Google and Facebook revive a medieval practice for the 21st century

BY JAMIE IRVING

The practice of “indulgences” was common among the wealthy and powerful In Medieval Europe.

In return for the payment of large sums to the Church, the sinner in question could secure his place in Heaven and keep right on sinning to his heart’s content down here on Earth.

It was a pretty sweet deal while it lasted.  But the party ended in 1517 with Martin Luther nailing his theses to a church door and the Reformation kicking in.

Leave it to today’s wealthy and powerful – namely two of the largest corporations in human history, Facebook and Google – to try and revive the practice of indulgences five hundred years after its heyday.

The two web giants have used their power as gatekeepers to the Internet to squeeze the life out of news media – especially local news media – in democracies around the world, including Canada.

They take content created through the hard work of journalists across the country and distribute it without compensation.  Even worse, they abuse their market power and their proprietary technology and control of algorithms to scoop up the lion’s share of online advertising revenues; in Canada, the two companies hoover up a head-spinning 80% of those revenues.

The fact is that reporting real news (as opposed to Fake News, which has been a speciality of Facebook and Google – but that’s another story) costs real money.  By preventing news media from accessing advertising revenues, and by circulating news content without compensation, the tech giants are cutting off the financial lifeblood that keeps them operating.  The results have been disastrous: the creation of vast “news deserts” without local news media in the US, and according to the Local News Research Project, the shuttering of more than 300 newspapers since 2008 here in Canada.  

Very simply, the voracious and unrestrained appetites of the web giants have resulted in unprecedented market failure.  The consequences are dire.  Honest local reporting is essential to the health of a democracy.

But finally, democratic governments are taking up the fight.

In Europe and -especially – Australia, governments and legislatures are pushing back on the monopolies and standing up for local news, enacting tough new rules that require Google and Facebook to reach licensing agreements with news media, to negotiate over the sharing of online advertising revenues. 

Canada’s Heritage Minister, Steven Guilbeault, has committed to “being at the forefront of this battle,” and vowed legislation this spring along the lines of the Australian model.

The growing international efforts to curb their monopoly practices has thrown both Google and Facebook into a panic.   In desperate effort to stop the Australian legislation, both companies threatened to pull out of that country.   Predictably, the crude blackmail tactic resulted in a huge backlash Down Under.  In fact, the ham fists played into the government’s hands, steeling their resolve.  The result: an epic Google/Facebook climbdown, with the two humbled giants now at the bargaining table – thanks to the big stick of government legislation – with the country’s news media.

Now, with Canada poised to take the same path as Australia, the companies have landed on a new strategy: Indulgences 2.0.   Facebook, for example, is announcing an $8 million fund (over three years) for Canadian journalists.   Ignore the fact that for a company that reported revenues in 2020 of more than $105 billion in Canadian Dollars (a 21% increase over the previous year), this “commitment” literally does not even constitute a rounding error.

Far worse is how transparent this gambit is.  With their back to the wall, Facebook still refuses to admit how destructive their practices are and how closed they are to any reforms.  Instead, they are willing to pay a 21^st Century version of an “indulgence” to keep on profiting from a broken system that works for no one – not for citizens, not for democratic institutions, not for journalists, not for the news ecosystem – no one, that is, except for them.

Google and Facebook were once scrappy upstarts, disrupting established wealth and power structures.  Now they are the wealth and power.  And they are badly in need of some disruption of their own.

Minister Guilbeault said it well last month:  “(Google and Facebook’s behaviour) just proves the point that they’ve been unregulated for too long.  And this needs to change.”

Let the online reformation begin!

Jamie Irving is Vice President of Brunswick News Inc. and Vice-Chair of News Media Canada. 

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