Big Tech and the Need for Fair Revenue Sharing for News Content | Teresa Joseph

The exponential growth of big tech digital platforms has brought to the fore numerous challenges, not the least being questions of revenue sharing, violation of data privacy, targeted advertising, abuse of dominant position in the digital advertisement market, indulging in anticompetitive practices, perpetuation of dominant positions in online search markets, and so on. These issues also draw attention to the architecture of the contemporary global media system and the working of the digital media economy. An important issue is the question of fair revenue sharing between big tech digital platforms and online news publishers. This is not merely about financial resources and economic policies, but also about sustaining a well-functioning news media system for a vibrant democracy, which is already on the downslide world over. Over the recent past, countries like Australia and Canada have implemented regulatory laws and mechanisms and other countries are in the process of doing so. Considering the gravity of the issues involved, the regulatory turn in platform governance the world over, and pleas from publishing bodies, the Government of India needs to rise to the occasion and urgently address the issue of fair revenue sharing between big tech platforms and online news publishers.

Digital Platforms and News Businesses

Big tech digital conglomerates often share on their platforms news content that has been created and produced by news organisations that invested substantial financial resources in the process of doing so. As far as digital platforms are concerned more engagements translate to more profit. Hence, without bearing any cost, or by providing a small portion of the advertisement revenue generated, tech titans use the content of news businesses to keep more readers on their platforms. This helps them to collect data about these consumers which facilitates targeted behavioural advertising as well as market predictions and sales. This ‘surveillance capitalism’ as Shoshana Zuboff in her widely acclaimed book, The Age of Surveillance Capitalism refers to it, [1] has made these platforms a major attraction for advertisers and they have come to dominate the global advertising market.

The tremendous growth of digital platforms which aggregate and distribute content, has come at a huge cost to those publishers who actually create the content. There has been a sharp decline in ad revenue and readership for traditional news organisations. News businesses do not unhinge themselves from big tech platforms for fear of losing more of their already dwindling readership as more and more readers turn to these platforms for news and snippets that are free of cost. But the reality is that this is possible only because those who create and produce the news, bearing all costs, are not compensated.

Although the battle between the digital giants and news media organisations is primarily a question of financial resources and economic policies, media monopoly has its impact on democratic processes and the quality of journalism, an indispensable pillar of democracy. The public sphere is being taken over by the marketplace, and audiences are perceived more as consumers rather than citizens – a far cry from the ideal oft mentioned role of the media as the watchdog of democracy or journalism as a public good.

Paul Starr, Professor of Communications and Public Affairs at Princeton University, argues that reforms to reduce platform monopoly and ensure some degree of transparency are required in order to recalibrate the economic basis of professional journalism and hold social media accountable for their role in shaping exposure to different contents and perspectives. While the modalities for holding them accountable are not easy to conceive, the economic basis can to a certain extent be addressed by reducing platform monopolies and ensuring some amount of transparency. [2]

Despite its necessity, a universal regulatory framework for digital platforms does not seem to be in the offing. In February 2023 UNESCO held the Internet for Trust conference which was aimed at developing guidelines to safeguard freedom of expression, access to information and other human rights, in the context of regulations for digital platforms being framed by different countries. [3] But the focus was on the contentious issue of content moderation.

As for governments, Seth Ashley, author of News Literacy and Democracy points out that in the neoliberal market-oriented approach to governance, legislators are usually reluctant to impose regulations on businesses as they are expected to be governed by the laws of supply and demand, rather than government intervention. However, as capitalist economies do depend on competition, governments often intervene to prevent monopolies. Industries also normally do not welcome government interference when they are doing well. But, as in the present context, it is not so when things face a downside. [4] Today, countries and news publishers in different parts of the world are increasingly challenging the digital giants.

The Regulatory Turn in Platform Governance

Legal cases and investigations against Google and Meta in various countries with regard to resource sharing, violation of data privacy and targeted advertising, besides the misuse of dominant positions, have resulted in them being forced to pay billions of dollars as penalty. Several countries have brought into effect regulations and mechanisms to address the issue. Regulatory scrutiny is seeing an increase the world over, as has been evident in the United States, countries of the European Union, South Africa, and so on.

In response to an investigation by the French Competition Authority (FCA) in 2021, Google agreed to negotiate with news organisations for compensations to them whenever their content appears in online searches. Google also withdrew its appeal against a €500 million fine on this issue. [5]

Despite stiff resistance from Google and Meta, Australia passed the News Media and Digital Platforms Mandatory Bargaining Code (NMBC) in 2021 to address the imbalance in bargaining power between the digital giants and the country’s news businesses. [6] The Code enabled Australian news publishers to bargain with big tech platforms for payment for any of their content that is linked or made available on these platforms. Meta initially retaliated by blocking news on its platform - Facebook, but backtracked after the government retaliated with the counter threat to prevent them from displaying news content from anywhere on their platforms in Australia and also made certain changes to the regulations. NMBC is reported to have resulted in an estimated AU$200 million being transferred to the Australian journalism industry, and an increase of 46% in jobs for journalists within a year of the implementation of NMBC. [7]

The California State Assembly was in the process of preparing a similar law that would impose a ‘journalism usage fee’ on tech giants, 70% of which was to be invested by publishers in preserving journalism jobs in the state. The Bill was put on hold reportedly to ensure the strongest legislation possible, in wake of threats by Meta to remove all news from its Facebook and Instagram pages. [8] However, the government recently made an agreement with Google whereby a new Transformation Fund is being set up for five years. Google has agreed to pay $55 million to boost local journalism with the state investing $70 billion. Google would also fund an AI Accelerator Project which is reported to be worth $62.5 million. [9]

The Government of Canada in turn, took cognizance of the fact that news businesses in Canada have been seriously affected by the online sharing of news and diversion of revenue to digital platforms. The government estimated that 450 news outlets were shut down since 2008, and that although online advertising revenues in Canada reached CAN$14 billion in 2022, Google and Meta together shared roughly 80% of it. [10] Subsequently, the government passed the Online News Act (ONA) in 2023 which was intended to break the monopoly power of Google and Meta and help sustain the country’s news sector. [11]

It enabled publishers to collectively bargain to reach payment deals with big tech platforms. Platforms that share, preview and direct users to news content created by Canadian publishers will have to compensate them. The Canadian Radio-television and Telecommunications Commission (CRTC) has been designated as the regulatory body for ONA. Highly critical of ONA, the digital giants responded to the legislation as they did in the case of Australia’s NMBC, with their own variations. Meta banned the posting of Canadian and international news content as well as the viewing of such content from international sources. [12] This blockade has made it difficult for Canadians to access up to date and relevant news and has led to the closure of smaller news businesses, impacting publishers, freelance writers and journalists.

On the othger hand, after two years of negotiations with Google, CRTC recently announced that it has given the tech titan a five-year exemption from ONA based on its offer to give $100 million a year to Canada’s news sector through the Canadian Journalism Collective (CJC). [13]

Towards Regulatory Mechanisms for India

The news industry in India is also largely based on the ad revenue business model. Over the years it has been faced with mounting pressure, with increasing advertisement investment going to digital platforms, the strides being taken by AI driven content development and declining readership. In 2022 the Indian Newspaper Society (INS), News Broadcasters and Digital Association (NBDA) and the Digital News Publishers’ Association (DNPA) all approached the Competition Commission of India (CCI) against Google, for having abused its dominant position in the digital ad market and imposing unfair conditions on news publishers. DNPA alleged that over 50% of the traffic on news websites comes from online search engines dominated by Google, which in turn, through its algorithms, determines which news website gets discovered first on its platforms. It also unilaterally decides the amount to be paid to the publishers for content created by them, while holding on to a major portion of the revenue. [14] The CCI ordered an enquiry into the matter and after a two-year detailed investigation it is expected to announce its findings soon.

The former Minister of State for Information Technology and Electronics, Rajeev Chandrasekhar, as well as the Telecom Regulatory Authority of India (TRAI) hinted at the possibility of policy interventions to enable Indian news media to get their fair share of revenue from big tech platforms. A Digital Competition Bill was proposed by the Ministry of Corporate Affairs (MCA) and in June this year the Ministry of Information and Broadcasting (MIB) held a meeting with representatives of the DNPA and other government departments including CCI, MCA and the Ministry of Electronics and Information Technology. Although no concrete steps have been taken, the proposed Bill by MCA, the upcoming findings of CCI in the case against Google, the demands of news organisations, and the initiatives of other countries could all provide the much-needed driver towards framing regulations for fair revenue sharing between big tech platforms and news businesses in India.

Paul Fletcher, former Australian Minister for Communications, who was at the forefront of the country’s NMBC, points out that given India’s large population and the extraordinary scale of its digital market (far exceeding that of Australia) it would have a major edge in ‘bargaining dynamics’ with tech giants. [15]

The regulatory turn in platform governance in different parts of the world is not without its flaws. India could clearly do well to draw from the experiences of Australia and Canada, as well as the emerging legislative processes in other parts of the world. It also needs to keep in mind the context of upcoming news businesses using generative AI tools to develop content. In framing regulations India faces the stark reality of a looming threat of the strengthening of the surveillance state as was evidenced in the Telecommunications Act, 2023. The hasty passage of the Bill in both houses of Parliament left little scope for democratic deliberations. Another very real possibility is that of revenue sharing regulations benefitting large corporation and a partisan selection of news organisations for revenue sharing. All these need to be factored in during any law-making process. Democratic procedural safeguards need to be ensured.

The government also needs to address the legitimate concerns of big tech to ensure that the baby is not thrown out with the bath water. News publishers and big tech platforms do need each other. Similarly, big tech need to act in good faith and involve in the finalisation of regulations, rather than retaliating with threats and blockades.

The reality is that given the increasing power imbalance between big tech and news publishers, as well as the pressures of sustenance being faced by journalism in the country, immediate albeit cautious interventions in this regard are the need of the hour. This is not merely a question of sharing financial resources but upholding the basis of democracy. The Government of India and regulatory bodies need to up the ante and take urgent necessary action. ONA and NMBC have in fact set the framework to move beyond questions of resource sharing to inter-related questions of content responsibility and the overall working of the digital economy.

Conclusion

The entire issue of fair revenue sharing in digital news publishing in fact reflects the extent of the corporate structural dominance of the tech giants, and their power struggle with democratically elected governments, besides raising questions of authority, accountability and public interest. Market forces and the digital giants are in effect ringing the death knell for quality journalism and news organisations, not forgetting the ideal role of the media as the watchdog of democracy. For journalism to function as a public good, legislations are required to reduce platform monopoly and sustain quality journalism. It is only fair that there is a just distribution of revenue between those who actually create content and those who aggregate and distribute it. There is a need to democratise the relationship between the tech giants and other news businesses, and for cautious government intervention in the matter.

At the same time, the moot question remains as to whether regulations are a definitive remedy to the entire issue at hand. Notwithstanding suggestions such alternative business models for news organisations, tax reliefs for publishers, newspaper subsidies, tax incentives for emerging new media, etc., the reality is that neoliberalism and monopoly capitalism have let the genie out of the bottle and given rise to ‘digital frankensteins’. Yet, if no action is taken now, democracy and democratic processes and institutions which are already on the downslide, will be the ultimate victims.

(Author: Dr. Teresa Joseph is former Professor of Political Science, Alphonsa College, Pala, Kerala and author of the books Mahatma Gandhi and Mass Media: Mediating Conflict and Social Change and Reporting Nuclear Pakistan: Security Perceptions and the Indian Press. Contact: teresajoseph123[at]gmail.com)

References:

[1] Zuboff, Shoshana (2019): The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power, London: Profile Books.
[2] Starr, Paul (2019, October 2). How Neoliberal Policy Shaped the Internet—and What to Do About It Now. The American Prospect: Ideas, politics and power, https://prospect.org/power/how-neoliberal-policy-shaped-internet-surveillance-monopoly/
[3] UNESCO (2023): Global Conference: A Global Dialogue to Guide Regulation Worldwide, https://www.unesco.org/en/internet-conference.
[4] Ashley, Seth (2019): News Literacy and Democracy, New York: Routledge.
[5] Burgess, Matt (2021): How France tamed Google, Wired, https://www.wired.co.uk/article/google-france-fines
[6] Australia, The Federal Register of Legislation (2021): Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021, https://www.legislation.gov.au/Details/C2021A00021
[7] Simms, Rod (2022): The Logic Behind Australia’s News Media Bargaining Code, CEPR, https://cepr.org/voxeu/columns/logic-behind-australias-news-media-bargaining-code
[8] Ding, Jaimie (2023): California Bill Requiring Big Tech to Pay for News Placed on Hold until 2024, Los Angeles Times, 7 July, https://www.latimes.com/business/story/2023-07-07/california-journalism-bill-on-hold-until-2024
[9] Ken Doctor (2024): Newsonomics: California’s Local News Agreement with Google is a Win, Nieman Lab, https://www.niemanlab.org/2024/09/newsonomics-californias-local-news-agreement-with-google-is-a-win/
[10] Canada, Government of (2022): Government Introduces a Bill to Ensure Fair Compensation for News Media and the Sustainability of Local News, https://www.canada.ca/en/canadian-heritage/news/2022/04/government-introduces-a-bill-to-ensure-fair-compensation-for-news-media-and-the-sustainability-of-local-news.html
[11] Canada, Government of (2023): Online News Act, https://laws-lois.justice.gc.ca/eng/acts/O-9.3/page-1.html; also see Teresa Joseph (2023), Tackling Big Tech: Lessons from Canada’s Online News Act, Policy Circle, https://www.policycircle.org/opinion/canada-online-news-act-big-tech/
[12] Meta (2023): Meta’s Position on Canada’s Online News Act, https://about.fb.com/news/2023/05/metas-position-on-canadas-online-news-act/; Walker, Kent (2023): An Update on Canada’s Bill C-18 and Our Search and News Products, https://blog.google/intl/en-ca/company-news/outreach-initiatives/an-update-on-canadas-bill-c-18-and-our-search-and-news-products/.
[13] Canada, Government of (2024): CRTC Approves Google’s Application and Paves Way for Aannual $100 Million Contribution to Canadian News Organizations, https://www.canada.ca/en/radio-television-telecommunications/news/2024/10/crtc-approves-googles-application-and-paves-way-for-annual-100-million-contribution-to-canadian-news-organizations.html
[14] CCI Orders Probe Against Google for Alleged Use of Dominant Position (2023): The Times of India, 7 January, https://timesofindia.indiatimes.com/business/india-business/cci-orders-probe-against-google-for-alleged-use-of-dominant-position/articleshow/88762764.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
[15] India Will Have Huge Leverage in Bargaining Dynamics with Big Tech: Australian MP Paul Fletcher (2023): The Hindu, 20 July, https://www.thehindu.com/news/national/india-will-have-huge-leverage-in-bargaining-dynamics-with-big-tech-australian-mp-paul-fletcher/article67101292.ece