When monopoles 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 are providing. This is immediately followed by the blame on others for getting so big and out of control in the first place – and it is often claimed that others just don’t “keep up with the times”.
This is essentially the reaction from Google and Facebook since News Media Canada released its “Leveling the Digital Playing Field” report last week.
The report details the impact of web giants’ monopoly practices on the news media in Canada and around the world – and how other democracies are responding to the challenge
This challenge is as simple as it is daunting.
Covering real news costs real money. However, Google and Facebook can roam freely 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 make up the lion’s share of online advertising revenue – 80 percent in Canada. You control the digital advertising pipeline and algorithms and skim the revenue during the process.
Not only do they distract advertisements from news media publishers, they pocket millions in advertising revenue that they place on news media websites. Even if advertisers pay specifically for advertising on news media websites, Google and Facebook keep most of that revenue while they collect and use data about readers and advertisers from news media websites for their own purposes.
In short, they use their monopoly control to both set the rules and play the system. This is how things could work in a casino – not in the market. They may have started out as an upstart, but now they’re two of the most powerful and wealthy companies in history. And they want to use that power and wealth to tighten their grip.
The arguments they use are that paying for content doesn’t “work or should work like search engines” like Google was a not for profit rather than one of the largest and most profitable companies in the world.
And, of course, they imply that the news media hasn’t worked hard enough to make up for the loss of traditional advertising and other revenue. Presumably this argument is being made with a straight face, as the web giants suck up every available advertising dollar because they can do so as gatekeepers and rule-setters. Because of this, their practices have been just as deadly for new digital media as BuzzFeed and Slate as they have been for so-called “legacy” media.
But no distraction or excuse can hide the fact that the surrounding countries are cracking down on monopoly practices that have become dangerous to both democracy and the free market.
Of particular concern to Canada is the way Australia holds up against the web giants and supports local news. With the support of all the parties in their national parliament, the Australians are taking a comprehensive approach that will allow their new publishers to negotiate as a group with Google and Facebook on compensation in order to bridge the huge power imbalance. They also employ codes of conduct and enforcement with real teeth.
And all without additional government funding or new taxes or consumer fees. Google and Facebook’s massive profit margins are so high that they can afford to pay fair for what they got for free.
Australia and Canada have a lot in common. Our economies are similar. So are our parliamentary and legal systems. We are both federal states. And we both have strong regions.
In short, there is no reason why the approach taken in Australia cannot work in Canada too. That is why we are calling on the government – and all parties in the House of Commons – to adopt the Australian model in Canada.
It is not the job of democratic governments to select winners and losers in the marketplace of ideas. However, it is their job to intervene when monopoly practices prevent this market from working. It happens all over the world. Now is the time for Canada to step up.
Jamie Irving is Vice President of Brunswick News Inc. and Chair of the News Media Canada Working Group.