Regulatory Policy

It’s Time to Exempt News Organizations from Antitrust Restrictions

(Tero Vesalainen/Getty Images)
Consumers benefit when companies have maximum flexibility to compete and innovate.

Congress is currently considering a bill that would allow news organizations to collectively negotiate with online-content distributors, such as Google and Facebook. If passed, the bipartisan Journalism Competition and Preservation Act would provide both small and large news organizations with a four-year safe harbor from antitrust restrictions, originally constructed to prevent “collusion” in the news industry. The law is a positive and necessary step forward; in fact, such onerous antitrust restrictions should be reevaluated across America’s industries. Consumers benefit when companies have maximum flexibility to compete and innovate.

Earlier this year, Pew Research Center found that 86 percent of Americans access news, at least some of the time, digitally. Of that group, 26 percent do so at news outlets’ websites or apps, 12 percent through online search, and 11 percent via social media. It’s not entirely clear whether Google and Facebook are more indebted to news organizations for their original content or whether the platforms benefit news organizations more by driving eyeballs to news sites via links. Incidentally, the legal case for platforms being in violation of copyright law for showing links with headlines, snippets, and thumbnail photographs is unsettled, but precedent seems to indicate that the platforms are protected under fair-use rules.

Putting aside the particulars of copyright law — along with the questions of who should be paying whom and how much — freedom of association suggests that media entities should be allowed to coordinate among themselves in order to gain maximum leverage in negotiating with these tech companies. State and federal antitrust laws currently prevent such activity on the grounds that it amounts to “collusion,” but this prohibition is an artificial restraint that makes little sense, especially in the face of shrinking newsrooms and dwindling profits. Restrictions on potentially beneficial collaborations have never carried much water, but in today’s rapidly innovating media landscape, they are even less intelligible. Competitive Enterprise Institute founder Fred Smith would often remark at the goofiness of antitrust law, which allows for full mergers but treats “partial mergers,” in the form of coordination, as collusion.

Politicians and regulators have no ability to know what the optimal arrangement between news-content providers and online platforms is, but they do have every reason to keep their thumbs off the scale. A fair fight between the two sectors is all that’s required for us to have trust in the outcome of private negotiations between what needs to be relatively evenly matched parties. Lifting antitrust restrictions against news firms coordinating their efforts in order to gain leverage against the online giants would be a step in the right direction.

The U.S. need not make the same mistake as Australia did when it inserted its government into these negotiations, a process that smacked of corporate cronyism. While companies should have every right to lobby against harmful regulations, it would have been far better for the specifics of this business arrangement to have been worked out voluntarily in the marketplace where consumers’ interests, in the form of potential profits, play a much bigger role than political considerations.

When government’s left hand undermines the news industries’ ability to scale up to spar with the very same tech companies that the government’s right hand is threatening to break up for having abused market power, the government is contributing to the very same problem it’s trying to remedy. In this sense, the antitrust restrictions on news companies act as a form of corporate welfare to Big Tech. It’s more preferable, then, to have antitrust regulators stay out of both the news media’s and Big Tech’s way. Their competitive market responses to each other will be far superior to the politicized, delayed, and rigid government dictates.

That’s why Big Tech would be wise to support this bill, too. Backing the preservation of antitrust action that would restrict news companies’ ability to compete increases the probability that similar types of regulation will be applied to Google, Facebook, Amazon, and Apple in the future. When healthy competitors flourish, the prospects of regulators leaving you alone greatly increase.

Consumers benefit from innovation in products and services, as well as through new business alignments. New alliances within and across industries with doubtless be needed to build the media and communications landscape of tomorrow. Why not start today by lifting antitrust restrictions that hinder that progress?

Jessica Melugin is the associate director of the Center for Technology and Innovation at the Competitive Enterprise Institute.


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