Editorial | Surviving Facebook and Google

In our neck of the woods, last week’s antitrust lawsuits in America to break up Facebook have, understandably, grabbed people’s attention. Little noted, however, was a development in Australia affecting Facebook, Google, and other social media behemoths that is worth the notice of Jamaica’s and other Caribbean governments.

After three years of inquiry and consultations by Australia’s Consumers and Competition Commission (ACCC), the country’s treasurer, Josh Frydenberg, announced a draft law, soon to be debated by the parliament in Canberra, that will require Facebook, Google, and other digital platforms to pay Australia for the use of its content or face penalties. The Australians insist that the move is necessary to save domestic media that have seen the bulk of their revenues vacuumed away by the American tech giants.

Google and Facebook are resisting similar efforts in France, the first European Union member to have adopted into domestic law, EU regulations requiring that Internet companies pay local publishers for content they display on their sites. That matter is in a Parisian court.

The issue is that Google and Facebook have grown big, rich, powerful, and become, critics say, largely unaccountable. Last year, Alphabet, Google’s parent, reported profit of US$34.3 billion on income of more than US$160 billion, US$134 billion of which was from advertising. Facebook’s revenue was US$70 billion. It took US$18.5 billion of that to its bottom line. The rapid growth of the firms has been driven mostly through acquisitions.

LACK OF CONSUMER COMPETITION

In Facebook’s case, American regulators say its expansion has been at the expense of competition and in breach of antitrust laws. The US Federal Trade Commission (FTC) and 48 states and territories are hoping to rectify that with separate complaints filed in courts last week focusing substantially on Facebook’s acquisition, in 2012, of the photo-share app Instagram, and two years later, the messaging service WhatsApp. Earlier this year, Facebook bought the imaging app Giphy and indicated that at least one other takeover was under way.

Mark Conner, the head of the FTC bureau of competition, argued that Facebook’s behaviour entrenched monopoly while denying “consumers the benefits of competition”. That increasing dominance of the Big Tech, the Googles and Facebooks, as the Australians have pointed out, has impoverished domestic media, leading to the collapse of some outlets.

For example, these digital platforms and information/news aggregators have their services enhanced with the mostly free access to content of domestic media while they gorge on advertising revenue. “For every A$ of online advertising revenue, A$53 goes to Google, A$28 goes to Facebook, and A$19 goes to other participants,” Mr Frydenberg said last week. In the face of the Big Tech’s swallowing of most of the ad income, scores of small and community newspapers have closed, and larger media companies have also felt the crunch. In a 2018 report on the effect of the digital platforms, the ACCC, noting the effects of the unbundling of advertising, pointed to what had happened to revenue to traditional media from classified advertising: between 2001 and 2016 it declined from A$2 billion to A$200 million. Overall, it is estimated that the revenues of Australian media have fallen by as much as 75 per cent over the past 15 years.

DILUTING MEDIA REVENUE

Most of that income has gone to online information providers, especially Big Tech companies. Yet there has been no concomitant spending by Big Tech, the Facebooks and the Googles, journalism – much less of the journalistic quality that highlights the role of the press as a critical pillar of liberal democracy.

For instance, in the decade to 2016 in Australia, the ACCC noted, “The number of people in journalism-related occupations fell by nine per cent and by 26 per cent for traditional print journalists (including those journalists working for print/online news media businesses).” A large portion of furloughed journalists and other staff worked for some of Australia’s best newspapers and radio and television stations.

There are no similar studies in Jamaica or, insofar as we are aware, in other Caribbean Community (CARICOM) countries. The anecdotal evidence, however, suggests that developments in the Caribbean aren’t dissimilar to what has happened in Australia. Technology has lowered entry barriers to the media business. Markets have become fragmented. The revenues of traditional commercial media have been bitten into. The ability of media that would wish to invest in serious journalism is weakened.

However, it isn’t only the new domestic competitors that diluted media revenue. The likes of Google and Facebook are swallowing up hefty bits of the Caribbean’s advertising expenditure even when advertising appears on domestic online sites. A large proportion, perhaps the majority, of these ads are booked through Google AdWords system, giving Google a large slice, nearly a third, of those earnings as commission. That, of course, is separate from what Google and Facebook extract by leveraging content developed and paid for by Caribbean news organisations to generate income for themselves.

Yet it is advertising revenue, primarily, that pays reporters and editors and funds an independent and robust journalism that helps to sustain a vibrant democracy.

Add to this the fact that neither Google nor Facebook nor the other Big Techs pay corporate taxes in Jamaica, or, we suspect, elsewhere in CARICOM, where they are neither incorporated nor maintain registered offices.

This is an issue that CARICOM technology and information ministers should have on their agenda for a regional approach to the problem. If it isn’t there, Daryl Vaz and Fayval Williams, the Jamaican ministers, respectively, for those portfolios, should get it there. Prime Minister Andrew Holness, if he believes in the media’s role as a partner in democracy, which he says he does, should see to it.

We expect that the social media companies will claim, as they have argued in other jurisdictions, that they widen the reach of, and access to, domestic media by having them on their platforms. So having to pay local publishers for content would be an imposition that they shouldn’t have to bear. That argument, taken in its broadest context, is, at best, questionable.

In any event, the larger question is what happens to a society, if a serious and questioning media, and the journalism they spawn, are no longer viable. That’s a matter that doesn’t worry Google, Facebook, and their subsidiaries. There is always the next operator, if it brings eyeballs. It, however, ought to be of concern to the leaders of Jamaica and CARICOM.