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Big Tech Faces Calls For Revenue Sharing

June 18, 2021 by Daniel Mollenkamp
Big Tech Faces Calls For Revenue Sharing

In the latest call for regulators to limit the power of big tech companies, a group of Canadian news media publications has asked Prime Minister Justin Trudeau to force revenue sharing negotiations among tech behemoths Google and Facebook and Canadian news outlets. 

The digital platforms have presented novel problems for regulators on how to prevent the silencing of free speech and the dissemination of misinformation, as well as how to ensure competitive markets and to kill off predatory practices, which may be building bipartisan opposition to the practices of these tech companies in the U.S. and others.

The Canadian letter was not the only recent update. Last week, American lawmakers released an ambitious anti-monopoly package which included five bipartisan bills aimed at breaking up powerful tech companies.

The latest American bills were the result of a 16-month study by the Congressional Antitrust Subcommittee that uncovered, in the words of House Judiciary Committee Chairman Jerrold Nadler D-N.Y., “overwhelming evidence of anti-competitive conduct that has seriously impacted consumers and small businesses.” The legislators even compared the digital companies to the oil barons and railroad tycoons that inspired the original trust-busting in the U.S. 

The concern over monopolistic practices is global, though observers say non-American lawmakers may be more limited in their ability to rein in the American-based companies, and revenue-sharing may not go far enough. 

While this presents itself as a marketplace of ideas, intellectual property, and media issues, it’s really a “concentration of ownership” issue, Peter Biro, a Canadian lawyer and liberal-democracy activist, said.

They have exposed an older problem in liberal democracies, he said. It isn’t about information—it’s about economic inequality. Monopoly power results in exponentially increasing economic inequality because it grows wealth and power gaps.

The Canadian letter alleged that the companies have used their algorithms to divert 80% of online advertising traffic in Canada, in addition to distributing the work of Canadian journalists without compensation.

Canada has done nothing about it, in part because it has no power to break up the companies, but it also has no willingness to lead on issues where there could be repercussions, Biro said.

Australia grappled with a similar issue earlier this year. In February, they passed a law, the News Media Bargaining Code, that requires Facebook and Google to negotiate with Australian news outlets to pay for the content shared on their sites.

The Canadian letter expressed frustration that its government has committed to bringing similar legislation but has not yet done so.

The answer may not lie in mandating revenue-sharing and distribution agreements, nor in other agreements that recognize, credit, and compensate content, Biro said. Those are accommodations among interested parties “masquerading as protection for content creators and the news media,” he said, adding that the response that any government should have is “to break them up.”

“The grievances in the letter are obvious, and I support them, and they’re right,” Biro said, “And I think that responsible Canadian leadership should call out the problem of concentration of ownership and concentration of power and commit to working with the United States and international organizations to address the problem.” 

The world is in the middle of a sea-change in how it thinks about antitrust, driven by the nature of digital markets. Originally, antitrust law was about making sure the market remains truly competitive, according to an American lawyer who agreed to speak on background. This means ensuring that individual firms aren’t allowed to dominate the market or submarkets, which would allow them to crowd out competitors and raise market prices, harming the consumer. 

More recent thinkers, like Lisa Khan, Biden’s pick to head the Federal Trade Commission, and Tim Wu, who Biden has appointed as a special advisor on the National Economic Council, have pushed for “hipster antitrust,” which has a looser approach to antitrust that will have a broader notion of antitrust violations and consumer harms that, they say, better captures the nature of the digital world.

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