News Publishers Team Up to Take On Facebook, Google

By Lukas I. Alpert, Deepa Seetharaman and Brent Kendall Features Dow Jones Newswires

Newspaper publishers are calling on Congress to allow them to negotiate collectively with Alphabet Inc.'s Google and Facebook Inc., as what they call the "digital duopoly" increasingly dominates online advertising and news distribution.

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The News Media Alliance -- a trade coalition representing some 2,000 organizations across the U.S. and Canada, including Wall Street Journal publisher Dow Jones -- says antiquated antitrust laws have had "the unintended effect of preserving and protecting Google and Facebook's dominant position," by limiting publishers' ability to push for changes together.

Federal antitrust law bars competitors from coordinating on business decisions and market strategy. If granted a limited waiver by Congress, the group said it would seek stronger intellectual-property protections, better support for digital subscription models and a fairer share of revenue and customer data.

"Quality journalism is critical to sustaining democracy and is central to civic society," the alliance's president and chief executive, David Chavern, said in a statement. "To ensure that such journalism has a future, the news organizations that fund it must be able to collectively negotiate with the digital platforms that effectively control distribution and audience access in the digital age."

Publishers have long been frustrated by Facebook's outsize role in news dissemination and commanding presence in the digital advertising market.

Google and Facebook are expected to receive more than 60% of U.S. digital ad spending this year, according to eMarketer. And their combined market share is growing. Last year, the two companies captured more than 77% of the nearly $12 billion in additional spending on online ads in the U.S., eMarketer estimates.

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The tech behemoths have made efforts to work more closely with publishers both large and small to address issues as the news industry transitions from print to digital.

Facebook has held numerous meetings with publishers over recent months -- including one in New York on Monday -- to discuss matters such as accommodating digital subscriptions, allowing publishers greater control over advertising, the platform's desire for more video content and how best to deal with fictional stories masquerading as news.

Some of the meetings have gotten "very heated," attendees have said, and publishers have had mixed reviews about Facebook's understanding of their needs. At one particularly contentious session in late March that was hosted by the Nieman Foundation at Harvard University, two attendees said a publisher accused Facebook of taking advantage of the industry after Facebook's vice president for communication and public policy, Elliot Schrage, said: "We can't solve your business model."

The meeting on Monday was described as far less tense, with some saying the earlier meetings had served as an opportunity to air grievances.

"We're committed to helping quality journalism thrive on Facebook. We're making progress through our work with news publishers and have more work to do," said Campbell Brown, Facebook's head of news partnerships, in response to the News Media Alliance's announcement.

Google has similarly sought to engage with publishers on how best to help them in the face of sometimes blistering criticism from some news outlets about its practices. Robert Thomson, chief executive of News Corp, the parent company of Dow Jones and the Journal, has for years accused Google -- and Facebook to a lesser degree -- of being a platform for "piracy."

"We want to help news publishers succeed as they transition to digital," Google said in a statement. "In recent years we've built numerous specialized products and technologies, developed specifically to help distribute, fund, and support newspapers. This is a priority and we remain deeply committed to helping publishers with both their challenges, and their opportunities."

In terms of securing a waiver to act collectively, publishers will need to identify a lawmaker willing to introduce legislation on their behalf. Such a waiver is uncommon, however, and the prospects for the alliance's push are unclear.

Antitrust exemptions generally are disfavored by the Justice Department and the Federal Trade Commission, which enforce U.S. antitrust laws. Proposed exemptions aren't usually embraced in Congress either, though there are exceptions.

"Congress adopts one probably every 8 to 10 years or so, but they are unpopular, draw a lot of eye-rolling from both parties, and I think it's fair to say that a few dozen are proposed and rejected during every Congress," said Cleveland State University law professor Christopher Sagers, who has written a book on the topic.

One that passed came in 2004, when Congress granted an antitrust exemption for matching programs that place medical students in residency programs at hospitals and health systems. A group of medical school graduates had previously filed a lawsuit alleging the matching programs had the effect of suppressing competition for the hiring and compensation of resident physicians.

The newspaper industry won an exemption of its own in 1970 when Congress passed the Newspaper Preservation Act, which in certain circumstances allowed competing publications in the same geographic area to combine production and business operations. The law was designed to help financially vulnerable papers stay afloat to preserve competing news coverage and editorial voices in a given community. Such joint agreements, however, have shrunk over time and the exemption has been criticized as ineffective.

--Jack Marshall contributed to this article.

Write to Lukas I. Alpert at lukas.alpert@wsj.com, Deepa Seetharaman at Deepa.Seetharaman@wsj.com and Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

July 10, 2017 20:08 ET (00:08 GMT)