The devil is in the details

Google and Facebook should compensate news outlets

One of the big and evolving questions prior to the COVID-19 crisis was the regulation of Google and Facebook.

There’s a growing view in Washington that these companies should be subject to anti-trust investigations as well as new regulations with respect to privacy, free speech, data tracking and data monetization. This isn’t merely a left-wing cause. Republicans including upand-coming Sen. Josh Hawley are at the centre of this new thinking about the size and scope of large technology firms in our societies.

Recently, the government of Australia announced its own plans to require Google and Facebook to compensate news organizations because of their reliance on these media outlets for content on their platforms. The announcement follows a similar one in France and growing congressional support for bipartisan legislation in the U.S. broadly along these lines.

We’re bound to see a similar push here in Canada. An independent panel appointed by Prime Minister Justin Trudeau’s Liberal government recommended as much in January. And a government spokesperson recently told a National Post reporter it’s studying the panel’s recommendations. It seems increasingly possible that Ottawa follows in this direction.

The basic premise of these policy reforms is that Google and Facebook account for 60 to 70 per cent of digital advertising revenues and yet don’t compensate news organizations for using or redistributing their content. Proponents, including the publishers, argue that news organizations ought to be duly compensated for their original content which, according to Australia’s treasurer, accounts for between eight and 14 per cent of Google search results.

This is a complex question for conservatives. There’s no self-evident answer. It involves the application of first principles to a new and emerging issue that touches on the intersection of technology, competition and intellectual property.

There are already competing claims to stake out the prevailing conservative position. Some have argued that such government intervention is anti-competitive and anti-innovation. And others contend the same intervention is justified to ensure that journalists and news outlets are compensated for their intellectual output.

This is how the debate has played out thus far in the U.S., for instance, where conservative Senators Mitch Mcconnell and Rand Paul have co-sponsored the bill to enable the publishers to collectively negotiate with Google and Facebook, and conservative organizations such as the American Enterprise Institute and conservative commentators such as Erik Erickson oppose it.

Australia’s plan is provocative because it’s new but that doesn’t make it inherently wrong. We expect musicians to be compensated for their creative content. We’re comfortable massively compensating drug companies for their pharmacological innovations. Why should we think about journalistic output differently?

That this particular case involves modern technologies or coincides with a divisive debate about direct government funding to news organization shouldn’t detract from the first-principle implications or the legitimate, practical questions.

The focus instead ought to be on how something like this might work. Who decides which content producers are eligible for compensation? Should it be mandatory or voluntary? Will governments just impose a remuneration scheme?

These questions are fundamental. The first-principles case for a new policy framework between Google and Facebook and the country’s news organizations is persuasive. But that assumes the government can design a process that’s fair and transparent. The devil will be in the details.

One related yet tangential point: Many will argue that enacting this type of reform is crucial for the survival of the industry. They may, in fact, be right. But that line of argument shouldn’t be persuasive. The case for reform has to stand or fall on principle. Creating a policy framework for Google and Facebook to share advertising revenues with news organizations is either justified as a matter of intellectual property or it is not. The financial position of these companies has some relevance, but it shouldn’t be decisive.

Even if the Canadian government opts to move in this direction, it’s no guarantee news outlets will survive after all. It’s beyond the scope of this column to judge the overall mix of factors behind the industry’s struggles or what it should do about them. But the point here is these decisions should be made based on principle and practicality rather than short-term calculus.