Canadian news industry groups are seeking antitrust action against Meta Platforms for blocking news on Facebook and Instagram in response to a law requiring social media companies to share advertising revenue for news articles. The law is yet to be enforced and the fine Meta faces, if found guilty of abusing its dominant position, will not make up for the loss in revenue publishers face due to the blackout. Canadian advertisers are patriotically withholding advertising to Facebook and Instagram. All of this is headed nowhere, with consumers of news left holding the can. Meta should have been paying for using news content, not turn the news spigot off on its platforms.
The way to go about making the internet a fairer place for content creators is to tackle concentration among platforms. Competitive intensity in social media would ensure a better distribution of ad revenue all along the value chain. Google and Facebook corner most of online ad revenue because of the network effect. By limiting network size, lawmakers will have a better shot at restoring the balance between publishers and distributors. A network of smaller networks could match the reach of current social media giants, and the money would spread further afield. The challenge for lawmakers is to interconnect proprietary networks so that producer and consumer can both be platform-agnostic. Social media platforms may see the logic of open networks if the alternative is restriction on size.
Platforms fragment all the time with innovation that alters consumer behaviour. YouTube and Instagram are struggling to monetise the short video format popularised by TikTok. Tech giants are also facing class-action copyright infringement suits over deploying AI on user-generated content. As the tech frontier moves outward, data owners will demand a bigger slice of the pie for machine learning. New battles will be fought between content creators and companies controlling AI on how to carve up the productivity gains. Here, too, the solution will reside in competitive markets rather than in overzealous regulation.
