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Big Tech becomes big punching bag at House hearing on news business

Lawmakers dig into big tech during hearing
  • Republican and Democratic representatives pounded Google and Facebook for their effects on news publishers, which one  described as an "economic catastrophe."
  • It was the first of a series of hearings on tech-company dominance, in parallel with the Trump administration's investigation of Facebook, Amazon, Google and Apple over antitrust and privacy issues.
  • Tech companies maintain that they have increased news readership for publishers; publishers say social media companies are "free riding" on news content that they don't produce, but against which they sell advertising.

The House Judiciary Committee on Tuesday launched its investigation into the market dominance of Silicon Valley's biggest companies, hitting hard on the impact of the tech giants' platforms on news, layoffs of journalists and the spread of misinformation online.

In a hearing stretching over three hours, congress members and publishers pounded Google and Facebook for creating an "economic catastrophe" for news outlets. The figures were stark: Newsroom employees have declined by nearly half since 2008, while the audience for online news is larger than ever, said multiple editors and publishers.

"This year alone, over 2,900 reporters have lost their jobs," including at print outlets and online-only publications, said Rep. David Cicilline, a Rhode Island Democrat who led the hearing. "If online news publishers can't survive, who can?" he continued. "We cannot have a democracy without a free and diverse press."

"If we don't act now to change the structure of our markets, titans will continue to control speech, journalism will continue to suffer, and so will our democracy," said Sally Hubbard, director of enforcement strategy at the Open Markets Institute.

"Many in Silicon Valley assert that members of the press are nothing more than a relic of the old media, displaced by the new media thriving in the digital world, but this is wrong," said David Pitofsky, general counsel for News Corp. Instead, he said, there is "massive free-riding" by online platforms that do not create news content but sell advertising against it.

"I call them our regulators, because they get to decide what content is delivered to whom and when," said David Chavern, president of the News Media Alliance, which represents 2,000 news publishers. "They are incredible and powerful advertising engines that do great advertising, often around our content, and they take the bulk of our advertising revenue." 

The News Mediia Alliance released a report on Monday asserting Google took in $4.7 billion last year from the value of news content. Google disputes the figure, but it is spurring debate around the value split between news and publishing platforms or search engines.

Alexis Ohanian on congressional tech hearings: "We've waited too long to try to understand a lot of technology"

Complaints left and right

The hearing stood out as a rare bipartisan effort in a Capitol steeped in partisanship, inflamed by special counsel Robert Mueller's report and Democrats' intensifying probes of President Donald Trump.

With regulators at the Justice Department and Federal Trade Commission apparently pursuing antitrust investigations of Facebook, Google, Apple and Amazon, and several state attorneys general exploring bipartisan actions of their own, the tech industry find itself increasingly accused of monopolistic practices.

Politicians on the left and right have differing gripes about the tech giants. Some complain of aggressive conduct that squashes competition. Others perceive a political bias or tolerance of extremist content. Still others are upset by the industry's harvesting of personal data.

Several Democratic presidential candidates think they have the solution: Breaking up the companies on antitrust grounds. Cicilline has called that "a last resort," but the idea has currency with both major political parties, including at the White House. Other suggestions floated at the hearing included forbidding any more acquisitions by Facebook and Google, or forcing advertising platforms to share more of their revenue with publishers.

The tech giants have mostly declined to comment on the antitrust investigations.

Google has said that scrutiny from lawmakers and regulators "often improves our products and the policies that govern them," and that in some areas, such as data protection, laws need to be updated.

Facebook executives have been calling broadly for regulation while explicitly rejecting the idea of breaking up "a successful American company." CEO Mark Zuckerberg has called for new rules in four areas: harmful content, election integrity, privacy and data portability.

When Democratic presidential contender Sen. Elizabeth Warren tweeted in April that tech giants like Amazon should be broken up, Amazon tweeted back, "Walmart is much larger." (Amazon's 2018 revenue was $233 billion, or less than half Walmart's $500 billion in global sales that year.) 

And Apple has countered a legal challenge to its management of the App Store by saying it "will prevail when the facts are presented and the App Store is not [deemed] a monopoly by any metric."

Jumping on the bandwagon

In hearings and closed-door work over coming months, lawmakers in the House aim to peel the complex onion of the tech industry's dominance. They are expected to summon the chief executives of the major companies to appear before the panel. Not showing up, as some CEOs have done in the past, is unlikely to be tolerated.

For a long time, the tech companies "sort of thumbed their nose at Washington" without repercussions, said Gene Grabowski, a partner at public relations firm kglobal who's a crisis communications expert. Now lawmakers, often initially slow to flex their muscle over an industry, seem to be making up for lost time.

"They're late. They feel like they've been embarrassed, and it's a popular issue for their constituents," he said.

Tech executives have testified to various congressional panels in recent years, often accompanied by high drama and fiery rhetoric. A media frenzy accompanied Zuckerberg's five-hour grilling on privacy last year at a joint Senate committee hearing. That hearing came in the wake of the scandal involving British data-mining firm Cambridge Analytica, which collected Facebook information on millions of Americans without their knowledge.

But until executives are called to testify, it's likely to be a tough slog for the subcommittee as it hears from experts and its staff, collects data and documents, and interviews industry players and others behind closed doors.

"There could be something really useful" to emerge as legislation, said Allen Grunes, who led merger investigations at the Justice Department as an antitrust attorney.

Lawmakers could address, for example, the galloping acquisition of small companies by the tech giants or craft an update of antitrust laws to apply better to complex tech behemoths, suggested Grunes, a co-founder and attorney at the Konkurrenz Group in Washington.

"It's not illegal to be a monopoly," he said. "But it's wrong for someone at the top of the hill to kick the people off who are trying to climb it."

Irina Ivanova contributed to this report.