By Taylor Buck, Rethink Trade Program Associate
On what planet is it an illegal trade barrier for governments to require Big Tech monopolists to pay for the content that journalists and newspapers create and from which the online platforms profit?
Such a claim was made by corporate lobby groups recently in filings to the U.S. Trade Representative (USTR). The target is Canada’s Online News Act, which, like Australia’s recent News Media Bargaining Code, addresses the major power imbalance between digital mega-platforms and newspapers and other news outlets.
Even though they profit massively from using the content created by journalists, Facebook and Google now dominate media ad revenue in a duopoly that has so diminished advertising revenue for traditional media that the United States is losing newspapers at a rate of two per week, while newsroom employment continues to drop at a staggering rate. Small and rural communities are often hit the hardest, although we all suffer when journalism is in crisis — as does democracy itself.
What the corporate lobby groups hate is the very concept that governments would establish a framework for digital platforms and news publishers to develop financial agreements for the platforms to compensate them for the content used on said platforms. You know, a level playing field between digital mega-platforms and the news outlets that write the content but see none of the revenue they help generate.
Why such intense animus? Because Australia’s News Media Bargaining Code, which went into force in 2021, has already proved this approach works to address the market failure. Australian media outlets of all sizes and Facebook and Google have already publicly disclosed over 30 deals, according to a new report. The former chair of Australian’s competition board estimates that over 90% of journalists in the country are now covered by these agreements and that $140 million was paid to news companies in the year following the legislation’s passage.
Here in the United States, Democrats and Republicans united in 2021 to introduce the domestic version of the concept, the Journalism Competition Protection Act (JCPA). JCPA passed the Senate Judiciary Committee in September 2022. Canada’s similar policy is now moving through parliament.
Here’s how all of these initiatives work: They establish a requirement for negotiations between the platforms and the news outlets. The outlets are empowered to initiate a bargaining process, which can be done either outlet-by-outlet or collectively. The digital platforms are required to participate. If an agreement is not reached on compensation, then an arbitration panel chooses between the final offers made by each of the parties. This style of arbitration incentivizes good-faith negotiations on both sides.
Facebook and Google have responded to each of these initiatives the way monopolists do: with bullying, threats, regiments of lobbyists. Facebook even temporarily blocked news content in Australia in retaliation, which backfired immediately and generated massive public outcry and fury. Not a great idea to shut down peoples’ access to health, governmental, and emergency information, especially during high fire season in Australia. A few months ago, Facebook threaten to pull the same stunt in Canada when the legislation started to move there. Meanwhile, in the U.S., the lobby troops managed to derail the JCPA in Congress’ last session.
The stealthier strategy accompanying that frontal attack takes us back to that planet where saving local journalism violates the United States-Mexico-Canada Agreement (USMCA), the deal between the U.S., Mexico, and Canada that in 2020 replaced the North American Free Trade Agreement (NAFTA).
Last year, we published an exposé revealing serial Big Tech attempts to hijack trade lingo and enforcement mechanisms to undermine policies reining in Big Tech’s dominance over retail, entertainment, transportation, advertising, and more. They said the quiet part out loud by slamming various entirely legit digital governance policies as “illegal trade barriers” in 2020 and 2021 submissions for a U.S. government trade report called The National Trade Estimate (NTE), a statutorily required annual review of potential illegal trade barriers around the world.
Our report chronicled over 30 separate instances of corporate associations backed by companies like Facebook, Amazon, Google, Microsoft, and other Big Tech mega-platforms using the trade non-discrimination concept to attack cutting-edge pro-competition digital policies around the globe over just two years of NTE submissions. The policies Big Tech targeted focus on increasing competition and cracking down on abusive corporate behavior. But given that many of the largest tech companies are based in the U.S., Big Tech interests used the NTE to accuse governments around the world of devising policies specifically intended to target U.S. companies. The reality is that countries’ anti-monopoly policies will naturally affect the most dominant players in any sector due simply to their largeness, not their nationality.
One interesting thing we noticed was that the corporate lobby groups attacked the Australian New Media Bargaining Code and other policies countering tech monopoly power in general terms. They cited vague conflicts with the World Trade Organization (WTO) or particular U.S. free trade agreements (FTAs). The problem for Big Tech is that many of those deals were negotiated before the digital mega-platforms started controlling virtually every aspect of our lives and gained so much power over government officials. In other words, the obligations in those deals are not as intrusive as Big Tech might wish.
So, Big Tech had to rely on the century-old concept of non-discrimination that requires countries to treat similar products the same, regardless of where they originated. For example, a country can require that all skis meet certain safety standards, but cannot require imported skis to meet tougher standards than domestically-produced ones (that is called “national treatment”), or allow just one country’s skis to get a pass on meeting the safety standard relative to other imports (this is the most-favored nation rule).
That was the idea, anyway. But over the past few decades, broad language on the non-discrimination standard in trade agreements has been used by corporate interests to attack neutral policies that may have unintended disproportionate effects on foreign products. One of the first examples was a Canadian challenge under the General Agreement on Tariffs and Trade in 1992 against tax benefits that some U.S. states offered for microbreweries. Even though Canadians could get the microbrewery benefits and large U.S. beer producers could not, Canada complained that the policy had a disproportionately negative impact on Canadian firms because the large breweries that were most likely to engage in international trade and investment were excluded, and the smaller ones who could get in on it were less likely to engage in U.S. business activities.
So when the Big Tech firms started screaming about the Canadian Online News Act directly, we wondered if it would be attacked as violating the extreme “digital trade” language that the industry had managed to get added to the USMCA when it was negotiated in 2018.
Sure enough, we found comments about the Canadian initiative as a violation of the USMCA digital trade “non-discrimination” rules. (USMCA Article 19.4 for the true wonks who want to follow along at home!) These crazy USMCA terms forbid policies that apply equally to domestic and foreign firms if such policies may have a larger impact on a foreign firm not because it is foreign but because it is bigger. (Yes, effectively this “digital trade” provision protects Big Tech monopolies, but that should not be so surprising given they had a major hand in writing the terms.)
So, for example, the Computer & Communications Industry Association, a D.C.-based lobbying organization which includes among its membership Facebook and Google, labeled Canada’s Online News Act a “problematic and discriminatory policy… narrowly targeted to apply to U.S. firms,” in conflict with USMCA Article 19.4. The National Foreign Trade Council, the Information Technology Industry Council, and the U.S. Council for International Business similarly cited USMCA in their arguments against the legislation.
It’s worth noting that for all of their howling, the Canada’s Online News Act includes provisions for platforms to be exempted if they meet certain criteria, such as providing fair compensation to news outlets for use of their content. Also importantly, the only criteria the Canadian proposal uses to determine which platforms must participate are the platform’s size and market position. No specific companies are named, and platforms’ country of origin is certainly not mentioned.
Like Big Pharma in the 1990s, digital mega-corporations realize the effectiveness of handcuffing countries through trade deals. So now one of their priorities is to push for highly invasive “digital trade” terms to be caboosed to actual trade deals. The USMCA approach to digital trade is a big problem. Broad, open-ended, and vaguely defined provisions on non-discrimination in trade pacts provide Big Tech with an avenue to attack good digital governance around the world, and we’ve now seen time and again how large corporations are willing to manipulate trade terms to serve their own interests.
That is why this direct attack using the USMCA terms so worrisome. The Big Tech lobby is trying to get that very language into the Indo-Pacific Economic Framework (IPEF). IPEF is a major trade negotiation that the Biden administration has launched with countries in Asian comprising 40% of the world economy. Congress and the Biden administration have enormous stakes in not letting Big Tech hijack the IPEF and derail government action just as countries worldwide are moving to counter Big Tech abuses.
[Preview of coming attractions: If you wondered how trade deals can get so extremely rigged by industry special interests, imagine an official U.S. government trade advisory system that is almost all representatives from corporate interests and a negotiating process that occurs behind closed door with the public, press and even Congress largely excluded… Seem far-fetched? Keep an on eye on the Rethink Trade blog for the ugly truth!]
