When monopolies get caught with their hands in the cookie jar, you can usually expect two reactions in quick succession.
The first is to point out how much of a public good they provide. That’s immediately followed by blaming others for letting them get so big and out of control in the first place – often claiming that others just aren’t “keeping up with the times.”
That’s essentially been the reaction of Google and Facebook since News Media Canada released its report, Levelling the Digital Playing Field, last week.
The report outlines the impact of the web giants’ monopoly practices on news media in Canada and around the world – and how other democracies are responding to the challenge.
That challenge is as simple as it is daunting.
Covering real news costs real money. But Google and Facebook free-ride on the backs of journalists and publishers in democracies around the world who produce news content, by grabbing and distributing that content without fair compensation.
And they scoop up the lion’s share of on-line advertising revenues – in Canada, as much as 80%. They control the digital advertising pipeline and the algorithms and skim revenue through the process. Not only do they divert advertising from news media publishers, but they also pocket millions in advertising revenue that they place on news media sites. Even when advertisers pay specifically to advertise on news media sites, Google and Facebook keep most of that revenue, while gathering and using data on news media site readers and advertisers for their own purposes.
In short, they use their monopoly control to both set the rules and game the system. That might be the way things work in a casino – not the marketplace. They may have started off as upstart disrupters, but now they are two of the most powerful and wealthy corporations in human history. And they want to use that power and wealth to consolidate their grip.
The arguments they use are that paying for content isn’t “how search engines work, or should work,” as if Google were non-profit utility instead of one of the largest and most profitable companies in the world.
And, of course, they imply that news media haven’t worked hard enough to replace the loss of traditional advertising and other revenues. Presumably, this argument is made with a straight face, as the web giants hoover up every available ad dollar because – as the gatekeepers and rule setters – they can. That’s why their practices have been as lethal to digital-only new media, such as BuzzFeed and Slate, as they have to the so-called “legacy” media.
But no amount of distractions or excuses can hide the fact that countries around are taking action against monopolistic practices that have grown dangerous for both democracy and the free market.
Of particular relevance to Canada is how Australia is standing up to the web giants and empowering local news. With all-party support in their national parliament, the Australians are taking a comprehensive approach that allows their new publishers to negotiate for compensation as a group with Google and Facebook, mitigating the huge power imbalance. They’re also putting in place codes of conduct and enforcement with real teeth.
And they’re doing all this without the need for additional government funding, or new taxes or consumer fees. The massive margins of both Google and Facebook are such that they can afford to start paying fairly for what they’ve been getting for free.
Australia and Canada have a lot in common. Our economies are similar. So are our parliamentary and legal systems. We’re both federal states. And we both have strong regions.
In short, there’s no reason why the approach being adopted in Australia can’t also work here in Canada. That’s why we’re urging the government – and all parties in the House of Commons – to adopt the Australian model in Canada.
It’s not the role of democratic governments to pick winners and losers in the marketplace of ideas. But it is their role to step in when monopolistic practices are preventing that marketplace from functioning. That’s happening around the world. Now it’s time for Canada to step up.
