Media layoffs bring heat on Facebook, Google

Critics are targeting Facebook and Google after a week of high-profile layoffs in the media industry, pointing to their dominance over internet ads as the reason news outlets are struggling.

BuzzFeed announced last week that it would be cutting 15 percent of its staff, including 43 journalists in its news division. The same day, HuffPost’s parent company Verizon said it’s planning to lay off 7 percent of its media division, which also includes Yahoo News. And Gannett, the local newspaper holding company that publishes USA Today, began a new round of cuts to its regional outlets.

Some are laying the blame with owners and hedge funds, while others say that the internet itself has made it harder to sustain a successful media outlet.

But many, including some high-profile Democratic lawmakers, are pointing to Facebook’s and Google’s power over the market for online ad revenue as the reason news outlets are struggling to establish a stable business model.

{mosads}The two companies take in the majority of internet advertising revenue in the U.S. and critics say that the current state of affairs leaves little for newspapers hurt after years of declining print revenue.

“This wasn’t some watershed moment last week,” said Jason Kint, the CEO of Digital Content Next, a trade group representing digital content companies. “It’s another milestone in what has been a steady loss in journalism jobs.”

Some lawmakers on the left see the media industry’s troubles as a crisis.

“The biggest threats to journalism right now are tech monopolies & concentration of ownership,” Rep. Alexandria Ocasio-Cortez (D-N.Y.) wrote on Twitter after the layoffs.

“The fact of the matter is the current monopoly trend is societally & economically unsustainable,” she continued in another tweet. “We can’t simply accept the cliché that ‘journalism is dying.’ Journalism will only die if we choose not to fight for it — and if journalism dies, our democracy will, too.”

Fellow Democratic Rep. David Cicilline (R.I.) piled on, adding, “A free, diverse press cannot survive unless we confront the power of Facebook and Google.”

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With Democrats in control of the House, Cicilline now chairs the House Judiciary subcommittee on antitrust and has made it clear he has his sights set on the two behemoths.

“Their power is staggering,” he wrote in a tweet last week. “Google/FB have created new ways to spread hate and misinformation. The press — and the fabric of our democracy — is at their mercy unless Congress does something.”

Facebook and Google both declined to comment to The Hill. 

The companies have long been aware of the criticism that the money they make in ad revenue has come at the expense of media publishers. Both companies have stepped up their outreach to journalists in recent years through fact-checking partnerships and charitable grants.

In the past year, the companies have each pledged $300 million toward supporting journalism. 

But as their dominance grows, that scrutiny could intensify.

Google and Facebook combined rake in about 58 cents of every dollar spent on online advertising in 2018, according to an analysis by eMarketer. Amazon and Microsoft were tied for third place, with each getting about 4 percent of the market.

Another study by the market research firm Pivotal found that in 2017 Facebook and Google accounted for 73 percent of the online ad market.

Digital publishers have been experimenting with ways to bring in enough of what’s left over to survive or to challenge the duopoly’s hold on advertisers.

Jonah Peretti, BuzzFeed’s founder and CEO, has pushed the company into retail and launched social media shows to diversify its product. But he’s also called for digital publishers to follow the example of newspapers and media sectors by consolidating in order to gain more leverage to bargain with the internet’s gatekeepers.

“If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” Peretti told The New York Times in November.

Other tech critics have also offered remedies to alleviate the internet giants’ effect on media. After Facebook announced changes to its news feed designed to combat the spread of disinformation, Rupert Murdoch, the executive chairman of News Corp., lashed out at the company, saying that it should be subsidizing the publishers who see their fates rise and fall with every change to the social network’s algorithm.

“If Facebook wants to recognize ‘trusted’ publishers then it should pay those publishers a carriage fee similar to the model adopted by cable companies,” Murdoch said in a statement at the time. “The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services.”

Those arguments have found a receptive audience among some Democratic lawmakers.

Cicilline has proposed creating an antitrust loophole to allow media companies to engage in collective bargaining with the internet giants.

Kint, the CEO of Digital Content Next, says that unless the tech giants’ vast data collection practices are curtailed by Congress, publishers will be unlikely to solve their problems by banding together or scaling up.

He argues that because Facebook and Google reach and collect data on billions of users, advertisers will be more attracted to their services because it allows them to zero in on their intended audience.

“Both businesses are based on collecting as much data as possible in order to microtarget users everywhere,” Kint told The Hill.

“They are data brokers more than anything.”

Updated at 2:52 p.m.