It’s time to rein in tech giants
This is the first in a series of articles on Big Tech’s damage to democracy, public safety and consumers.
The biggest heist in business history began quietly in August 2004 when search engine Google, now Alphabet, went public.
People were already addicted to Google and I wanted to buy shares, but not until I understood how it could make money by giving away free information.
When I realized its business model was similar to ours in the news business — ads wrapped around content it had taken from newspapers and others
— I bought lots of stock and wrote a memo to my CEO advising that the company do the same, in order to try and stop the looming apocalypse. He did nothing. I bought more stock.
Sixteen years later, Google, Facebook, Yahoo and many other social media sites have eaten newspapers alive. A 2018 report from Zenith, a company that tracks ad spending, found that advertising in newspapers plummeted to only US$48 billion ($65 billion) globally in 2018, from US$107 billion in 2000, and estimated that it would drop to US$44.5 billion by the end of this year. Meanwhile, internet ad spending soared from less than US$8 billion to US$227 billion in 2018 and has been increasing ever since.
News Corp. owner Rupert Murdoch was the only proprietor who understood what was about to befall the industry and tried to avert it. He publicly criticized Google and Yahoo for swiping content without paying fees and attempted to alert and organize publishers. In 2009, at a Washington forum on the future of newspapers, he said: “There are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production ... Their almost wholesale misappropriation of our stories is not fair use. To be impolite, it’s theft.”
He noted that, “Producing journalism is expensive,” and argued that, “When this work is misappropriated … it destroys the economics of producing high-quality content.”
News Corp. tried to organize a consortium of newspapers to charge for news distributed online, but to no avail. He was the first to erect firewalls, preventing Google from accessing his company’s content, and was able to protect his broadcasters and the book publishing industry, which he controlled, from Google’s piracy.
Meanwhile, the Americans did nothing and, like the rest of the world, simply watched as newspapers shuttered by the thousands, consolidated into chains, undertook massive layoffs and hobbled along under bankruptcy protection. (The European Union, for its part, has taken on the big American tech companies with mixed success.)
But Brexit and the 2016 election in the United States changed many minds, after it was discovered that advertisements on Facebook and Google paid for by unidentified Russians and other political operatives had spread disinformation, conspiracy theories, fraudulent stories, propaganda and hate to unsophisticated electorates.
Now that it has become clear that public discourse and traditional media are under threat globally, governments are finally looking for solutions.
Not surprisingly, the jurisdictions where Murdoch has made the most money and done the most lobbying — the European Union and Australia — have made concrete moves to correct the problem by forcing social media companies to pay for all the content they repurpose.
But the pushback is severe. In 2014, Spain required Google to pay periodicals for content, so Google simply shut down its news feed.
America is a laggard, mostly because of Silicon Valley’s political clout, campaign contributions and its army of lobbyists in Washington. Canada’s reaction has also been lame.
The Liberals opted to subsidize politically correct media outlets with hundreds of millions of tax dollars, which was worrisome in itself, but, more importantly, besides the point.
The issue is that copyright rules must be enforced, or, if inadequate, bolstered in order to level the playing field.
Australia has become a world leader in this regard, as it intends to force Facebook and Google to share advertising revenue with local media firms, the country’s treasurer announced recently.
The Aussies are creating a mandatory code to require tech giants to pay local media for reusing their content.
Canberra has also unveiled a support package that includes grants, tax breaks for media companies and an A$50 million (C$47 million) public interest news gathering program.
Naturally, Facebook is balking and pledges to fight the proposal.
Unfortunately, all these efforts are too little, too late for those driven out of business, but it is clear that all governments must bridle these social media giants.