The U.S. Federal Trade Commission needs new powers to protect the struggling local news industry from unfair competition from large technology companies, a senior lawmaker said.
Maria Cantwell, the top Democrat on the Senate Commerce Committee, said in a report released on Tuesday that "local news has been hijacked by a few large news aggregation platforms, most notably Google and Facebook, which have become the dominant players in online advertising."
The report added the "trillion-dollar companies scrape local news content and data for their own sites and leverage their market dominance to force local news to accept little to nothing for their intellectual property."
Google scrapes the web to get headlines and story snippets, while Facebook features content posted by publishers or users and "receives billions in profits from the news content created by others," the report said.
The chief executives of Facebook, <FB.O> Twitter <TWTR.N> and Alphabet-owned Google <GOOGL.O> will testify Wednesday at a Senate Commerce Committee hearing that is expected to discuss their impact on local journalism.
U.S. local news outlets, which already faced a decline in print revenue, have seen advertising revenue plummet in the face of the COVID-19 pandemic. The report said U.S. newspapers would most likely cut at least 7,000 employees in 2020, leaving only about 30,000 newsroom jobs.
Cantwell told Reuters that "beyond just making sure that they (local news outlets) live to fight another day" Congress must address "unfair competition" facing local news outlets that "hold governments accountable" and provide other services.
"We don't want to lose that in the digital transformation," she said.
This month, Google said it planned to pay $1 billion to publishers globally for their news over the next three years.
Google in a statement acknowledged "the traditional news publisher business model is clearly facing enormous challenges, but this report misrepresents Google’s role in the online news ecosystem."
Facebook said it recognizes "local news is critical to an informed society." It added it has "committed $400 million to programs and partnerships with a focus on local news, including $100 million devoted to organizations affected by the COVID-19 pandemic."
By the end of 2020, total U.S. newspaper revenue is expected to have dropped by about 70% since 2005, while newsroom employment has fallen by 59%, the report said.
Australia will become the first country to require Facebook and Google to pay for news content provided by domestic media companies under a royalty-style system that will become law this year.
Legislation is pending in Congress that would give news publishers a four-year safe harbor to negotiate with Facebook, Google and other platforms collecting the bulk online advertising revenue.
Cantwell's report noted Google and Facebook "control 77% of locally-focused digital advertising revenue."
(Reporting by David Shepardson. Editing by Gerry Doyle and Lincoln Feast.)
