How to stop Google and Facebook from strangling journalism

The last two decades have been perhaps the worst in American history for journalism. After years of decline, newsroom employment fell a further 23 percent from 2008-2017 — a trend which shows no sign of stopping.

There are three big reasons why. First, the rise of the internet, which undermined traditional newspaper revenue models, especially classified ads. Second, the Great Recession, which tanked employment of all kinds. Third and most importantly, the rise of online monopolies like Google, Facebook, and Amazon.

It raises a question: How can we stop these corporate behemoths from strangling the life out of American journalism? A good place to start would be breaking up the tech giants, and regulating the online advertising market to ensure fair competition.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Spending on digital advertising is projected to surpass the traditional sort in 2019 for the first time, and you will not be surprised to learn where that money is going. Last year, Google alone was estimated to make more than $40 billion in online advertising with $4.7 billion of that coming from news content, according to a new report from the News Media Alliance. That is nearly as much as the $5.1 billion the entire American news industry earned in online ads. What's more, Google "only" accounts for 37 percent of the online ad market. Facebook makes up another 22 percent — an effective duopoly that has only been partially disrupted by (who else?) Amazon, which has moved aggressively into the market over the last few years and now takes up 9 percent.

That is why journalism has continued to flounder even as the broader economy has improved a lot, and why even digital native companies like Buzzfeed and Vox are struggling to keep their heads above water. For instance, as Josh Marshall of Talking Points Memo explains, Google runs the major ad market (DoubleClick), is the largest purchaser on that market (through Adexchange), and has privileged access to all the valuable data thus obtained. Its "monopoly control is almost comically great," he writes — and that's just one company. Just as online ad revenue got to the point where it might replace print ads, internet behemoths have sucked up a huge majority of it, leaving news companies to fight over scraps, or desperately pivot to alternative revenue models like video content or subscriptions.

Remarkably, there appears to be some bipartisan support for regulatory action to give news companies a leg up. Hearings are scheduled on Tuesday for a bill which would grant news companies an exemption to antitrust law, reports CNN, "allowing them to band together in negotiations with online platforms."

This would probably be worth trying, but it's likely not nearly aggressive enough. The journalism industry is fragmented, damaged, and cash-poor, and would surely struggle to compete with Google and Facebook even if it could coordinate properly. It's telling that only Amazon — another gargantuan, hugely profitable tech colossus — has managed to compete even a little.

A better approach would be to simply break up and regulate these companies. Following American antitrust law, force Alphabet (Google's parent company) to break all its major parts into separate companies — Google for search, YouTube for video, DoubleClick for ads, Analytics for audience analysis, and so on. Do the same for Facebook, forcing it to split off Instagram and Whatsapp.

Then regulate the online ad market. It is outrageous for one company to both run the major ad market and have first bite at sales on that market, because it puts other sellers and buyers at an unfair disadvantage — as Marshall notes, "the interplay between DoubleClick and Adexchange is textbook anti-competitive practice." Breaking DoubleClick out into a different company would solve that particular instance of abuse of market power, but it probably wouldn't be the end of it. An online ad sales platform (like many internet businesses) has high fixed costs but very low marginal costs — meaning it costs a great deal to set up all the servers and networks, but almost nothing to serve one additional ad. Once a company has achieved massive scale, like Google has with DoubleClick, it has an ever-increasing advantage over any would-be competitors. That's the classic definition of a natural monopoly, which if left to its own devices will certainly abuse its market power just like Gilded Age railroads.

Therefore, abuse of market power should be banned outright with common carrier regulations mandating equal prices for equal services across the whole online ad business — either that, or DoubleClick should be nationalized outright and run as a public utility.

For many years, Big Tech had a glossy reputation, portraying itself as the vanguard of a new high-tech future where fancy gadgets and websites would solve all our problems. It turns out it is just another grubby corporate sector, ruthlessly seeking profit no matter who or what gets trodden underfoot in the process. It's long since time we brought these companies to heel. Cracking them up and regulating their markets is a good place to start.