News publishers face ‘existential threat’ from Google and Facebook, peers warn

The government must take action to address a “dysfunctional” online ads market that is crippling news organisations, a new House of Lords report has said.

Warning of a “fundamental imbalance of power” between news publishers and platforms like Google and Facebook, the report issued by the House of Lords Communications and Digital Committee warns that journalism faces an “existential threat” if action is not taken.

Outlining the issue, the report details how publishers are increasingly forced to rely on online revenue.

However, it notes, platforms like Google and Facebook profit from adverts alongside news organisations’ content, despite neither having to pay for the right to carry such content.

"Online advertising is crucial to news publishers' success, but there's a fundamental imbalance of power between them and platforms such as Facebook and Google whose overwhelming market dominance means they dictate the terms on which they use publishers' content, including whether and how much they pay for it," Lord Gilbert of Panteg, chairman of the Communications and Digital Committee, said, according to PA Media.

“Publishers need platforms far more than the platforms need them and are disadvantaged by a dysfunctional online advertising market,” Mr Gilbert said.

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The chairman said committee members would like to see the Government “act swiftly to remedy this” by setting up the Digital Markets Unit (DMU) outlined in the Furman Review in March 2019.

Under the proposal, the DMU would operate as a function of either the Competition and Markets Authority (CMA) or Ofcom or it could exist as an independent body connecting the two.

The unit would be tasked with establishing a code of conduct regulating the digital markets.

Mr Gilbert said any delay to the development of the unit could be detrimental to the journalism industry.

“The possibility that it could be delayed until 2022 or later is unacceptable — the news industry can't afford to wait that long,” he said.

Peers also recommended the introduction of a compulsory news bargaining code that would force platforms to pay publishers for the right to access content.

In a statement provided to PA, Michelle Stanistreet, general secretary of the National Union of Journalists (NUJ) said: “The House of Lords Communications and Digital Committee report correctly identifies the need for the tech giants to be brought to book for their stranglehold on the media industry and the unfair competition for advertising revenue.”

However, Ms Stanistreet said there is "scope to be much bolder".

"A levy of tech giants would provide the means to support innovation and plurality and help this industry out of the crisis caused by the pandemic and towards better health," she said.

“A more strategic body — such as a Journalism Foundation — is needed to increase media plurality, champion public interest journalism and rebuild the present broken media model,” Ms Stanistreet said.