The commonly held belief that ‘content is king’ may no longer necessarily be true, as today, one may have the best content but it has no commercial value until it reaches a wider audience. Moreover, whether we like it or not, today the audience is in the clasp of the Big-Tech companies like Google and Facebook. The Big-Tech companies, who own and control social media platforms, have more than half the global population as their customers who devour and share content on an unprecedented scale. They can push content to billions of subscribers and followers and garner trillions of dollars in ad revenue and by manipulating consumer behaviour.
This new communication and data ecosystem has flipped the entire media industry on its head with the news companies becoming bit-players for these giant social media conglomerates. Current trends show that people seek their news on social media platforms. It is convenient (on your mobile), fast, interactive and capable of being beamed in all formats of visual communication. This phenomenal reach and ownership generated by Big-Tech have forced the various news companies to share their news stories and their entire content on social media platforms with little to nothing of the subsequent revenue.
For the moment, these data-czars like Mark Zuckerberg of Facebook and Sunder Pichai of Google appear invincible masters of all they survey over the ‘media-horizon’. However, this asymmetry between the Big-Tech companies and news organisations has also generated a lot of concern and backlash among the global civil society, conscientious citizenry and responsive governments. Finally, the Australians made the first move to take on Big-Tech. The Australian government came up with a proposal to bring a new law that would force Big-Tech to pay for news content in Australia.
Termed as “News Media and Digital Platforms Mandatory Bargaining Code,” the new law would allow Australian news companies to negotiate with the tech firms for getting a sufficient share of revenue that is generated through news content that appears on their news feeds and search results. In case the two fail to agree then the matter would be resolved by the Australian Communications and Media Authority. Penalties could be as high as 10 million Australian dollars per breach or 10% of the company’s local turnover. The law would focus on Google and Facebook initially but later expand to other tech giants.
The proposal led to something dramatic and shocking. Facebook banned all news content on its platform for the continent of Australia. This also resulted in the deactivation of pages on charities, non-profits and public health information like Covid-19. The hostile response to this contemptuous move by Facebook forced it to reverse its decision, but the damage was done. Facebook became the most distrusted brand in Australia.
The legal battle against Big-Tech has tremendous global ramifications as other countries are bound to follow the Australian example. How will Facebook and Google strategise in the face of this new development? Will the revenue model for news content on social media platforms change fundamentally?
THE CORE OF THE DISPUTE
In June 2019, the Australian Competition and Consumer Commission came out with a report that looked at “the impact of digital platforms on: consumers, businesses using platforms to advertise to and reach customers, and news media businesses that also use the platforms to disseminate their content”.
While talking about the “Risk of self-preferencing and other potentially anti-competitive conduct”, the report says – “Google and Facebook have both the ability and incentive to favour their own related businesses (self-preferencing) at the expense of other business users of the platform. They also have the ability and incentive to favour a business with which they have an existing relationship (and through which additional revenue may be generated), such as websites that are members of their display or audience network or use their ad tech services.
“Given the substantial market power of each of Google and Facebook, their presence in a significant number of related markets and the opacity of their key algorithms, there is significant potential for self-preferencing by Google and Facebook to substantially lessen competition.
“The extensive amount of data available to Google and Facebook provide these platforms with a competitive advantage and assist with entry into related markets. After entering the market, the role of Google or Facebook as a host or gateway then enables these platforms to advantage their own related businesses.”
In other words, Google and Facebook have a monopoly over the way information is gathered and disseminated and they take undue advantage of that power and use it to fuel their own affiliated businesses to perpetuate that monopoly even further. According to reports, for every $100 spent on online advertising in Australia, Google garners $53, while Facebook takes $28.
THE WAR WITH BIG-TECH
The combined market cap of Apple, Amazon, Facebook, Google and Microsoft is US $6.8 trillion. It makes up nearly a fourth of the S&P 500 Index. With combined revenue of US $900 billion, Big-Tech is equivalent to the 18th largest economy in the world.
The question that everyone is asking is Big-Tech getting too big? Last year, the US Department of Justice filed an antitrust (the American legal framework for competition law) case against Google, alleging that Google has been “abusing its dominance in online search to stifle competition and harm consumers” and it “uses billions of dollars collected from advertisers to payphone manufacturers to ensure Google is the default search engine on browsers.” Cries of “Our economy and democracy are at stake,” were made in a 450-page report by the Democratic-led House Judiciary Committee in America naming Facebook, Amazon, Apple, and Google and comparing the Big Four to “oil barons and railroad tycoons”.
The report says – “These firms have too much power and that power must be reined in and subject to appropriate oversight and enforcement.”
In December 2020, the Federal Trade Commission (FTC) and attorneys general from 46 states launched antitrust proceedings against Big-Tech companies. There were dramatic congressional testimonies by various tech CEOs that only reinforced the perception in lawmakers and the public that these companies have grown too big and need to be broken into smaller ones.
MARKET FORCES AND THE STATE
It cannot be denied that at the heart of liberal democracy lies the free market. However, this does not mean that the state completely abandons its responsibility of maintaining the rule of law in the market and preventing clever businesses from subverting the market to suit their own companies and profit at the expense of others.
The case of Big-Tech is a classic case study of how smart companies, with their upper hand in cutting edge technology, can dominate the market, kill competition and resort to practices that benefit their own spin-off businesses so that they grab all the market share.
English art critic, John Ruskin said: “The man who accepts the laissez-faire doctrine would allow his garden to grow wild so that roses might fight it out with the weeds and the fittest might survive.” It means we do need a gardener to care for our roses; albeit one who is both liberal as well as just.