Antitrust Suit Against Google, Facebook ‘Necessary Step’ For Future Of Local Journalism, Says W.Va. Publisher

HD Media, a local publishing company with newspapers in Charleston, Huntington and southern West Virginia, became the first news publisher in the U.S. to file an antitrust suit against Google and Facebook last month.

Attorneys for HD Media say that the two multi-billion dollar companies are stifling local journalism by operating an unfair “duopoly” over the digital advertising market. In more than 40 pages, lawyers detailed a conspiracy by Facebook and Google to violate federal antitrust laws, created for promoting competition among online advertisers and vendors of advertising space.

They describe other tactics by Google for maintaining a “monopolistic” advantage over other vendors, including acquired behavioral data on internet users, which Google uses to create targeted advertising.

Sometimes, attorneys wrote, Google will collect data on visitors to newspapers’ websites, which Google “then uses to offer targeted and directed ads to the newspapers’ online readers and customers, thereby directly competing with newspapers for digital advertising.”

Nationally, newspaper advertising has dropped from roughly $49 billion in 2006 to $14 billion in 2018, according to the Pew Research Center. Meanwhile, attorneys for HD Media wrote that Facebook and Google, described as “archrivals” in the complaint, receive nearly half of all revenue generated from digital advertising. The disparity has resulted in a “profound impact upon our country’s free and diverse press,” attorneys wrote.

Reporter Emily Allen spoke with principal owner Doug Reynolds of HD Media about online advertising, their lawsuit and what readers should expect.

Allen: The way that we consume news has changed a lot with the internet, and I think you must be pretty familiar with this, especially in the process [of preparing] this lawsuit.

And the way that people are accessing the work that newspapers do, it doesn’t necessarily depend on having a physical copy of the newspaper anymore.

With that change and with all this digital access now, where do newspapers tend to get money to support what they do?

REYNOLDS: Well, I mean, print advertising, print display ads, that’d be the first biggest. The second biggest source of revenue is single copy and subscription sales. So someone walks in there, and they pay $1 for a paper.

And then the third area where we make money is digital — digital advertising in terms of selling display ads that accompany stories, as well as digital subscriptions.

ALLEN: Your attorneys — or, attorneys for HD Media — are writing that since 2006, advertising revenue has dropped by maybe 50%. Has HD Media taken a comparable hit? And what does that drop in revenue result in? What does that look like to your employees and your customers?

REYNOLDS: I would say that HD Media’s advertising revenue has been very comparable with the industry’s as a whole. You said, ‘What does that look like to our customers?’ In some respects, we hope they don’t notice it, frankly, that’s our goal every day.

We try to do more with less. We’ve tried to consolidate. If you look at what we’ve done, we’ve basically consolidated offices, copy desks, tried to take non-reporting expenses out of the business. We’ve cut the size of the paper, the width of it, which results in less waste. We cut off Monday papers, the lowest grossing revenue day, and we went digital. We have a digital paper on Mondays.

ALLEN: I think now would be a good time to redirect the conversation to the actual lawsuit, which you filed against Google and Facebook. They’re two of the largest national — or, international — entities out there. The lawsuit says that they’re monopolizing the digital advertising space, and they’re also violating antitrust laws for competition.

What do these laws look like? And how are they being violated? What does this monopoly look like?

REYNOLDS: Basically, if you look at these laws, they were enacted over 100 years ago. They said, basically, that in certain businesses there’s certain behavior you can’t do to become a monopoly. And in this case, you have to say, ‘Are these companies a monopoly? Do they conspire together? Do they operate to reduce competition?’

I think you could look at the marketplace, and you could say that most businesses, especially if they’re in an information and digital business, cannot do their business without Facebook and Google.

Clearly, it’s a closed ecosystem. You have to join their ecosystem. They sell ads against you, they compete against you. And then finally, they keep score. There’s no independent scorekeeper.

ALLEN: If you look at this lawsuit, it’s 42-pages long. It’s not something you could come up with in a week.

What is this in culmination of, and what kind of steps in this whole process has led you here? What has the conversation around antitrust laws and privacy and competition looked like until now?

REYNOLDS: You go back to the mid 90’s, there was this Telecommunications Act, which basically gave internet businesses, frankly, huge advantages — like, they can’t be held responsible for libel. Unlike newspapers, or unlike you! If you say something about somebody that’s false, you can be sued and held responsible.

Facebook can’t do that. Right? Somebody can get on their platform and say anything about an individual and they’re (Facebook) not subject to libel laws.

I think a lot of this case will be about assessing damages during this time frame. But for journalism as a whole, the most important thing is, what is the remedy that comes out of this?

I think that’s the really important thing that this case has to establish. There has to be some way that good journalism is financed. And it can’t be within an ecosystem that is at the will and pleasure of Facebook and Google, or good journalism will never include anything that’s critical of Facebook and Google.

ALLEN: You [HD Media] were the first newspaper group of your kind to file a lawsuit like this. As the smaller guy kind of taking on these large, multi-billion dollar companies, what are your hopes and fears?

REYNOLDS: I hope that we can get some type of financial settlement so we can continue to do the great journalistic work we do. You know, the Charleston Gazette-Mail won the Pulitzer Prize in 2017, for its work on the opioid crisis. We want to keep doing that.

You know, in terms of fears, my dad always said, growing up, ‘Never get in a fistfight with a guy that moves furniture for a living.’ And, you know, Mark Zuckerberg, I don’t think he does that. So we’re not afraid of them.

ALLEN: A lot of people read your newspapers. What do you want to leave your readers with?

REYNOLDS: We are committed to continuing to doing the work that we’ve done in most of our newspapers for over 100 years. And this is what we feel is a necessary step to continue to do that.

Representatives for Google declined to comment on the HD Media complaint specifically, but referred West Virginia Public Broadcasting to a statement that the company issued in January, responding to a similar antitrust suit by the Texas attorney general, which Google called “misleading.”

Several state attorneys general, along with the Federal Trade Commission, have filed complaints in federal court against Google for violating antitrust law. The company’s digital advertising practices were the subject of a U.S. House Committee investigation in October, and a Senate hearing in September.

Representatives for Facebook did not respond to a request for comment.

Emily Allen is a Report for America corps member.