Gotham Gazette Thu, 16 Jul 2020 12:56:37 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) Eyeing Ad Revenue and Antitrust Laws, Teachout Targets Tech Giants in Wake of Daily News Layoffs Zephyr Teachout

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

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Eyeing Ad Revenue and Antitrust Laws, Teachout Targets Tech Giants in Wake of Daily News Layoffs Wed, 25 Jul 2018 04:00:00 +0000
Facebook Rep Calls New York Ad Transparency Law a National Model, Points to Next Steps gov dpa

Gov. Cumo signs ad transparency bill (photo: Kevin P. Coughlin/Governor's Office)

The recent federal indictments of 12 Russians involved in the country’s interference campaign in the 2016 United States presidential election comes at a time of already heightened interest in election security given other previously known facts and allegations about Russian meddling in the election, the promulgation of “fake news,” attempted hacking of state elections systems, and questionable practices by social media platforms like Facebook. Though election security and integrity at the federal level has dominated people’s attention, it is also an issue at the state and local levels.

For the past two years, policymakers, security companies, and members of the tech and media industries have engaged in more fulsome debate over how to combat issues like “fake news” -- meaning fabricated news stories pushed off as actual news -- and false or misleading ads on social media, not to mention ensuring the security of election infrastructure.

In April, Governor Andrew Cuomo signed a bill, passed in a new state budget agreement that prohibits foreign entities from buying political ads “in order to influence New York elections,” requires political ad buyers on social media to register as independent expenditure committees, requires independent expenditure ads to clearly display that the independent spender, not a candidate, paid for the ad, and requires the state Board of Elections to “create an online archive of all political communications for a set period.”

Some say that while these are important measures, there is more to do to secure New York elections, both in terms of hardening security systems to prevent hacking and reducing the influence of malicious actors in other, “softer” ways. Facebook itself, while the subject of much scrutiny and criticism during and after the 2016 election, is making some reforms to the ways it does business. On Tuesday, a representative for the social media giant called the New York political ad transparency law a model for the rest of the country, while also pointing toward transparency into voter targeting on the platform as a next frontier.

During a panel discussion at City & State NY’s “Protecting NY Summit,” moderated by Gotham Gazette editor Ben Max, Eva Guidarini of Facebook said the company is encouraging users to report questionable content, has begun working with “third party fact-checkers” when potential fake news is flagged, and, if determined to be fake news, posts will receive a tag noting it as such, and be “down-ranked,” meaning it will show up less frequently in people’s feeds, while an explanation of the fact-checking will also be provided. She defended the practice of not removing content unless it is deemed “misinformation,” saying that there can be too many gray areas in defining misleading content. Misinformation would include things like fake news.

Facebook’s actions come after widespread criticism of its platform as a venue for the spread of fake news and conspiracy theories, as well as inappropriate user-data sharing.

Guidarini, a member of the U.S. Politics and Government Outreach team for the company, said Facebook should be the subject of government regulations, but indicated there is a line to ensure that the platform still serves its users. When asked, she also indicated that users must take some responsibility for evaluating content, and said the company is working to help educate people. She also praised the new New York law that applies to Facebook and other online services, which was sponsored in the state Senate by another panelist, Senator Todd Kaminsky.

“We worked really closely with New York and Maryland,” Guidarini said. “We’re really excited about these ad transparency laws that you passed, and we’re now sort of rolling that out to the whole country even though it’s only law in a couple of states. We think that that’s important. The law lagged behind, right? It’s ridiculous that you didn’t have to say who’s paying for a political ad online, even though you did on TV and in newspapers. And we should change that.”

The panel on election integrity included Guidarini; Kaminsky; state Senator Liz Krueger; Assemblymember David Buchwald; Michael Ryan, the executive director of the New York City Board of Elections; and Eric Hodge of CyberScout Solutions, a company that works with government to prevent hacking and other security breaches.

Ryan said that the BOE’s concern has moved from tampering with results towards the manipulation of social media to alter election results.

“We were concerned in the lead-up to election day that people would put out false information that poll sites were on fire or that no voting is happening at particular locations,” Ryan said. “Real misinformation causing chaos as opposed to manipulation of results.”

Sen. Kaminsky, a Democrat representing parts of Long Island, said that he combatted fake news himself in his 2016 election campaign, which led to an extremely close race where one was not expected. He said that the events made him prioritize publicizing the issue as being a state and local issue, not just one related to Donald Trump and Russia.

“There would be a Facebook group that would pop up in someone’s feed called Long Islanders for Clean Drinking Water,” Kaminsky said. “They would then have an ad saying ‘last year, Todd Kaminsky voted to deprive Long Island of $10 million of clean drinking water. And if you liked it, all your friends would see it, it would go up to their feeds. And if you commented on it, all your friends would see it. If you commented something like, ‘this is not true,’ your comment would be removed in, like, ten minutes.”

Kaminsky said that the law passed as part of the budget was a major focus for him in the previous two years. He also criticized the press, claiming that members of the media ran with the Facebook posts without fact-checking them. He said that there are not enough ameliorative pathways for combatting false political information, such as mailers claiming support for Kaminsky from “undocumented aliens” or Mayor Bill de Blasio. The former prosecutor indicated that there is not enough punishment for bad actors, but that his new law would at least change that for those that may try to anonymously post political advertising on social media.

Asked about next steps in regulating social media platforms, Guidarini of Facebook said that, while microtargeted ads are a powerful tool, that “voters should know if the African-American community is receiving a totally different message, or the Hispanic community is receiving a totally different message from the white community from a specific candidate.”

by Ben Brachfeld, Gotham Gazette

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Facebook Rep Calls New York Ad Transparency Law a National Model, Points to Next Steps Wed, 18 Jul 2018 04:00:00 +0000