Digital Updates – May

On May 27, The Wall Street Journal reported that Google was nearing a settlement with French regulators in an antitrust case that claims the tech giant has abused its power in the online advertising industry. Australian regulators are also investigating the ways that Google’s dominance in online advertising is hurting news publishers and consumers alike, noting that the monopoly Google holds in the industry leaves publishers with little room to negotiate the sharing of advertising revenues. There are also ongoing investigations in both the United Kingdom and the European Union into how recent changes to Google’s online advertising platform have strengthened their grip on the industry at the expense of a competitive marketplace. In the United States, Google faces a lawsuit from the owners of the Daily Mail, who allege that Search rankings are based on how much ad revenue the publishers create for Google. Additionally, Texas Attorney General Ken Paxton, along with nine other states’ Attorneys General, filed suit against Google alleging abuses of power by the company in stifling competition in the digital ad market. Read more here.

The News Media Alliance submitted a response to the Judicial Panel of Multidistrict Litigation (JPML) regarding Google’s motion to move the antitrust case filed by the Attorneys General of Texas and 15 other states and territories from Texas to California. The case, filed by 10 states in December, focuses on Google’s dominance in the digital advertising sector, and was joined by other states earlier this year. While the judge in the case previously refused to transfer the case to California, the JPML is yet to make its decision. The Alliance’s brief opposes the change of venue as the Eastern District of Texas is more centrally located, making the location more accessible to potential witnesses, including news publishers. The current venue also has fewer cases on the docket than its Northern California counterpart, allowing for a timelier resolution of the case. The Alliance’s response also objects to the consolidation of the Texas case with any other cases, while supporting the consolidation of the “newspaper cases” in the Southern District of New York, a court with a long track record and expertise in cases involving the multibillion-dollar online ad industry. Read more about the Texas case here and the “newspaper cases” here. Read the Alliance’s submitted comments here.

On May 25, Florida Governor Ron DeSantis signed the country’s first state law regulating online platform moderation practices. The bill makes it illegal for online platforms to suspend or ban state political candidates for more than 14 days or to use post-prioritizing or shadow banning algorithms for content by or about the candidate. The bill also creates transparency and notice requirements regarding content moderation practices and allows users to opt for a chronological news feed without curation. The law bans the online platforms from censoring, de-platforming, or shadow banning qualifying “journalistic enterprises” based on their content and does not apply to websites or platforms owned by theme park or entertainment venue operators. Platforms may be fined up to $250,000 per day for de-platforming candidates for statewide office and the bill provides for a private right of action in certain circumstances. Several commentators have criticized the law and it is expected to face constitutional challenges, in addition to which the law may be preempted by Section 230 of Communications Decency Act. The law will take effect on July 1. Similar bills have been considered in other states, including Texas. Read more here.

Re-introduced in March, the “Journalism Competition and Preservation Act” has gained bicameral, bipartisan support in Congress. Introducing sponsors David Cicilline (D-RI) and Ken Buck (R-CO) in the House, and Amy Klobuchar (D-MN) and John Kennedy (R-LA) in the Senate, have been joined by 23 House and 3 Senate cosponsors for their chambers’ version of the Safe Harbor Bill. In May, 10 new Representatives agreed to co-sponsor the House bill: Vern Buchanan (R-FL), Theodore Deutch (D-FL), Lucy McBath (D-GA), Lloyd Doggett (D-TX), Mike Rogers (R-AL), Steven Palazzo (R-MS), Joe Courtney (D-CT), Dina Titus (D-NV), Joe Neguse (D-CO), and Dusty Johnson (R-SD). You can view the House bill here and the Senate bill here.

From May 10 – 12, the Alliance hosted a series of meetings between local member publishers and their representatives in Congress so they could discuss the “Journalism Competition and Preservation Act” (JCPA) and the impact the legislation would have on small, local publishers. Publishers from a number of local outlets discussed the importance of a safe harbor and how it would help them fight for better business terms with tech giants like Facebook and Google. During the meetings, the publishers shared stories with their Members of Congress about the work they do, and the ways that the JCPA, also known as the Safe Harbor Bill, would help support them so they can continue their vital work. Read more here.

On May 21, the U.S. Copyright Office released a report outlining issues with the current regulation scheme as applied to the digital context. While the report does not call for a complete overhaul of Section 512 of the Digital Millennium Copyright Act, it does suggest Congress address flagged issues because the “original intended balance has been tilted askew.” The technological advancements since the statute’s enactment in 1998 has created gaps in the legislation, and online copyright infringement poses significant issues that need to be addressed. The U.S. Copyright Office calls on Congress to “fine-tune” Section 512 to address the new copyright issues posed by the internet. Read more here. 

On May 19, the Australian Competition & Consumer Commission (ACCC) published a concepts paper seeking comment on four possible solutions to the bargaining imbalance between big tech and news publishers. These suggestions followed the ACCC’s Digital Platforms Inquiry in June 2019, which recommended a code of conduct to address this bargaining power imbalance. The ACCC suggests collective bargaining or a collective boycott of Google and Facebook as a possible solution to the imbalance — both practices that would otherwise be punishable as anti-competitive. Other possible solutions include bilateral negotiations and collective licensing or fee arrangements. The comments on these suggested solutions are due June 5. Read more here.

On May 18, the Supreme Court denied to review Force v. Facebook, a recent case implicating Section 230, from the Second Circuit. In Force v. Facebook, the Second Circuit allows Facebook immunity from a suit for failing to remove a post by Hamas, saying they will grant immunity “unless the defendant directly and materially contributed to what made the content itself unlawful.” This comes at a time when some are suggesting a public health exemption to Section 230, as communities are seeing the disastrous impacts of inaccurate information spread through digital platforms. The Supreme Court has yet to hear a case on the troubling applications of Section 230 to digital platforms. Read more here.

On May 5, International Trade Secretary Liz Truss and United States Trade Representative Robert Lighthizer issued a joint statement that they would begin virtual trade negotiations. As both countries deal with the ramifications of COVID-19, the economic health of the UK and the US are a top priority. The parties concur that a Free Trade Agreement “is a priority for both countries” and both hope to “secure an ambitious agreement that significantly boosts trade and investment.” However, United States negotiating representatives must ensure that Section 230 immunities are not further exported at the request of the platforms in an attempt to enshrine their immunity globally while Congress is revisiting the rule’s existence. The countries have provided adequate resources for the negotiations to be completed at an accelerated pace. Being that the U.S. and UK already trade over $200 billion a year, making each the other’s biggest investor, there is significant motivation to reach an amicable and timely deal. The Alliance will continue to ensure that news publishers interests are heard. Read more here.

As Facebook is investigated by the Department of Justice, the FTC, and over 40 state prosecutors, it now claims it isn’t just competing with other social media sites, it’s competing with newspapers, television, and videogames. As the investigations continue and whispers of breaking up the company increase, Facebook’s lobbyists advocate for an expanded market size, likely in an attempt to make Facebook appear less dominant. But as local newspapers struggle to keep the lights on in the midst of COVID-19 crisis, Facebook’s profit has increased despite sharp ad declines. In 2019, Facebook made over $67 billion from digital ads, and their first-quarter revenue was up 18 percent for this year, making many worries deepen about the pandemic expanding big tech’s already pervasive power. Read more here.