Tech Companies Are Destroying Democracy and the Free Press
Ad revenue that used to support journalism is now captured by Google and Facebook, and some of that money supports and spreads fake news.
By
Mr. Stoller is the author of “Goliath: The Hundred Year War Between Monopoly Power and Democracy.”
As the presidential election approaches, the cracks in the digital facade are once again showing.
Facebook just removed an “I Love America” page, run by Ukrainians, which pushed recycled pro-Trump imagery from the Internet Research Agency, the Russian group that tried to influence the 2016 election. As it turned out, “I Love America” wasn’t state sponsored — the Ukrainians were just running the page for the advertising money. A similar page with falsified content, “Police Lives Matter,” is now run out of Kosovo.
These two phony Facebook pages illustrate the crisis of the free press and democracy: Advertising revenue that used to go to quality journalism is now captured by big tech intermediaries, and some of that money now goes to dishonest, low-quality and fraudulent content.
This is the first presidential election happening after the business model for journalism collapsed. Advertising revenue for print newspapers has fallen by two-thirds since 2006. From 2008 to 2018, the number of newspaper reporters dropped 47 percent. Two-thirds of counties in America now have no daily newspaper, and 1,300 communities have lost all local coverage. Even outlets native to the web, like BuzzFeed and HuffPost, have laid off reporters. This problem is a global one; for example, in Australia from 2014 to 2018, the number of journalists in traditional print publications fell by 20 percent.
The signaling functions of news brands and the cultural barriers meant to guard against distorting effects of advertising have broken down. In their place, a dysfunctional information ecosystem has emerged, characterized by polarization, addiction and conspiracy theories. In Europe and in the United States, young men learn race science on YouTube. In Brazil, citizens learn that Zika is spread by vaccines. As the Center for Humane Technology puts it: “Today’s tech platforms are caught in a race to the bottom of the brain stem to extract human attention. It’s a race we’re all losing.”
There are two drivers of this crisis. The first is the concentration of online advertising revenue in the hands of Google and Facebook — global monopolies sitting astride public discourse, diverting money that used to go to publishers to themselves. The second is an ethical breakdown — a natural consequence of advertising financing an information utility like a social network or search engine — which I call “conflicted communications.”
It’s tempting to blame the rise of the internet for all of this, but it’s important to recognize that technology is shaped by law. Advertising, publishing and information distribution operate in publicly structured markets. In the past 40 years, the rules underlying these markets have undergone a radical reorganization.
As the communications historian Richard John argues, for roughly 200 years (beginning with the creation of the Post Office in 1791), American policymakers generally sought to decentralize media power and keep communication networks neutral. In the late 1970s, policymakers reversed their presumptions. They relaxed antitrust law, eliminated the fairness doctrine and eventually allowed the creation of large media conglomerates through the Telecommunications Act of 1996.
Enabled by a loose merger policy, there was a roll-up of the internet space. From 2004 to 2014, Google spent at least $23 billion buying 145 companies, including the advertising giant DoubleClick. And since 2004, Facebook has spent a similar amount buying 66 companies, including key acquisitions allowing it to attain dominance in mobile social networking. None of these acquisitions were blocked as anti-competitive.
Data is now the key input into advertising: If you know who is looking at an ad, that ad space becomes much more valuable. Google and Facebook now know who is looking at every ad, and their competitors for ad dollars — newspapers — do not. Further, newspapers now must also rely on Google and Facebook to reach their customers, and hand them valuable subscriber and reader data; when The Wall Street Journal refused to abide by Google’s formatting terms, Google removed it from its search ranks and the newspaper’s traffic dropped by 44 percent.
In other words, it wasn’t just technology but also a pro-concentration philosophy that shaped the information revolution of the 1990s and 2000s. Google and Facebook grew to control important information utilities, like general search, social networking and mapping. New forms of advertising — underpinned by unregulated use of data and sold through opaque and complex auctions — then undermined the bargaining leverage of publishers and enabled new forms of fraud using bots and falsified content.
A result of these policy changes is a radical centralization of power over the flow of information. Tech platforms now control online advertising revenue, which is the primary source of financing for news. But this is not just a problem of the monopolization of an industry — these new monopolists are not simply more powerful media behemoths taking share from smaller publishers. Google and Facebook are not in the journalism business at all; they are in the communications business, running information utilities with revenue that used to go to journalism.
Advertising financing presents an inherent conflict of interest, because advertising is a third party paying to manipulate someone. In traditional media, advertising can influence editorial choices. There are a series of ethical structures designed to inhibit excessive control of advertisers in media industries, a result of debates for hundreds of years among public figures on the nature of advertising and publishing. Some of these include the signaling effects of differentiated news brands, a diversity of news outlets, the separation of advertising and editorial departments, and guilds to protect journalistic integrity from publishing business interests. But such ethical debates have yet to occur around information utilities. Consequently, the manifestation of the distorting effect of advertising — addiction, manipulation, fraud, tearing of a collective social fabric — has been met with little cultural immunity, policy response or institutional defenses.
Before Google became an enormous advertising company, the company’s co-founders — Sergey Brin and Larry Page — noted this problem. They looked at the problematic search engine market of the 1990s — with companies offering advertisers the chance to pay to be listed as an organic search result — and argued that financing a search engine business through advertising was fundamentally corrupting. Such information utilities would then have an incentive to keep users on their properties so that they could keep selling more ads. They would also have an incentive to self-deal, putting content in front of users that benefits the utility rather than the end user. And they would have an incentive to surveil their users, so that they could target them more effectively.
Mr. Brin and Mr. Page were right about the corrupting influence of advertising. This business model of conflicted communications is where the addiction, surveillance, fraud and clickbait come from. Unfortunately, we are living in the world they foresaw.
The combination of these two dynamics — the concentration of power and the new ethical quandaries presented by the financing of information networks by advertising — has created a crisis for democracy. The monopolization of ad revenue starves legitimate outlets of financing. More subtly, the signaling functions of news brands and the dense cultural barriers meant to guard against distorting effects of advertising have broken down. The task of policymakers is now to put together the ethical structures to mitigate these conflicts.
The collapse of journalism and democracy in the face of the internet is not inevitable. To save democracy and the free press, we must eliminate Google and Facebook’s control over the information commons. That means decentralizing these markets and splitting information utilities from one another so that search, mapping, YouTube and other Google subsidiaries are separate companies, and Instagram, WhatsApp and Facebook once again compete. It also means barring or severely curtailing advertising on any of these platforms. Advertising revenue should once again flow to journalism and art. And people should pay directly for communications services, instead of paying indirectly by forgoing democracy.
Matt Stoller (@matthewstoller) is a fellow at the Open Markets Institute and the author of “Goliath: The Hundred Year War Between Monopoly Power and Democracy.”
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