Below, we have provided the full transcript of our panel discussion The Future of Innovation in News Production. Read below to see the timely discussion where a panel of experts discussed the pressing issues for the industry and possible paths forward for both platforms and publishers.
Rob PEGORARO:
Hello, and welcome to The Future of Innovation in News Production, brought to you by Competition Policy International and CCIA. Before we get around to fixing all of the business model problems of my industry, the news media, let’s introduce ourselves. My name is Rob Pegoraro. I’m a freelance technology journalist based in Arlington Virginia, just across the Potomac River from Washington DC.
I currently write for Fast Company and USA Today, Forbes, Wirecutter, multiple other publications, and in the past I’ve written from everybody from the Washington Post, my employer of 17 years in another life, to Boing Boing. Which means in that time, almost 30 years, I’ve seen a lot of bad decisions made by the news media.
And now let’s go to our star panelists. Cathy, how about you go first since you got to get up earlier than everybody else?
Cathy GELLIS:
Hi, thanks for having me. I’m Cathy Gellis. I’m a solo cyber lawyer in the San Francisco Bay area, and I came to law via journalism, which then turned into a career in information technology, which then turned into going to law school to wrestle with the law and policy issues connected with free expression online.
PEGORARO:
And Thomas, on the other side of the time zone scale here.
Thomas BIHLMAYER:
Good afternoon from Brussels. My name is Thomas Bihlmayer. I work for Eco, the Association of the Internet Industries. With more than 1,100 member companies Eco is the largest internet industry association in Europe, and I work as a policy advisor in Brussels here with the European institutions on topics like eCommerce, copyright, data protection, and other things.
PEGORARO:
And finally my neighbor, relatively speaking. Over to you Charlotte.
Charlotte SLAIMAN:
Great, thanks Rob, and thanks to Competition Policy International for putting this on. I’m Charlotte Slaiman. I’m the competition policy director at Public Knowledge. Public Knowledge is a nonprofit working in the public interest. We focus on free expression and open internet, and access to communications tools. So we’re really interested in this issue, and think this is so important. My background, I was an antitrust enforcer at the Federal Trade Commission for four years before coming to Public Knowledge, and also worked in the US senate, and our work is focused here in Washington DC. So I’m excited to talk with you today.
PEGORARO:
All right. Developments in yet another time zone, all the way across the Pacific in Australia, where until recently it looked like Facebook was going to put Australians in the news equivalent of a penal colony by not letting them share news links at all on Facebook, and not letting in the rest of the world share Australian news links. This was in response to a proposed compensation scheme for government registered news publishers. Facebook and the Australian regulators have since worked it out. Australian publications will get some prominent place in Facebook News, the tab on the Facebook app on your phone many of you may actually ignore. So let’s start with that. Have we solved everyone’s problems with that solution? Publishers get some sort of premium placement, and Facebook and for that matter Google, which has offered the same thing in its new showcase site, don’t actually have to pay to link to sites, as in pay for sending traffic to them, which is usually a good thing? Anyone who wants can grab that one first.
GELLIS:
I’d go with a no. The fact that a number of large companies have reached a sort of stasis that they can commercially live with does not mean that we’ve actually solved any particular problems for anybody else on the planet, include some of the fundamental issues and tensions that were informing this policy proposal.
PEGORARO:
Charlotte, is this… has the lawkeeper figured anything out here?
SLAIMAN:
I agree with Cathy on this. I don’t think that that solution is serving small, local, independent news, which I think is what is so important for our democracy. That is the type of news that people are really relying on as a sort of antidote to so much of the misinformation that is so attractive on the internet these days. And I think that those are the type of news organizations that are being left out here, so I’m very concerned about the power of the dominant digital platforms, but also I think media consolidation is a serious concern that we’ve been working on for a long time, and this solution doesn’t seem to address either of those.
PEGORARO:
And Thomas, your perspective here should be especially enlightening since Australia is going where the EU has been in a while. There have been proposals for snippet taxes, link taxes, or as the EU would put it, compensation for neighboring rights for news publishers for a long time, and the EU just codified them in 2019’s directive on copyright in the digital single market. What’s all that done for news publishers in the EU so far?
BIHLMAYER:
As you said, in the European Union, we’ve been discussing these kinds of issues for now nearly a decade, and we have not found the silver bullet. We haven’t found a solution yet, because otherwise I think as with the GDPR, we could have a blueprint for everyone to just copy and paste. But unfortunately, we’ve had this ancillary copyright for press publishers, which we now have on a European basis. We had that with the Spanish version, and with the German version. In Germany, we introduced it in 2013. But without having a real effect so to say, because nothing changed. And as you also pointed out, I mean, it is a win/win situation. There’s a court decision of the Berlin court on this, where it said well, media publishers profit from being linked to on search engines, and search engines profit from having the news media on their services.
So we’re on this discussion, and as Charlotte pointed out, the question is are we looking at the right points there? Are we also including all the necessary press publishers there, or is this just a battle of the biggest tech platforms against the biggest publishing houses here, and we are not actually talking about what we had been discussing a lot during the development of the copyright directive you mentioned which has been put in place in 2019, where we’ve been talking about quality media, where we’ve been talking about fake news and countering fake news. But what we see here is more about… the more news you share, the more money you should get, and is this really where we are heading to?
So we had these discussions. We have not found a solution yet, and we are having this discussion now again with the copyright directive which has to be implemented into all 27 member states in the European Union until this summer. So member states are still trying to do that, and finding their own interpretation of the copyright directive. As you are probably aware, the European Union is a bit complicated when it comes to the structure and to making law. So we have the directive, but still 27 member states have to implement this directive into their national law. And we will have to see if we have 27 different solutions, and what we actually would need would be a global approach. So we don’t have an Australian solution and then everyone goes like, “Yeah, that sounds like an idea, we should do something similar.” But we should look at how can big companies deal with that, and have a solution that suits maybe not everyone, because that sounds impossible, but at least for a big group of press publishers, and especially for the small ones.
PEGORARO:
So have any EU countries at least decided what publishers will be eligible, or has the conversation not even gotten that far, the policy making not gotten that far yet?
BIHLMAYER:
No. We had first steps, but France made it into the news I would say with the first contracts being made there by Google and press publishers, but the laws are still not finalized yet.
PEGORARO:
Yeah, I know, I remember was talking to a friend of mine, I’ll commend the work of Chris O’Brien, an American expat who lives in Toulouse, writes a very good blog about Toulouse. And he said, “I don’t expect to get anything out of this,” which is too bad because he does great work.
Let’s talk about the US. All these proposals are taking place in different legal regimes. Is it even possible to craft a policy in the US that would compel search sites to pay for showing even tiny snippets of the story? Which in most cases in practice is the headline and the lead image, maybe a sentence or so. Setting aside whether or not that’s a good idea, is it even legal under the constitution at all? Here I welcome the input of the actual lawyers on this panel.
GELLIS:
I don’t tend to think so. I think there’s a number of obstacles. You have first amendment rights of the platforms themselves to have editorial discretion over what appears on their site and how. And then you also have the idea that you couldn’t even have a snippet. That’s starting to look like you couldn’t have a fair use of a copyrighted work, and fair use is also informed by the first amendment. So from both angles, when you look at it, this doesn’t seem to survive constitutional muster. Even if we assumed it was good policy, and that is I think a giant if.
PEGORARO:
Charlotte?
SLAIMAN:
Yes, I’m much more interested in the question of whether we think this is a good idea, but yes. We had two recent Supreme Court cases that I think are interesting here, Oracle V. Google, which was a win for fair use, and the Prometheus case, which had a lot that we disagreed with, but I think reaffirmed that important goals of localism and diversity in media, and that media ownership actually should be even less consolidated than just the competition concerns might indicate, because we have those other important priorities. So I’m interested to talk more about the actual merits of the idea.
PEGORARO:
Yeah. I guess the other thing I want to ask about is who even decides? One part of the Australian policy that squicked me out a little bit was the notion that the government registers news publishers, which seems like quite a perk to dangle. And in the US, there isn’t really a concept of that. In New York, the police department can give you a parking pass, you can get credentialed by various government agencies, but there’s no government list of, “You’re a journalist, you have these privileges.”
GELLIS:
And there’s a first amendment consideration for why we would not do that, because the idea is that everybody can have their press and everybody can publish what they feel the need to publish, and the more formalized you make it the less that is true. So I think, and I put up that big if for is this good policy, I think that… and Thomas said something like we haven’t found the solution. I think we haven’t found the problem. We’re not even agreeing what is it that actually needs to be fixed here, because it seems like the thing that needs to be fixed is less consolidation, more independent voices, and an ability for those voices to be quality where the quality ones will rise to the top.
And we may not be achieving that under the current status quo very well, but it doesn’t follow that we’ve figured out why well enough that any of these regulatory solutions don’t actually fix what’s wrong. They seem to just sort of be making what’s wrong even wronger. They’re encouraging the consolidation, they’re encouraging the bigness, and they’re squelching the smaller independents in this, in journalism, which might be doing a better job, particularly for all news’s local, and we’re losing a lot of that access to more local what’s going on in the world, which then can percolate up and inform people elsewhere on the planet.
PEGORARO:
Let’s talk about that for a little bit, because that is a good angle. One I’ve been following for a while, certainly Public Knowledge’s efforts in particular, Prometheus, that was one of the cases about a radio ownership, right? Did that figure into low power FM, am I remembering my history right?
SLAIMAN:
I think that’s right.
PEGORARO:
Okay. So what can we do to encourage more diversity in media ownership, and not have it wind up in the hands of the same five giant corporations?
SLAIMAN:
Yeah, well there’s a lot of important policies that we’re working on advocating for at the FCC. There’s an important role for the FCC here, and that’s where I think we want to focus for those media ownership issues. We’re also working on how to address the role that the most powerful digital platforms have played in the difficulties that the news industry is facing today. I think there’s a lot of reasons that have led to the closing of so many news organizations and small local news organizations, but that’s definitely part of it. And I think that’s part of what’s animating these solutions. But what we really need to do is address the power of the largest digital platforms directly, and address the problem of the crisis in news directly.
PEGORARO:
How do we do that?
SLAIMAN:
So I’d love to talk… oh, go ahead. Yes, great. That’s what I was hoping for Rob, thank you. So let me start with the news, the crisis in news since that’s what we’re focused on here today. There are a variety of really strong proposals out there. I’ll start with our own at Public Knowledge. We have been thinking hard about an idea of an internet super fund. So we’re facing this problem of misinformation on the internet that is going viral, and being amplified.
So the idea is that the platforms that are in part responsible for this would need to pay into this super fund. And the super fund would be used to clean up the misinformation, doing information analytics and fact checking, and that this could be an alternative revenue stream for small local news organizations that have a lot of skills overlap with the work that needs to be done there. But there are also proposals for a tax on digital platforms that would support local news, there are proposals for tax incentives to help support local news, and reform to the Corporation for Public Broadcasting that would allow that money to also be going to digital news. So there are a variety of tools that kind of directly address this problem, and I think that’s where we should focus our energy.
PEGORARO:
Thomas, are there any EU initiatives that the US might want to be looking at in terms of making the climate easier for news or providing alternate revenue streams, or some other form of support besides programmatic display ads? And I don’t think anyone in the industry is really too happy with them. Certainly not the readers, and not a whole lot of publishers.
BIHLMAYER:
To be honest, I don’t think so. But that also brings me back to that issue of the EU being 27 member states. I mean, those kinds of issues, when it comes to copyright this is national competence in general. So we have this issue of having all those licensing, which is done on a national basis. So if you look across the border, you’re already having issues with the rights you have. However, this is less a print media issue than it is for audio and video content.
But I mean, also as Cathy pointed it out, the question is probably really not do we have the solution, but what is the problem? If we’re looking at the media, we’re having a situation there where we have two big groups. We have the tech industry that came up with something new, which is search engines, platforms, everything that is based on the internet, which is quick in its development and leaping forward in very short timeframes. Then we have on the other side a very classical industry, which is the press publishers, which is the news industry that has been there for years, hundreds of years. And since then, to be honest, has not developed too much. They were forced with the change of internet to do something about it, they put their offline media online and thought, “Oh, that’s a good idea.” But everyone did that, and so with the global internet, then you were just one player in a very big pool. And from there on, there was not much of a development to be honest.
And so in the middle of it, you have the consumer or the reader. And they moved forward with the development of technology, they moved forward. They read the news online, but moved forward to reading news they reach over search engines, and nowadays everyone has his/her mobile phone and has apps installed, and consumes differently than the four of us I assume in their favorite social media app. This could be TikTok, this could be Facebook, this could be YouTube or you name it, whichever you prefer. So the question is maybe we need to adapt to that change looking at the press publishers.
So maybe we should really just take a step back or two and look at the issue, and see where are we and where do we want to go. And maybe we cannot force what we have so far, or had so far, into the new reality, which is what I have the feeling we’re trying to do here by saying, “Well the press publishers, they are out there, they need our help, and they need to be here.” I agree with that, because I think still without having independent media outlets, the world would be different and not to the better. But how do we do that? And no, we have not found a solution either in Europe. As I said, maybe we should turn around and look at the question of, what is the issue exactly.
PEGORARO:
So here I want to ask Cathy, I know from a lot of your writing you’re a little more skeptical of giving more tools to the government to make private companies do one thing or another. Certainly the last four years of hilarity in DC have given many of us reasons to be wary of that approach. What sort of policy steps would you have the US or individual states do to make life easier for the media?
GELLIS:
So I was thinking with what Charlotte and Thomas were saying, two thoughts come to mind. One I want to put a little pin in. When we talk about the tech platforms, locally, I’m not a fan of Facebook. As a user, as I publish on Techdirt and my posts never get seen by my friends because of their algorithm, I’m not a fan of the way they design their system. I think they’re certainly deserving of a lot of criticism.
Whether I think that prompts a regulatory solution, that is a whole other kettle of fish. I don’t tend to think so, because every time we try to regulate Facebook there’s no way to regulate Facebook that won’t have some collateral effects, and probably damaging effects, over every other possible tech platform that exists now or ever could exist in the future.
And I also don’t think it’s really the problem that we’re looking at. Something you pointed out in your introduction is, being in the news business for 30 years, you’ve seen a lot of mistakes by the news business, and some of it has been that they didn’t recognize the technological change, they tried to do everything the way they had been doing it, which had been based on scarcity models which the internet does away with. This should be boom time for news. This gave access to publishing cheaply, easily. This should be, the way we do ads should be a miracle, because you don’t have to, like if you’re going to form an outlet, you don’t even have to hire your staff to handle your advertising relationships and deal with creatives and deal with accounts and have the headcount, because all you basically need to do is do your writing, and then you can use a plugin of some other agency that’s going to broker all the monetization ability. This should be working ideally, and the technology provides a variety of fantastic tools for somebody who wants to publish to be able to actually be seen, distributed, and make money from it.
So why is that not working? And some of it is I think early recalcitrance, failure to adopt. We do have consolidation, so sometimes you get outlets that are actually sustainable, but somebody buys them. And then they buy them and they shutter them. I mean, that’s not Facebook. That’s not even the publication’s fault. That’s, maybe we capitalize things in America weirdly, where we incentivize that sort of corporate behavior.
So this should be a fantastic period for journalism in America and probably the world, and the fact that it’s not, we need to figure out why. But this external scapegoating of, well let’s blame the toolmakers who are providing these other mechanisms I don’t think is the way to go. I think we need a little bit more self reflection to figure out, for the entrenched incumbents, what decisions did they make, why did they go wrong, and let’s figure out if maybe they can stop making them instead of externalizing the poor choices now on everything else, because now we want to hobble the tools so no one else gets to use them either.
PEGORARO:
That’s a point I do try to make myself. Facebook and Google did not force every newspaper in America to greet every new reader with the prompt to get notifications in their browser, the prompt to sign up for their newsletter, that then maybe appears when they’re a third of the way through. They did not force every news publisher to have those horrible tabbouleh and outbringing ads at the end. Your best reader, the one who’s read to the end, gets the shlockiest ads of them all.
And on that, I want to talk about the ad industry, because that’s one where local publishers I’ve talked to, like there’s a really good side called ARLnow that covers Arlington where I live in great detail. And the guy who publishes it, Scott Brodbeck, is not a fan of the display ads business. He thinks Google is just not motivated to do a lot to fix it, because they make so much money from search ads on a macro level, and regulators in United Kingdom and many state attorney journals in the US have found all sorts of problems with how much money just disappears. No one actually knows where it went to, except it didn’t go to the publishers. It’s based, a lot of it, on behavioral tracking across the web that people don’t like, and even Google says is going to stop.
Are all these changes afoot in the basic tracking across the web, is that going to make ads any better? Are there steps publishers or governments could take to make this whole ad tech stack that everyone needs to stay in business, but doesn’t seem happy with, to make that work better?
GELLIS:
One of the failures, with what I was saying of why isn’t this working, one of the reasons it’s not working is we’ve sort of got Google ads and stopped there. And there were some interesting innovations that came out about it. I mean, the smallness, the bite sized way of having ads, because you make advertising more accessible to more people, and then it’s easier for tiny publications to incorporate them, that’s great. But they kind of innovated themselves into a couple of undesirable, probably dead ends, the way that it has the privacy impacts and things like that.
There’s some really good upsides with systems like that, and particular downsides about these systems. And what we really need is more space for other ad providers to have some competition in this space, so that somebody could build a better mousetrap and it would put some pressure on Google to make theirs better, but then we wouldn’t all have to use Google. But the one thing that was so innovative was, oh, small bite sized ads? That’s a great idea. And they had the head start to be able to issue it. So now they’ve got more entrenched market power, et cetera et cetera, but they innovated and so they got there first. And let’s get somebody else there, and let’s figure out what we might need to make sure that somebody else can get there, because obviously that takes some capital to innovate a whole new system. But I think if we could get more competition in that space, so we can get that type of advertising more ideal instead of more negative, we might have some answers here.
SLAIMAN:
Yeah, so I think part of that is right Cathy. I think that having more competition in this space would make a big difference, but I want to take issue with some of what you said before, because I do think that the government needs to act in order for that to happen. We have five now antitrust cases, three against Google and two against Facebook, and that is huge progress, and I am hopeful for those antitrust cases making a difference here.
But I actually really do think that we need new laws to address these problems as well. I think antitrust is not going to be enough. And I take seriously this concern that we hear all the time, that if you try to regulate Facebook that it’s actually going to entrench their monopoly, but I think we cannot let that be the end of the conversation. We should take that concern seriously, and think about regulations that will promote competition. So that’s what we’ve been working.
I think for Facebook, a really important tool is going to be interoperability requirements, and we can make sure that those interoperability requirements are only applying to a dominant firm, and thinking about ways to… sort of where to draw that line to make sure that it’s only applying to dominant firms. But I think that is a tool that can actually really promote innovation and promote new competitors to be able to come up and actually challenge Facebook. It’s really targeted at promoting competitors against these dominant digital platforms, rather than having an unintended effect of protecting the monopoly. Oh, go ahead.
PEGORARO:
Is that interoperability in the sense of, you can take your data, the stuff you put into Facebook, download it? Because they already give you that. Or do you also mean in the sense of, take your social graph. So if you wanted to replicate your Facebook feed and your environment, minus the annoying relatives who won’t shut up about politics. Is that what you mean?
SLAIMAN:
Right. So the first example you’ve given is what I would call just data portability, and Facebook does currently offer some forms of data portability for some types of your Facebook data. It’s not super user friendly, and I think it is not the data that is really needed to promote competition. But in addition to that limited data portability that they offer, they really need to be required to offer a deeper interoperability. The social graph is a great example, Rob. So that’s like who you’re friends with, the network connections that you’ve made on Facebook. That’s a really important piece for competition. And there’s some other particular types of interoperability that we think are really important. Cross posting is another example.
But figuring out which exact features need to be interoperable to best promote competition is going to be a very detailed decision that needs to be updated over time, because we know this is an innovative industry, and we really want to promote that innovation. So we’re actually advocating for a new regulator that would be focused on dominant digital platforms, and build that technical expertise, and make those updates over time.
PEGORARO:
Cathy, I know that our mutual friend Mike Masnick, your colleague at Techdirt, has been a big proponent of interoperability and has actually gotten Twitter CEO Jack Dorsey to pick up on some of his ideas of having more decentralization, letting people use their own filters to see what shows up in their Twitter feed. Is that something that you think will sort of get some traction outside of Twitter?
GELLIS:
I hope so. I mean, it’s not new. I mean, this was sort of the internet we used to have. If you used the internet in the 90s, I think it’s a little easier to understand the concept of interoperability, because it was all interoperable. But eventually we sort of had a couple of companies that kind of came in, and the one thing we also remember from the 90s is the internet was a little hard to use. You kind of needed a certain level of geekiness to sort of figure out this software, that software. You might still be using a command prompt, and it was a little less accessible.
So a bunch of companies kind of came in and innovated some front ends to make the services easier and more easy to use. Great, okay. But the problem is, and for a variety of reasons that actually may have very little to do with the companies themselves, other people who came on sort of learned the internet as, “Well, I learned the Google. I learned the Facebook.” You learned it from the corporate provided service instead of learning it from what the underlying ability was.
And to a certain extent, we’re kind of stuck like that a little bit. I miss Homebrew. I miss booting up your own server, putting your computer together, putting your operating system on your web server, and running all your services yourself. I think the best thing about the internet is that it can enable that. The problem is, is it now requires even a greater technical ability to be able to do that successfully, largely for the cybersecurity reasons that if you don’t do this carefully, you will get owned and it will not be good, and it will be a problem. So you sort of now need more corporate infrastructure to make the investment to provide the services. That’s unfortunate, and I think it’s something we have to keep in mind.
But the general idea of interoperability is, go back to what is the core service? What is the core protocol? What is the core thing we’re trying to have done? And you’re just passing data back and forth from machine to machine, and you don’t need to necessarily squeeze it through the corporate service straw to figure out what is being used. And if we go back to those first principles I think that starts to kind of provide a map for how we might want to go.
But I disagree a little bit with Charlotte. And I love her organization, work with them all the time, and we agree on a whole bunch of things. But I’m less thinking that we need to require interoperability. I’d rather at least start with removing the barriers that are preventing it. I mean, we’re now two days into Google versus Oracle resolution, and actually now that kind of gives us a chance to rethink things, because now that the APIs can’t be locked down in a way, I wonder, people are at their desks now like, “Okay, what can we do with this ability?” Because you might get that interoperability when other people who want to do it are not terrified about developing their service because of all the things that are going to prevent them from actually achieving it.
So we may have now lowered a significant barrier, and there may be some other barriers we can get rid of as well. Let’s start there, and then see what we need to go back and tune.
PEGORARO:
For listeners who may not have followed the news, Oracle/Google is the case where Oracle was trying to get courts to hand it a new intellectual property monopoly that had never existed before, saying no one else could reimplement its API, the programming framework that lets you have one program request a task from another one. And the courts said no, that’s fair use, no you can’t do that, which ended a long running case. This was like 10 years or so. It is a big deal for interoperability and for… I think we can all agree, we’re not going to really solve this problem by creating new kinds of intellectual property and new things that lawyers can use to bring cases to trial and tie up the courts for a very long time. Back to you, Charlotte. Did I summarize it right?
SLAIMAN:
Yes, absolutely. And I love the way that you presented it, about they wanted to create a new property right, because that’s how I have seen it. But both sides may throw arguments, right? No, but Cathy, I think it’s not a coincidence that the interoperability options that come to mind are ones that require a lot of work on the part of the user. I think those are the ones that have been allowed to exist by dominant platforms, because they’re not a real competitive threat. I think once one of these companies starts to show promise, the interoperability is often cut off. And that’s why I think these options for adversarial interoperability are important and should be protected, but we should not rely on them to really provide competition that could get those average users. But I think if there is a legal right to interoperability, that then we’ll see a lot more investment, a lot more entrepreneurship coming in to make this really user friendly. Because I agree with you, if it’s just us nerds, it’s not going to be a very effective competitive threat.
PEGORARO:
Thomas, is the EU doing anything to try and promote competition among social networks? So much of what I read seems to be more in terms of, how can we make Facebook and Google pay? Which to be fair is also the tenor of a lot of discussion in DC these days. Are there any pro competition, pro interoperability initiatives brewing we should know about?
BIHLMAYER:
Thanks for the question Rob, and if I may just first refer to the interoperability point that has been brought up by Charlotte and Cathy. I just would put or shed some light on the question, on the issue of A, from an EU perspective with the General Data Protection Regulation, there is the question of, do the users know what happens with their data when they get shared across platforms? And they would have to agree to that. So if you are on Facebook connected to me, Rob, for example, and we want to connect with Charlotte who is on another platform, then the two of us need to agree that our data leaves the platform to the other platform, but also our friends need to agree that the fact that they are connected to us and their information leaves the platform to another platform. So this puts a completely different complexity into that issue – seeing this with an EU perspective, certainly. It might be easier in the rest of the world.
And also regarding interoperability, I think we’re having these discussions now in the EU. Not now, but in general also, but with the focus now, and I’ll come to that in a second. The interoperability question is also the question of how much can you really be interoperable without losing your liberty of developing your product further, specifying it, having features that are unique to your platform. Because if we look, maybe the easiest example, the most obvious example is the text message. Where did the text message start, and where are we now with our messaging services? It started with just letters, and we’re now sharing audio segments, we’re sharing videos, we’re sharing pictures, and not to forget all those amazing emoticons that are out there, or GIFs, or stickers, or what all those things are I never use.
So those are also questions. Do we really want to sacrifice this just to be interoperable? Or as Charlotte I think indicated, where are the points where we really can reach interoperability? So we need to look at how much can we make interoperable, and not just say we need to have everything interoperable, because that’s the only thing that can help us with competition.
And back to your question on what is the EU doing, I’ve mentioned, I think I mentioned the Digital Services Act in the beginning, and we also have the Digital Market Act as the two main proposals at the moment on the table that the EU published at the end of last year, which are looking at amending the Digital Services Act, for example. The eCommerce directives, which is kind of our section 230 in the US, and all the liabilities regarding hosting and internet intermediaries. And on the other hand, we have the Digital Market Act, which looks at it from a competition angle. So however the DMA, the Digital Market Act, is focused only on a dozen companies, which have more than 45 million users in the European Union, which is about 10% of the population in the EU. And it introduces, or it should introduce, the discussion just started, so called blacklist and a gray list of things that those then called, the proposal called it gatekeepers should do or should not do.
And this as well as the DSA comes with a lot of transparency obligations when it comes to those gatekeepers or platforms as they are called in the DSA, the Digital Services Act. Transparency to the user when it comes to advertising, so who pays for advertising and why is this advertisement shown to me as a user for example, but also transparency regarding the companies that pay for the ads. So they get information on who is this shown to, why am I paying this price, and all the information that ad companies make out of those advertisements. So the background information, with which you can then continue doing something else like selling your products differently, adapting your products, et cetera. So that is one thing that is at the moment in discussion in the European Union, and will be discussed for the next, I would assume at least two years. And we’ll see where we end up soon.
PEGORARO:
Thank you for that. Having talked about the difference between data portability and interoperability before, I do have to give the GDPR credit for making some American tech companies finally add data portability. Facebook, sorry, Instagram, and Tumblr didn’t have export features until the GDPR compelled them to do it, so that alone is a nice upgrade for users. Your discussion about requirements for transparency and disclosure and accuracy also seem like the sort of things that existing laws, again, fraudulent commerce might cover. And Charlotte, I know you cheered the FTC moving to develop new regulations based on its existing authority in terms of antitrust regulation and whatnot. Are there ways in which we have the tools already on the shelf in the form of one law or regulation or another, and they’re just not getting used effectively, but they could be? Are there any particular examples we all want to discuss here?
SLAIMAN:
So I do want to be clear when we’re talking about what we want the FTC to do now. I’m not letting congress off the hook. There’s a very important role for congress here, and we really need new laws in order to jumpstart competition against the dominant digital platforms. But while we are waiting, I do want the FTC to use all the tools that they have. I do want the FTC to do their best to act. Of course, that means antitrust enforcement. That’s going to be a huge part of this.
But we did see some great news recently. Acting chairwoman Rebecca Slaughter at the FTC is starting up a new rulemaking group to do both the regular consumer protection rulemaking that the Federal Trade Commission has been doing for so long that’s under Magnuson–Moss, but also they have some administrative procedure act rulemaking authority on the consumer protection side.
But what I think is really interesting is the possibility for competition rulemaking, and that’s something that she said that this new group would also be interested in working on. Which is great, and I think has great potential. It is an area, a tool that the FTC hasn’t used in a long time. So I think we should be prepared that there may be court challenges when they try to do this competition rulemaking. But I don’t think that should deter us. I think we should go ahead and do it, but select those rules carefully to be ones that we think can really withstand that legal scrutiny. So I’m hoping that we can try to get some of the priorities that I’m working on in congress to give them a try through this FTC rulemaking tool.
But advocates have also been pushing for a rule against noncompete employment contracts, which are a really anti-competitive and widespread problem that we’re seeing, so that’s another great category for this competition rulemaking. So it’ll be really interesting to see how that goes, but I think it’s something that the FTC really needs to put some energy behind and see if we can get it done.
PEGORARO:
I do know that California is one state that has banned noncompete clauses, so I have to turn it over to our expert in the Bay area. Are there any laws that we’re just not making enough use of right now to address some of these concerns we have about competition and market power and market concentration?
GELLIS:
Well I often say, and I’m sorry Thomas, I often say this to my European colleagues. Sometimes I’ve heard complaints particularly from my European colleagues, but even in other parts of the country, they’re very grumpy that there’s all these big tech companies based in California. But then there’s also reasons why the big tech companies are based in California, and that it was a regulatory environment that allowed them to take root and grow where you wouldn’t necessarily see that in other parts of the country or other parts of the world. California’s, for many, many years, I don’t know how far back it goes but I think we’re talking decades, has considered noncompete agreements to violate public policy, and they’ve not been enforceable.
And there’s sociologist who have written about Silicon Valley’s development vis-a-vis other areas of the country with innovation like the Route 128 Corridor in Massachusetts. Annalise Excinian was a writer I was reading in college, which was also a few decades ago, and talking about how Silicon Valley had this energy of smallness and fluidity, where different people would go from one company to another, and because the companies tended to be small and then sort of existed in an ecosystem with some of the bigger ones, California ended up growing, outpacing the growth that the 128 Corridor was, which was much more dependent on depth as the single mothership that was spawning all the innovation.
So to Rob’s question, yeah. Yes on the noncompetes, and yes at look at what else is going on in the regulatory train. In the United States, we have different capitalization rules for companies, so it’s much easier for a company to start up in the United States than in Europe. We have a first amendment. California’s got a robust anti-SLAPP and has had it for a number of years. We also in the United States have Section 230. There are certain reasons why the companies are able to exist in innovation, both in terms of what we got of the big ones, but also the fact that we have a constellation of the small ones as well. What people tend to be grumpy at of like, “How dare you have these big companies that are affecting my life,” well do you want them too? Look at what allowed them to exist, and maybe start to replicate that.
And I think some of the answer from a regulatory standpoint is not necessarily regulation that is thou shalt not, thou shalt, or mandates of what a company needs to do. Thou shalt have the interoperability. Maybe the thing to do is what I was saying earlier, get rid of the barriers and look for the fluidity so that people’s innovations, innovative spirit can take root and actually produce something without fearing that they’re going to be chilled.
PEGORARO:
We’ve got about 10 minutes left, so now I want to address what news publishers, what the news industry should be doing. And I wanted to start with the issue of owners. Toxic owners have come up before in this conversation. Right now they’re in the news, because Tribune Publishing Company, a large chain of newspapers is up for sale. Until recently, the leading suitor was Alden Global Capital, which is a hedge fund with a notorious and well documented record of strip mining newspapers and leaving news deserts in their path. So one of my half joking policy proposals on this on my notes was give NASA enough money to shoot Alden Global Capital into the sun. Probably not actually possibly given the limits of rocket engineering and the laws of physics, but there is a long and unfortunate history of news organizations getting sold to people who either have this delusion that they’re going to return to the profit margins of the 1990s, or really just seem to be looking to make a quick buck. Is there any way we can encourage a shift towards ownership that is not so keen on getting every last dime out of the newspaper or the news site over the next two years?
GELLIS:
There’s a joke about Elon Musk in here somewhere. I’m not quite sure where. But I wanted to circle back a bit to the antitrust bit, because I’m having a hard time cheering the five antitrust lawsuits. It’s not that I think that the vocabulary for antitrust doesn’t belong here, but I think it’s a very delicate scalpel to figure out how to do. And put me and Charlotte in a room and we’ll probably-
PEGORARO:
These are the ones against Facebook and Google, right?
GELLIS:
Those are the big ones that I know about. I have not heard one that I feel good about. What I end up hearing about is ones where the problem is that antitrust has become this gigantic buzzword, and it’s the cool thing for if you hate big tech and you’re just really mad at big tech, you just throw an antitrust argument at it. And I don’t think that the lawsuits themselves are necessarily using the appropriate scalpel, making the appropriate policy questions, and no good is likely to come about it.
What the problem is that this is I think the vocabulary we need to use, I think we really need to understand what to use. But I also want to add in terms of this question, and something I said earlier, why isn’t corporate law more globally part of this conversation? Because if we’re talking about strip mining these journalistic assets, and we’re like, “Well maybe that’s not good for society if the companies do it,” there’s no bar to them doing it. There’s no effective bar to them doing it, and in fact there’s probably incentives for them to try. So in a whole bunch of ways in terms of tech policy, I think we’ve just had this gigantic blind spot of a whole area of law where we don’t just permit what ends up being destructive behavior. We may incentivize what ends up being destructive behavior, and I don’t see any real conversation trying to take stock of how we might be doing this. And I think especially when we get down to this problem, we really need to start.
PEGORARO:
Charlotte, you were talking about proposals Public Knowledge has been working on to break down market concentration. I agree with Cathy that, yeah, the way the tax code treats different kinds of income, it is almost tax season here. At least we have another month to do it thanks to the pandemic. It reminds me of how much worse my own income gets treated than if I were in a private equity fund using that carried interest loophole if I have it right. So what else can we do to have fewer toxic owners and more owners of news organizations that are committed for the long haul? I’m sure the private equity guys can find something else to do if they’re not interested in news any longer.
SLAIMAN:
Sorry about that. So first I do want to push back on Cathy’s point about antitrust being I guess an inappropriate tool to address the problems of big tech. I think it’s not the only tool that we need to address the problems of big tech, and certainly not the only tool that we need to address media consolidation and the crisis in journalism, but I do think it’s an important tool, and I think it’s huge progress that we have these antitrust cases. And I think that they are well reasoned. Really looking forward to seeing how they turn out. They will take a long time, that’s something that we always know about antitrust cases, and that’s part of why we’re focused on these additional pro-competition laws and rules. I think sometimes when people say antitrust, they are also incorporating additional pro-competition laws and rules that may not just be the sort of, as an antitrust lawyer, when I hear antitrust I think the Sherman Act and the Clayton Act, and there’s nothing else. But I think most people use that term in a more broad way, so those other competition tools I think are going to be really important and effective in addressing the power of the platforms.
But as we have discussed here on this panel today, the power of the platforms is not the only reason that we’re facing this crisis in news. So I do think that we want to support multiple options for how news organizations can be sustainable. So some of them may be profit seeking corporations, some of them may not. I think the nonprofit model for journalism is a really strong one that needs to be better supported. Some of the proposals that we’re seeing in congress that are supposed to help the news are just focused on profit seeking corporations, and they’re not going to help these nonprofit news organizations that I think are a really important source of independent, high quality local news. I think that we need to target our solutions at local news. As I said, I think that’s one of the most important categories of news for our democracy.
We have been talking about the news in this discussion today largely as any other industry, and I think we really should ground ourselves in how important the news is to our democracy. We are not just consumers of news, we are citizens. We are members of this democratic community, and it’s not just about how we use the applications on our phone to access news, but it’s really about our collective ability to make democratic decisions. And so it’s just so much more important than an industry that we think about from a corporate or profit seeking perspective.
PEGORARO:
Thomas, has the EU had any better luck at avoiding this distressing American trend of toxic ownership of news, newspapers, news publishers, news organizations?
BIHLMAYER:
I don’t think so. I think this is a global trend that does not stop at the EU’s borders, and it’s also I think a development that just also shows that there’s… let me say, maybe that needs to happen, something needs to happen. A change needs to happen to how this area works. And I mean, Cathy pointed it out, it should be kind of the time right now is the perfect time for spreading your news, for being a journalist, for maybe even being a publisher. Using the tools that are out there, given by the so called big tech, and just reaching the audience you want to reach. I mean, it’s easier than it was ever before to, even if you have a very specific, very narrow specialty or special field of interest, to reach an audience making it worth writing for them.
But I think with this issue or with this question, we open up a completely other topic where we could talk about for another hour when we talk about how to distinguish good news, quality news from fake news, and good bloggers from bad bloggers, and there we would then shift into the question of education and other things. So I better stop there I think, before we run over time.
PEGORARO:
True, that is a whole other conversation. Last round then. I want to end this on a hopeful note, so you all, if you want to pick one trend about the news business that does give you cause for optimism.
GELLIS:
Everybody can speak.
PEGORARO:
Please don’t all be silent, you’ll make me sad.
GELLIS:
No, I mean literally beyond this Zoom, everybody can speak. You can say things, and you can say things online, and other people can find you. We can tune that and try to make it easier, but that essentially liberty, certainly in the United States, continues to exist.
SLAIMAN:
I think that’s such a great point Cathy, I love that. Everyone can speak. I’ll just add, I think there really is an interest in identifying as you said Rob, the real news from the fake. There is an interest in fact checking, and I think that is something that we can lean into, that people, though they are often drawn or pushed towards this misinformation, that they’re interested in learning the truth, and we should support that.
PEGORARO:
All right, Thomas, you get the last word.
BIHLMAYER:
That’s a difficult one after those two very, very good comments. But I think, yeah, it’s not the end of all hope so to say. I think what we have there, the opportunities, the chances are big. And we should just not lose optimism. And I think it’s not just hit on the big techs, and kind of push all the guilt there. I think we need to work on it from all sides together, and then we will reach I think a good solution for everyone, including consumers or readers, including tech companies in a very wide range, but also including the news media as pointed out multiple times before. I mean, democracy relies on independent news, and reliable news, and that’s what we’re here for, I think to keep this alive.
PEGORARO:
Amen to that. Well we may not have solved all the problems of the news business, but I hope we made a little progress, and I hope we can resume this discussion, maybe even in person. Either in San Francisco, Washington DC, or Brussels. Thank you everybody for your contributions, and thank you all for tuning in.
