The great breakup of big tech is finally beginning

These corporations enhance their power by getting data from nearly every publisher that exists. Google and Facebook need publishers to serve their large audiences, and publishers need Google and Facebook as distributors. But the power imbalance is stark. Google and Facebook need publishers, but they don’t need any one specific publisher. By contrast every publisher desperately needs both Google and Facebook to get their content in front of readers. For example, a few years ago Google decided to punish the Wall Street Journal for enacting a certain type of paywall by downgrading the newspaper’s search ranking, lowering the Wall Street Journal’s traffic by 44%. Google’s business was unaffected.

With this imbalance, both Google and Facebook can and do entice or force, through a host of arrangements, millions of publishers to hand over data about their audiences and subject themselves to specific formatting choices. In other words, Google and Facebook both compete with publishers for ad revenue and force those publishers to hand over data about their readers and subscribers, data which is the main input that advertisers want.

The net effect of this market structure is that news gatherers can produce news, but most of the advertising revenue earned from people consuming that news goes to Google and Facebook. Google and Facebook earn money from other people’s work, which is unfair and anti-competitive. And it’s why newspapers are dying.