Schenectady

Capital Region newspaper group joins legal challenge to Google, Facebook

PHOTOGRAPHER:

ALBANY — A Capital Region publisher has joined the long line of newspapers suing Google and Facebook, saying the tech giants are cornering digital ad revenue with their monopolistic and anti-competitive practices.

Attorneys for Capital Region Independent Media LLC on Tuesday filed papers Tuesday in federal court in Albany nearly identical to lawsuits they have filed on behalf of more than 200 other newspapers in 22 states.

The complaints make the point that “The freedom of the press is not at stake; the press itself is at stake” because the two digital giants have conspired to grab for themselves the bulk of digital advertising revenue that the press must have if it is to survive.

Capital Region Independent Media owner Mark Vinceguerra said Friday that Facebook and Google are unfairly exploiting newspapers like his: 

The digital giants need fresh local content; so they take headlines and summaries from newspapers; without paying the newspapers for it; without incurring any of the costs of generating it; without bearing any of the responsibility or liability for its accuracy; and while keeping ad revenue for themselves.

“The biggest thing, essentially, is they’ve taken what we produce and they’ve used that to boost their audience,” Vinceguerra said.

The lawsuit starts by quoting Thomas Jefferson’s comments circa 1787 on the importance of newspapers and moves quickly to antitrust investigations circa 2020 against Google and Facebook.

At the heart of the case is a secret 2018 agreement codenamed Jedi Blue between the two companies, which had been archrivals for digital advertising money but struck a quid pro quo deal to stop competing.

This was an unlawful conspiracy to manipulate the market, the lawsuit claims.

Supporting details within the lawsuit indicate newspapers’ problems predate Jedi Blue.

Newspaper circulation in 2018 had already fallen to the lowest level recorded since comparable data were first gathered in 1940; newspaper ad revenue dropped from $49 billion in 2006 to $16.5 billion in 2017; and the newspaper workforce dropped 50% from 2008 to 2019.

Google and Facebook, the dominant forces in their respective sectors, continue to apply pressure, the lawsuit claims.

The lawsuit seeks restitution and treble damages with interest, legal costs and any other relief deemed appropriate after a jury trial for the two companies’ alleged monopolization of the digital ad market, conspiracy for restraint of trade and unjust enrichment of themselves,

The alternative is “the decimation of local news sources, giving rise to news deserts, and a profoundly negative effect on American democracy and civic life,” the lawsuit maintains.

Vinceguera’s company publishes newspapers from Greenville to Granville and runs online news sites. These newspapers long predate the internet, and the telephone in some cases, and even the telegraph — the Whitehall Times dates all the way back to 1815.

But it also has a website and a Facebook page.

“Ink on paper is how people know us,” said Vinceguerra, owner of the newspaper group since 2018. “But we’re very diverse in how we tell stories.”

WIDESPREAD ISSUE

Most smaller newspapers are suffering to some degree amid the status quo maintained by Google and Facebook, said Diane Kennedy, president of the New York News Publishers Association.

“It really depends very much on the news organization,” she said. “Larger organizations have been able to negotiate payments in return for news content.”

The problem is that many people only read the headline and first few sentences of an online news post that represents hours of work by a news team supported by an expensive infrastructure. Google makes money with a link to that headline and first sentence, even if the rest of the story is obscured behind a paywall on the newspaper’s website.

“Copyright law has not kept up with technology,” Kennedy said.

There is some hope for relief, she said, in the proposed Journalism Competition and Prevention Act, federal legislation that would waive antitrust rules and allow newspapers to band together to negotiate fees for use of their content. Small and midsize organizations would see the most benefit, she added.

A similar measure has shown significant benefit to newspapers in Australia, Kennedy said, and variations are under consideration in other countries.

However, it seems not to be on a fast track in the United States, despite bipartisan sponsorship.

Another federal proposal — the American Innovation and Online Choice Act — would bar large online platforms from self-preferencing their own products or limiting competitors, and that is more closely focused on ad revenue, Kennedy added.

John DeAugustine, president and publisher of The Daily Gazette, said The Gazette isn’t among the newspapers suing the tech giants but has not ruled out the possibility.

“Our position on this is Google and Facebook perform a vital service in getting our content out to people who may not come directly to our site,” he said. “Now, I understand fully that they are taking ad dollars that may otherwise be placed in our products and the impact of that has been greatly detrimental over time. I do not think the downside of the ad dollars that they have taken outstrips the benefit of getting our content in people’s hands.”

The newspaper’s inclination could change as the situation changes, he said Thursday, the same day Facebook announced it was canceling the partnership program by which it pays news organizations to have their content appear in the Facebook News Tab.

“So this is an evolving thing that has to be watched very closely,” DeAugustine said.

Passage of the American Innovation and Online Choice Act would be a help, he added. “It’s not a drop in the bucket to a newspaper our size,” he said.

Newspaper lawsuits against the tech giants began in West Virginia and spread rapidly. The Fitzsimmons Law Firm in Wheeling now represents 40 ownership groups publishing 225 newspapers in 22 states.

Clayton Fitzsimmons said Friday there are now four categories of plaintiffs suing Google and Facebook over their online business practices: State attorneys general; advertisers pursuing class action status; newspapers pursuing class action status; and newspaper publishers acting individually, like Capital Region Independent Media.

Most cases have been consolidated as a multidistrict litigation matter in federal court in Manhattan, so that the same pretrial process of depositions and discovery need not be done hundreds of times. He expects Vinceguerra’s lawsuit will be moved into the same group.

At stake is not just money but survival of the news industry and the continuation of what it does for democracy, Fitzsimmons said, and “that is a fight that is absolutely worth fighting.”

Categories: Business, News, Schenectady, Schenectady County

0 Comments

No Comment.