Zephyr Teachout (photo: Gotham Gazette)
Democratic Attorney General hopeful Zephyr Teachout is placing the blame for mass layoffs at the New York Daily News on tech giants Google and Facebook, and plans, if elected, to enforce antitrust laws to battle what she calls a “duopoly” of ad revenue that is crushing local news.
Referring to big tech as a “parasite on journalism,” Teachout unveiled on Wednesday a broad, though somewhat vague, plan to use the antitrust laws available to state and federal prosecutors to break up Google and Facebook’s stranglehold on the news business.
In the wake of tronc, the Daily News’ parent company, laying off half the publication’s staff on Monday, much of the blame has been pinned on the corporation and its executives. According to the Daily Beast, tronc executives told remaining Daily News staff that they had no strategy behind the mass layoffs. Meanwhile, former tronc board chair Michael Ferro, who left the company in March amid a sexual harassment scandal, received a $15 million severance package from the company, drawing criticism.
Teachout, however, says that targeting tronc, while necessary, is piecemeal and would do nothing to save local news.
“I’ll look into illegality wherever it is, or any issues that fall within the jurisdiction of the AG’s office,” Teachout said at a Wednesday press conference outside the Daily News headquarters in lower Manhattan. “But I can’t repeat this enough. If we don’t actually deal with the systemic, structural issues that are squeezing out and starving local journalism, if we keep treating these as one-offs, we’re gonna keep losing local news.”
The larger issues Teachout was referring to were the heavy concentration of digital ad revenue with Google and Facebook, which she said transferred revenue from journalists and publications into the hands of tech giants. She cited a December report from research firm eMarketer estimating that 63 percent of all digital ad revenue in 2017 belonged to the two companies. Microsoft and Oath each accounted for 11.8 percent of revenue, while Amazon took 5.4 percent. Other reports, such as one from software firm Pivotal, estimated Google and Facebook’s duopoly at 73 percent of digital ad revenue in 2017.
Though Facebook and Google still are clearly the dominant forces in online advertising, their share of the market appears to be slipping somewhat, according to the same firm cited by Teachout. A post from March suggests that Google and Facebook will see their share of digital ad revenue decline to 56.8 percent this year, and continue slipping in 2019 and 2020 as companies like Amazon and Snapchat grow their ad businesses faster than the two current juggernauts. None of it points toward ad revenue returning toward news publications themselves.
Meanwhile, Facebook’s profit margins are, according to Teachout, over 40 percent.
“Local newspapers around the country are getting decimated as the digital ad revenue is dropping and being shifted from the newspapers themselves, the journalists themselves, to Google and Facebook,” Teachout said, referring to this as the “ad tech tax.”
Teachout said that lax antitrust enforcement had allowed Google and Facebook to acquire companies and become massive juggernauts in the advertising industry. She said that she would work with other state attorneys general to bring a “major antitrust investigation to look into the ways in which Facebook and Google are wielding and maybe abusing their duopoly powers.”
She also proposed “rigorous enforcement” of state and federal antitrust statutes, like the state’s Donnelly Act, preventing anticompetitive business practices, and the federal Clayton Act, to prevent the proliferation of monopolistic mergers, to bust the duopoly.
As such, she wants to break up Google and Facebook in such a way that creates “healthy ad markets” with hundreds of firms making lower profit margins, and more revenue going to publications and journalists. In that vein, she hopes to block large mergers and acquisitions by companies like Facebook, citing its acquisition of Instagram as an antitrust violation -- both had been competing in the market for user-created photo content.
“We should explore breaking up these companies to allow for healthy ad markets which are necessary to support affordable access to news,” Teachout said. “So instead of newspapers begging for access to readers through Facebook and Google, what we should have instead is a healthy, vibrant, competitive ad market with hundreds of digital ad brokers competing -- with a profit margin, but not 40 percent profit margin -- competing for the attention of those news organizations.”
Responding to a question from Gotham Gazette, Teachout said that Google and Facebook were able to achieve such dominance in the online ad market because their mergers and acquisitions had been allowed to proceed at a hectic pace with little regulatory scrutiny. As such, if the companies were to be broken up into hundreds of smaller ad companies, and enforcement and legislative statutes prevented new mergers from taking place, then a newly competitive market would be sustained by government intervention and the share of revenue demanded by the firms would decrease.
“There isn’t actually a competitive market for different ways to reach readers,” Teachout said.
The Fordham Law professor and constitutional scholar discussed her antitrust plans on the same day she received good news about a lawsuit she helped craft against President Donald Trump, for his alleged violation of the emoluments clause of the U.S. Constitution, which is said to prohibit payments from foreign governments to the president of the United States. A judge, citing Teachout’s work, ruled that a case brought by the attorneys general of Maryland and Washington, D.C. could proceed.
Teachout is facing New York City Public Advocate Letitia James, U.S. Representative Sean Patrick Maloney, and Leecia Eve, a former aide to Governor Andrew Cuomo, in the Democratic primary for Attorney General. The vote is September 13.
One area of antitrust action Teachout said she would pursue would be to prevent Facebook from using its platform to host both news from outside sources, like the Daily News or Gotham Gazette, and its own news content, such as the presentation of trending topics alongside posts from news services. Teachout referred to this as a “clear” violation of antitrust laws.
She also said she would support state legislation to prevent content discrimination on social media platforms, saying that large media organizations like the New York Times could afford to cut deals to better promote their content in a way that a smaller outlet -- she cited the Poughkeepsie Journal -- could not.
“I do see it as a combination of legislation and enforcement, but we gotta start with enforcement. We’re just not even enforcing existing laws.”
***
by Ben Brachfeld, Gotham Gazette
@GothamGazette
Ben Max, left, of Gotham Gazette, and Jarrett Murphy, right, of City Limits
July 25, 2018 - Max & Murphy Podcast: Attorney General Candidate Leecia Eve
Leecia Eve is one of four Democrats vying for the party's nomination to become the next Attorney General of New York. Eve has a long resume practicing law and serving in government, including work for then-Senator Joe Biden, then-Senator Hillary Clinton, and Governor Andrew Cuomo. Eve, most recently an executive with Verizon, joined Max & Murphy for the second show on WBAI radio, discussing her career and her candidacy for attorney general.
The podcast includes the full Max & Murphy hour on WBAI, including the conversation with Eve, listener calls, and other discussion of the recent political news.
Listen to the full conversation and let us know what you think -- we're on Twitter @TweetBenMax and @JarrettMurphy. You can listen to the show through the embedded audio below or download the episode wherever you get your podcasts, under "Max & Murphy," and listen to the show on Wednesdays at 5 p.m. on WBAI radio, 99.5FM or wbai.org
***
by Ben Max, Gotham Gazette
@tweetBenMax @GothamGazette
Zephyr Teachout (photo: zephyrforny.com)
Zephyr Teachout is set to cast aside a key question surrounding her candidacy for New York Attorney General. After filing the appropriate paperwork, reviewing the required “orientation” course online, and sitting for the necessary interview, Teachout will be sworn into the New York Bar on August 22.
Teachout, running in a four-way Democratic primary, is seeking to become the state’s top legal officer. She has been licensed to practice law in North Carolina, where she did legal work early in her career, and has been teaching at Fordham Law School for a number of years, during which time she has also run for governor in 2014, run for Congress in 2016, and been a part of lawsuit aimed at President Donald Trump, alleging that he has violated the "emoluments clause" of the U.S. Constitution.
The process of becoming admitted to the Bar in New York was fairly easy given the arrangement between New York and North Carolina, but some critics and opponents raised questions about Teachout’s law license in the early weeks of her campaign given that she was not licensed to practice law in New York as she launched her bid to become its top attorney. Bar admittance does not appear to be a legal necessity to hold the position of New York attorney general, but it does appear to be a practical necessity and a political issue.
"Zephyr has been a lawyer for 17 years, and taught law in New York for the past decade,” said Teachout campaign spokesperson Cristina Gonzalez, in a statement to Gotham Gazette. “She has also been engaged in high level litigation, including appearing in the Southern District of New York last fall in the groundbreaking lawsuit against Donald Trump. Since New York and North Carolina, where she has been licensed for 17 years, have full reciprocity, the admission on motion process was very simple."
Teachout is running for attorney general promising to use the law “as a sword” as well as a shield for New York and its people, pledging to investigate and, when warranted, file litigation against Trump, his administration, businesses, foundation, and associates; as well as bad actors in the real estate and financial sectors, corrupt political figures, and others who may break the public trust and the law. The attorney general can file litigation to defend New York and its residents, and is also responsible for defending the state in legal proceedings and for enforcing a wide variety of laws within the state.
Teachout’s competition for the Democratic nomination includes New York City Public Advocate Letitia James; Leecia Eve, a Verizon executive and former aide to then-Senator Hillary Clinton and Governor Andrew Cuomo; and U.S. Representative Sean Patrick Maloney. James, a former assistant attorney general under Eliot Spitzer and former public defender with The Legal Aid Society, has attempted to turn her relatively small citywide elected office into a law firm of sorts, hiring more attorneys and filing more litigation against the city than her predecessors in the ill-defined role of public advocate. Some of these efforts have led to reforms while several have been tossed due to a lack of standing, something James wants to see changed in the city’s charter.
The winner of the Democratic primary will face Republican nominee Keith Wofford and Green Party nominee Michael Sussman in the general election. Wofford is currently on leave from his firm, Ropes & Gray, where he was “co-managing partner of the firm’s 300-lawyer New York office,” according to the firm's website.
The primary race among Teachout, James, Eve, and Maloney appears wide open, with polls showing James in the frontrunner position but most voters undecided. James has the backing of the State Democratic Party and Governor Andrew Cuomo, whom Teachout challenged in the gubernatorial primary four years ago. James’ cross-endorsement with Cuomo has been a source of criticism for her given calls for the attorney general to be completely independent from the governor and to better root out public corruption given the scourge that continues to plague state government.
There is only a competitive Democratic primary because former Attorney General Eric Schneiderman resigned abruptly earlier this year amid allegations of domestic violence against multiple intimate partners. Then-Solicitor General Barbara Underwood became Attorney General and is serving out the final months of Schneiderman’s second term. She has said she has no interest in running for elected office. The primary is September 13.
Asked what sets her apart from her competitors during a recent appearance on the Max & Murphy podcast from Gotham Gazette and City Limits, Teachout said, “One, for nearly 20 years I have been steeped in cutting edge law around anti-corruption and constitutional law, which is essential at this moment with the Trump threat and with our own corruption threat in New York state.” She also listed a variety of areas where she has taken a stand and all or most of her competition has not, such as calling for the head of the state’s main state government ethics body, the Joint Commission on Public Ethics, to step down.
Her application to become admitted to the Bar in New York does not appear to have been hindered by the fact that in 2005 Teachout was reprimanded by the North Carolina Bar for not having notified the court and her opposing counsel of her address change while she was still second chair for a client facing the death penalty, the type of legal work Teachout did in North Carolina. While finding that she violated the code of conduct, the Bar's grievance committee chose the middle of three sanctions, and, in its ruling, explained that Teachout had not impacted her client's case, nor had the client complained.
Teachout was recently notified of her acceptance to the New York Bar and summoned to appear on Wednesday, August 22 at State Supreme Court in Brooklyn to be sworn in as a member. The ceremony will consist of an oral oath and the signing of the “oath book” affirming it. “This is to comply with Section 466 of the Judiciary Law which requires every newly admitted attorney to subscribe and take the constitutional Oath of Office,” reads a letter Teachout received.
[Listen: Max & Murphy Podcast: Attorney General Candidate Zephyr Teachout]
***
by Ben Max, Gotham Gazette
@tweetBenMax @GothamGazette
Note: this article has been updated with information about Teachout's 2005 reprimand by the North Carolina Bar.