own rules and “toggle” content based on revenue opportunity. News outlets, as creators of high-quality (and expensive) news content, like a level playing field and have supported net neutrality.
But it would be hypocritical for Google and Facebook to be the faces of this fight, given their business models. The digital giants have become central to how millions of Americans consume their news, and as these companies rely on consumers’ ever-increasing appetites for news to capture their audiences, the business terms they dictate put intense stress on news industry economics.
For example, Google requires publishers to offer “First Click Free” content, lest they be punished — with demoted content that doesn’t abide by the rules in search results. Facebook’s “Instant Articles” allows articles to load faster in user news feeds, even with the newly announced changes and trials, but doesn’t allow a simple or direct way to subscribe to a publication.
Meanwhile, both companies pressure newsrooms’ bottom lines by soaking up online ad revenue. A study by Digital Content Next, a publishing trade group, found that major publishers with large digital operations earned only about 14 percent of their total revenue in the first half of last year from distribution platforms — and most of that was from YouTube. Smaller news publishers get peanuts.
This debate — as well as the spread of fake news and questions about digital companies’ responsibility in weeding out false content — seems to be leading the tech giants into an increasingly fraught political landscape. Media reporter Michael Wolff observed that the Trump administration and Republican-controlled Congress are creating a “uniquely dangerous moment” for the digital industry as its “customers and employees demand that companies swear ever-more anti-Trump oaths.”
Google and Facebook understand the burgeoning vulnerability in their positions. Each has teams to think through its relationships with news content providers. Facebook brought on former CNN anchor Campbell Brown to “help news organizations and journalists work more closely and more effectively with Facebook.” Although welcome, such outreach won’t be enough. Newsrooms have always cooperated with Facebook — so much so that they have co-opted their economic models. What’s really needed is a fair and sustainable split on the advertising income earned off breaking news and good reporting, not just more happy talk about the importance of journalism.
As the net neutrality issue heats up again, Facebook’s and Google’s conflicting positions won’t go unnoticed. These companies argue that their content shouldn’t be prioritized based on revenue-driven decisions by internet service providers, yet they are doing the same thing to news organizations. It’s an inconsistency that even ardent defenders of net neutrality will be unable to resolve. Something’s got to give.
David Chavern is president and chief executive of the News Media Alliance, a trade association representing about 2,000 newspapers in the United States and Canada.