The four Quad nations are considering regulation at the intersection of media and Big Tech platforms. Their approaches reflect various priorities but also commonalities and divergences to the question of how to regulate Big Tech in an adverse business environment for the media.
Background Paper No. 5
By Nikhila Natarajan
Introduction
Around the world, the media industry is experiencing a bloodbath. Business models have remained unchanged for decades and traditional print and electronic media organizations are witnessing falling revenues, shrinking newsrooms, and paywall fatigue. A partial reason is the domination of advertising markets by the large technology companies. Platforms such as Facebook, Google, Twitter, and Instagram enjoy outsize data extraction power via algorithmic mediation. Although the blame for misinformation and disinformation is often laid at these platforms’ doorsteps, they are increasingly being blamed for the decline of journalism. As newsrooms collapse for lack of funds, we are being called on to remember why they matter.
On the consumer side, confidence in traditional media is on a steep decline. For the first time ever, less than 50 per cent of all Americans say that they trust the media. More than half of all Americans (58%) think most news organizations are more concerned with supporting an ideology or political position than with informing the public. In parallel, trust in social media has also hit a nadir of 27%. These trends are not unique to the United States. Governments in several countries are struggling with how to respond to these trends. The United States, India, Japan, and Australia – four democratic countries that happen to comprise an informal ‘Quad’ – have begun to adopt some similar approaches to regulation, although with important distinctions.
Four Parallel Approaches to Media and Tech
On February 25, 2021, Australia passed the News Media Bargaining Code, a world-first law that forces Internet giants Google and Facebook to pay for news content shared on their platforms. With this power move, Australia immediately became a testing ground for digital platform regulation. Acting independently, at least thus far, the governments of India, Japan, and the United States are, like Australia, contemplating policy interventions at the intersection of news media, social media platforms, and the ethics of digital media intermediaries. At its core, the role of the state in new media is being renegotiated in all four democratic countries that comprise the Quad.
Saving Local News in the United States
There are some important differences in the four countries’ experiences. The emphasis in the United States has revolved around market dominance and violation of antitrust principles. The likes of Facebook and Google became the focus of international attention after the Cambridge Analytica scandal, the UK Brexit vote, and the avalanche of fake news that came with these political upheavals.
But there is also growing cognizance of how disproportionate revenue sharing between big tech and media publishers is hollowing out the local news industry. In 2019, just 16 percent of the $134 billion that advertisers spent through Google went to more than 2 million non-Google properties, which includes news publishers that also sell their advertising space through Google’s exchange and buying tools. Approximately 25% of all newspapers in the United States have merged or gone out of business in the past 15 years. Between 2018 and 2020, 300 newspapers went bust and 6,000 journalists lost their jobs. More than 1,300 communities in the United States have totally lost their news coverage. In an effort to find sustainability — and ultimately growth — some media companies are shifting from an advertising-supported business model to one based on subscriptions. Additionally, philanthropic support is shoring up large swathes of the news industry, without the pressures of institutional investors who may expect high profit margins.
U.S. lawmakers are getting more involved. The Journalism Competition and Preservation Act has been reintroduced for the third time since 2018. If it makes headway, the bill would offer a pathway for news publishers to negotiate as a group with “dominant online platforms” for a larger share of online advertising revenue. News publishers are supporting this effort, along with the Local Journalism Sustainability Act, which proposes annual $250 tax credits to encourage Americans to subscribe to local news or donate to local nonprofit news organizations. That bill – which has caps of different dollar amounts for news subscribers, publishers, and small businesses that advertise in local newspapers - is gaining traction on the Hill and has picked up 70 cosponsors. “Of all the ideas I’ve seen, it’s the closest in spirit to the postal subsidy and mimics the benefits of the charitable deduction,” Steve Waldman, founder of Report for America, told the Columbia Journalism Review. The rising wave of legislation specific to the news industry adds to the growing pile of so-called “techlash” bills in statehouses, where there is a growing bipartisan effort to install new guardrails against big tech platforms around matters related to antitrust, consumer privacy, and public interest. By July 2021, landmark legislation has begun advancing in Congress that intends to curb the market power of Facebook, Google, Amazon and Apple and could force them to separate their dominant platforms from their other lines of business where they operate both as a platform and as a competitor on the platform. The road ahead is neither quick nor easy for Big Tech critics. The politics are tough, positions are hardening, and the fight is on to frame a new narrative.
Taking on Monopolies in Japan
Japan is following suit in approaching the media through an antitrust lens and the country’s Antimonopoly Act (AMA). The question of digital platforms profiting from their dual roles as both intermediary and publisher in the absence of regulation is at the center of multiple antitrust cases in the United States as well. In February 2021, Japan’s Fair Trade Commission (JFTC) released a 23-page “Final Report Regarding Digital Advertising”, which captured feedback from digital platform operators, advertisers, publishers, and users of search services and social media. The JFTC focuses on the actual status of transactions in digital advertising, effects on innovation, and ongoing fact-finding surveys based on a shifting competitive environment. “In order to create a competitive environment for digital platforms, it is necessary not only to enforce the AMA,” the report concludes, “but also to consider…the introduction of appropriate regulations under the Act on Improving Transparency and Fairness of Digital Platforms and other regulations, a mechanism to realize the transfer and opening of data, and the appropriate protection of personal information.” Japan, like other countries where regulators are wading into the tangled business of media-platform-OTT, acknowledges that “the way digital platform operators run their businesses related to digital advertising has been having a major impact on the media businesses.” Broadly, JFTC’s research on the use of digital platforms has resulted in plenty of action around transparency and fairness on specified digital platforms. Legislation like the Act on Improving Transparency and Fairness of Digital Platforms (passed February 2020) points in the general direction of greater state monitoring and tighter conditions for platforms to comply with.
New Rules and Compliance Measures in India
On February 25, 2021, India’s Ministry of Electronics and Information Technology released a 26-page Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which dramatically altered intermediary liability and replaced the Information Technology (Intermediaries Guidelines) Rules, 2011. The document detailed new regulations for social media platforms and digital sites, with tighter definitions around forms of content, guidelines around government power to police what shows up on the front end and timelines for enforcement. The new rules are less about bolstering negotiation between the two sides and more about putting social media platforms on notice. India’s media ethics code took effect on May 26, 2021 and will also apply to digital streaming platforms like Netflix and Amazon.
India’s new rules landed roughly two weeks after Twitter defied orders from the Indian government to take down content about farmers’ protests taking place in India. The 2021 Rules cover a much bigger media landscape than a 2018 edition of intermediary rules and affects online intermediaries, digital news organizations, and video streaming. The distinctions and overlap between concepts like “publisher of news and current affairs content” and “publisher” or even “online curated content” go deeper than they have since news publishers began posting their content online in the 1990s. Significant social media intermediaries (those with a user base of over 5 million users) must now comply with a long list of rules, including appointing grievance redressal officers residing in India who must acknowledge all complaints received within 24 hours and must resolve complaints within 15 days of receipt.
Ravi Shankar Prasad, India’s then-Minister for Law & Justice, Communications, Electronics & Information Technology, struck a combative tone during the release of the Rules, on the same day that Australia launched its news media bargaining code. “If you want to do business in India, do it on our terms and conditions or you are free to leave,” he said to a packed conference venue. “Do business, make money, empower the ordinary Indian, you’re welcome.” But he also struck warning notes throughout: “It is very important that the social media users running into crores should also be given a proper forum for resolution of their grievances and that it's time bound, against the abuse and misuse of social media. This is our focus.” He highlighted India's large user base numbers: Facebook with 410 million users, Instagram with 210 million, Twitter with 175 million, WhatsApp with 530 million, and YouTube with 448 million.
Exactly 90 days after India’s news rules were announced, law enforcement swooped down on Twitter India’s offices to serve notice demanding explanation for a “manipulated media” label on a politician’s tweet. The timing and the action sent a strong message about India’s bare knuckle approach to regulation. Days later, India tightened the screws some more, giving the micro blogging platform one last chance to “immediately” comply with her new information technology rules which came into effect on May 26, 2021. A furious Ministry of Electronics and Information Technology (MeitY) warned Twitter that failure to adhere to the norms will lead the platform to lose exemption from liability under the Information Technology Act. India’s tough stance is already having an effect on its Big Tech target audience. In his first few public announcements, Prasad’s successor Abhinav Vaishnaw has promised continuity. Speaking at the MIT social media summit in April 2021, Facebook’s Nick Clegg said the “future of the Internet is basically going to be decided - certainly in terms of governance - in India.”
Determining the Market Value for News in Australia
Australia’s government arguably attracted the greatest international attention with its News Media and Digital Platforms Bargaining Code. This created a regulatory framework where tech firms can strike commercial deals with media outlets for news content. Barely three weeks after the passage of this breakthrough law, Rupert Murdoch's News Corp Australia sealed a deal with Facebook where the platform would pay News Corp for journalism from its local mastheads. News Corp also signed a deal with Google where the search giant will pay the company for its content, including through online advertising, digital subscriptions and via YouTube. News Corp controls about 70% of newspaper circulation in Australia with titles including The Australian, The Daily Telegraph and The Herald Sun.
In the absence of such deals, platforms and publishers can wade into arbitration over the value of content. The legislation is rooted in facilitating "fairer" contract negotiations between media and tech companies. What is still unclear is how negotiations between smaller news outlets and Big Tech will play out. The code offers at least seven key negotiation tools that put publisher-led content to the market valuation test. The consensus view from 88 regional, state and national news publishers is overwhelmingly in favour of the code. In a written submission to the Australian government, they call it one of the “most important media policy decisions affecting Australian democracy for decades. It could literally determine the fate of the independent news publishing industry.”
Rod Sims, chair of the Australian Competition and Consumer Commission, thinks his country’s move is the “better way” of dealing with monopoly power rather than the European focus on copyright. In 2018, Europe passed rules requiring tech companies to enter into negotiations with publishers when linking to their digital content. France took the lead, and Google and a group of 121 French publishers eventually inked a three-year deal worth a reported €62 million. Australia’s action has lit up global interest. Canada’s Heritage Minister has argued for legislation that would force Google and Facebook to pay for news on their platforms. Opponents to the Australian law, however, have called it a “link tax” that threatens the open sharing of information on the internet. Critics have also labeled the Australian law as an effort to move money from one group of monopolies (Big Tech) to another (the big media conglomerates in the country).
Conclusion
Despite differing triggers, emphases and methods, there has been a clear escalation in the early regulatory approaches of the four Quad countries to the issue of digital media intermediary regulation. A shared phenomenon is the long-running decline of local media industries and the ascendancy of powerful online platforms, most of which are U.S.-based multinational corporations. Amidst dramatic increases in digital advertising revenue, publishers have been squeezed out while their content benefits Big Tech platforms whose algorithms control who gets to consume journalism. Big Tech companies claim that news businesses are making less revenue not because of search engines and social media platforms but because websites have taken classified advertising online. Google’s chief evangelist Vint Cerf, during the thick of the debate on Australia’s news bargaining code, wrote that an arbitration model that considers only publishers’ costs and claims “incorrectly” supposes that news content always has a higher value to users than any other kind of online information or service. “Raw data and human behavior tell us this is a fallacy,” he said.
The broader public clamor over uninhibited data collection and behavioral targeting has been met with carefully worded responses from platform CEOs who say they “welcome” regulation. In the United States, Section 230 of the Communications Decency Act arms these platforms with near total immunity for content posted on their platforms. So far, the legal system has had trouble deciding what sort of rules apply to digital goods. In the digital public square, the old playbook on what belongs to whom has been ripped apart. What takes its place is still being worked out.
It is true that the United States has long been outpaced on tech regulation. Europe is the more popular contrast, because of the General Data Protection Regulation (GDPR) in 2018 and more recently a series of new laws aimed at limiting the anticompetitive practices of the major tech companies. Any unscripted convergence has its limits too. The United States has witnessed a string of Big Tech testimonies in Congress and, by July 2021, a more muscular approach on the antitrust front. Australia and India are having none of the talk. They have been figuring out new media regulation on the go. In time, greater coordination on these difficult questions - a four-way huddle – will empower others including, perhaps, democracies outside the Quad.
Nikhila Natarajan is Senior Program Manager, Media and Digital Content, at Observer Research Foundation America.