Digital Updates – July

This week, Attorneys General from 36 states and the District of Columbia filed a new antitrust lawsuit against Google alleging that the tech giant abused its power with the company’s Play Store on Android devices. Plaintiffs allege that anticompetitive practices used by Google have allowed them to extort a 30% commission from app developers on all Play Store sales. Google controls over 90% of the android app market, having previously held off attempts by fellow tech giants Amazon and Microsoft to break into the marketplace. The lawsuit claims that Google’s targeting of app stores attempting to compete has left developers with “no reasonable choice” but to distribute their content through the company’s Play Store. This is the fourth antitrust lawsuit brought against Google since October of last year as regulators seek to reign in the dominance of the nation’s largest technology firms. In addition to the multitude of lawsuits, a recent slate of tech focused antitrust bills marked up by the House Judiciary Committee further shows the governments focus on making the tech markets more competitive.

In December of last year, the FTC unveiled massive antitrust lawsuits against Facebook seeking to have the social media company broken up. The suits accused Facebook of illegally crushing competition, namely the acquisitions of Instagram and WhatsApp, on its way to a monopoly. The cases were initially dismissed in late June when a federal judge said the FTC had failed to show that Facebook held a monopoly in the social media market. The FTC has now been given the opportunity of rewriting the lawsuit in hopes of better defining the market in which Facebook dominates. Recently confirmed FTC chair Lina Khan, whose career is defined by her opposition to monopolies, seems perfectly suited to lead this new effort to hold big tech companies in check. Tech companies have filed motions that Khan recuse herself from antitrust probes against them due to her past criticisms of the largest tech firms, while opponents of the tech giants believe they makes her the exact person who should be leading the effort.

Congressional leaders and the White House are continuing their discussions on the next stimulus bill, including an extension of the Paycheck Protection Program (PPP). Both the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act released by the Senate Republicans earlier this week and the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by the House in May include an extension of the PPP. The latter included an Alliance ask to include a waiver of the PPP for news organizations who are currently ineligible because their owner also has other small newspapers or non-news businesses. Senator Chuck Schumer (D-NY), who is negotiating with the Republicans, is supportive, having co-sponsored the Local News and Emergency Information Act of 2020 which would create such a waiver. The Alliance is also working to support Senator Maria Cantwell (D-WA) and who has been a leader on this effort.  The NewsGuild-CWA Union reportedly also approached Leader Mitch McConnell (R-KY) and Senator Schumer on the issue, and other labor unions are expected to follow. A main driver, the unemployment benefits that are ending on July 31, remain unresolved and the Senate just adjourned until Monday without reaching a deal. We’ll continue to advocate for our asks for news publishers and will keep you updated on developments.

On Wednesday, the CEOs of Amazon, Apple, Facebook, and Google all testified before the House Judiciary Committee’s Antitrust Subcommittee on Antitrust as part of the Subcommittee’s investigation into the anticompetitive practices of online platforms. The hearing was the sixth hearing in the bipartisan investigation, originally launched last year by the Chair of the Subcommittee David Cicilline (D-RI) and then-Ranking Member Doug Collins (R-GA). Our safe harbor bill, the Journalism Competition and Preservation Act, was the first focus of these series of hearings in which the News Media Alliance testified.  During the hearing, several representatives questioned the CEOs on issues that the Alliance highlighted in our recent White Paper. Specifically, Representative Pramila Jayapal (D-WA) compared Google’s ad exchange to a stock market but with no regulation, allowing Google to abuse its market power at the expense of journalists. Google CEO Sundar Pichai was adamant that Google is “deeply committed to journalism” and that its business with news publishers remains a “low margin business for us,” but did not address the control over ads without accountability or the increasing ad revenue for Google-owned sites at the expense of websites not owned by Google. More highlights below in the video reel created by our comms team.  The Alliance is following the investigations into the online platforms closely and will continue to advocate for the safe harbor as a critical solution to the problem caused by the platform’s anticompetitive conduct. You can watch highlights of the discussion of journalism during the hearing here. You can watch the full hearing here.

On July 30, French and German news publishers announced that they were working together to form a new joint venture to license news content to online platforms under the EU’s recently adopted Copyright Directive. Article 15 of the Directive created a so-called Publishers’ Right, allowing news publishers to protect their content online against unauthorized use by the online platforms. The French and German publishers are working through VG Media in Germany and l’Alliance de la presse d’information générale in France and expect the new licensing company to be available to all European publishers once established. France became the first country to transpose the Publishers’ Right into national law in July 2019. After Google refused to pay French publishers, the French competition authority issued an interim order in April 2020 requiring Google to negotiate with the publishers for compensation. While Google reportedly (link in French) appealed the order in early July, requesting for more details on “certain elements of the decision,” the head of the competition authority said on July 9 (link in French) that the negotiations were ongoing and that the authority was hoping to see some results in late-July or August.

Following multiple efforts to reform Section 230, including the President’s Executive Order, DOJ study, and other legislation, Senators Brian Schatz (D-HI) and John Thune (R-SD) introduced the bipartisan Platform Accountability and Consumer Transparency (PACT) Act in late June. The PACT Act would require platforms to respond to consumer complaints about content moderation and publish reports to foster transparency. The Senate Subcommittee on Communications, Technology, Innovation, and the Internet held a hearing on July 28 on the bill, where Senator Roger Wicker (R-MS) suggested amending the definition of “otherwise objectionable” content in Section 230 in order to narrowly define big tech’s immunity. Senator Jon Tester (D-MT) brought attention to the liability disparity for paid ads between broadcasters and digital platforms, and Senator Ted Cruz (R-TX) expressed concerns over lack of liability for promoting certain content they happen to agree with. There remains strong bipartisan support to reform Section 230, and multiple bills about Section 230 remain active. The Alliance is following all developments regarding Section 230 closely, including its potential inclusion in trade agreements such as the U.S.-UK agreement that is currently being negotiated between the two countries. You can watch the full hearing here.

On July 27, the Australia Competition & Consumer Commission (ACCC) began a proceeding against Google for allegedly misleading Australian users into giving consent for broad data collection. The ACCC alleges that Google did not obtain users’ “explicit informed consent” to combine personal data linked to a Google account with data about activities on non-Google sites. The ACCC claims Google used this combined information to improve its advertising business, which is its primary source of revenue. Read more here.

On July 2, the bipartisan “EARN IT Act,” which is aimed at eliminating the sexual exploitation of children on the internet by imposing restrictions on big tech’s Section 230 immunity, unanimously passed the Senate Committee on the Judiciary. Committee Chairman Sen. Lindsey Graham (R-SC) said no social media company is doing enough to protect children, and they should have liability like everyone else in America. Before passing, the Committee accepted an amendment by Sen. Patrick Leahy (D-VT) that excludes encryption from being grounds for increased liability. The bill will now be presented on the Senate floor. Read the bill here.

California Attorney General Xavier Becerra’s enforcement of the California Consumer Privacy Act (CCPA) began on July 1, despite numerous requests for it to be postponed. The guiding regulations are not yet official, but the statute itself can be enforced. Meanwhile, Alastair Mactaggart, of Californians for Consumer Privacy, which advocated for the CCPA, is now proposing the California Privacy Rights Act (CPRA), a ballot initiative to expand CCPA. The CPRA would create a new enforcement agency and require more business disclosures, among other measures. Read more here.

On July 1, the United Kingdom’s Competition and Markets Authority (CMA) released its final market study report on online platforms and digital advertising. The study, launched in July 2019, focused on Google and Facebook’s dominance of the digital advertising marketplace. The findings and recommendations in the final report follow closely those identified in the CMA’s interim report published last December. The report’s findings highlight, among other things, the competitive advantage Google and Facebook enjoy due to their extensive access to user data; how the online platforms interpret data protection laws and regulations to benefit them; and concerns arising from vertical integration in the digital ad markets. In order to address the concerns identified in the report, the CMA recommends the establishment of a Digital Markets Unit with powers to develop, oversee, and enforce a code of conduct and to take other necessary actions, including data-related interventions. The report also raises the prospect of separation interventions to address vertical integration concerns. While the CMA refuses to launch a full market investigation into the digital ad markets, the report indicates that it is considering possible enforcement actions. The report also discusses the Digital Markets Taskforce, designed to advise the government on digital competition issues, that CMA will be leading. Read the full report here.

On June 30, Facebook announced that original reporting with transparent authorship would be ranked higher in users’ News Feeds. Facebook hopes that by boosting original sources, it will give more traffic and revenue to trusted news publishers. Facebook will also demote any articles that do not list authors or lack transparency about the editorial staff. Facebook has provided a guide explaining how news publishers are ranked in the News Feed. Facebook hopes these changes will demote unverified sources and promote ethical journalism. Read more here.

On June 30, the New York Times announced its content will no longer appear on Apple News, starting July 6. The Times reports that it could not accomplish its goal of reader engagement and building subscribers while being part of Apple News. The announcement comes as scrutiny of big tech’s control of ad revenue and business models that negatively affect news publishers is growing. Read more here.