Hello. My name is Erik Peinert. I am the research manager at the American Economic Liberties Project, a Washington, D.C.-based policy and advocacy organization focused on reducing concentrated economic power to broaden opportunity for small businesses, workers and communities. I earned a Ph.D. from Brown University, where my research focused on competition, monopoly and antitrust and has been published in leading academic journals.
Thank you for the opportunity to speak today about big tech’s pattern of coercion in response to regulation, specifically Meta’s recent action to block Canadian access to news articles across its platforms in retaliation for the passage of Bill C-18, the Online News Act. This follows a nearly identical action in 2021 by Meta—then Facebook—to extract concessions from Australia with respect to its news media bargaining code.
This discussion comes at a time when the news industry across the globe is in peril. It’s an industry that I’ve watched closely since I was a child. I was raised by a journalist. My mother began her career as a reporter for a local paper in rural New England in the late 1970s, moving to various editorial roles in minor cities, to the newsroom at The Boston Globe, and then to executive positions at The Boston Globe and GateHouse Media, now Gannett. She now owns several successful, independent local papers in Massachusetts suburbs.
My personal and professional experiences lead me to make two principal points today, the first being about the platforms' business model in this market. Media companies pay to produce and distribute content that a large mass of readers find valuable. Then they sell ads to businesses that want their offerings in front of those readers. On one side, Meta and Google have become the central way that readers access news media, giving them power over journalism outlets, with an implicit threat to cut off readership. On the other side, Meta and Google also have an effective duopoly over digital advertising, and both face or faced antitrust lawsuits for illegal monopolization in this space.
These companies are not providing viewership so much as using their dual control over Internet traffic and advertising to monetize content that journalists produce at considerable expense. Recent research by economists at the University of Zurich indicates that 40% of Google’s total revenue from search advertising would go to publishers and other journalism outlets if it faced more competition. With media companies paying to produce the content and big tech getting the ad revenue, this destroys the model of journalism that a democracy needs.
Google’s decision to broker a deal with the Canadian government last week, to pay about $100 million Canadian per year to journalism outlets and publishers, simply confirms this. It acknowledges the value the platforms gain from journalism. The dispute was over the scale of payments and the terms of negotiation—whether to have one deal or require multiple bargaining groups—rather than whether compensation was owed at all.
This brings me to my second point: why these companies respond to regulatory proposals with bullying, threats and coercion. Rather than making rational business decisions in response to regulatory changes—as Meta claims it is doing with respect to Bill C-18—they see oversight and market governance as an existential threat to their predatory business models, and they react with hostility.
For example, these tech giants have been leveraging trade and investment frameworks to stop governments around the world from regulating them. Their latest strategy is pressuring governments to include digital trade clauses in bilateral and multilateral trade agreements. In this way, big tech companies are better positioned to argue that policies like the Online News Act are violations of trade law because they unfairly discriminate against companies like Google and Meta by virtue of their American origin, ignoring that these companies are targeted due to their size and not their place of incorporation.
This is also even though, as American, multinational companies, their home country is considering many of the same or similar policies, with the journalism competition and preservation act being repeatedly introduced in the American Congress. They succeeded, to a degree, by getting the North American governments to include expansive digital trade clauses in the 2020 CUSMA. U.S. industry associations are already making use of this language to claim that the Online News Act violates Canada’s commitments under the CUSMA.
More egregiously, Meta last week filed a lawsuit against the American Federal Trade Commission, one of its primary regulators, arguing that the commission itself is unconstitutional and, thus, effectively illegal as a regulator, rather than face an amended consent decree based on privacy violations that the company has repeatedly committed over the past decade, which the FTC has found involved children’s data.
Adding little of clear social value but having learned to profit from it nonetheless, Meta repeatedly shows disdain for the rule of law in this space, preferring to destroy the legal system in the United States and elsewhere rather than come up with a business model that is both profitable and socially beneficial.
Having seen the continually worsening struggles of the news industry over the course of my life, I applaud the Canadian government for passing the Online News Act. We hope to see similar policies passed in the United States.
Thank you.