Good morning, and thanks for having me.

It's a privilege to speak to a Canadian audience, and I wish I could testify in person.

On behalf of the News/Media Alliance, a collection of news publishers, I have worked extensively on companion legislation to Bill C-18 in the United States called the Journalism Competition and Preservation Act , or JCPA, and I will speak to those efforts. The economics are the same.

Among other protections for news publishers, the JCPA would grant an exemption to antitrust laws for news publishers so they can better coordinate their dealings with the tech giants.

Before going any further, I want to be clear. Antitrust exemptions are rare, and that's a good thing. Powerful entities should not be immunized from antitrust scrutiny. In some limited circumstances, however, coordination among small suppliers when dealing with a large buyer is necessary to overcome a power imbalance that causes input prices and employment to fall below competitive levels.

This market failure is the basis for the current exemptions for farm co-operatives in particular and labour in general from the U.S. antitrust laws. It is the same basis for extending a new exemption to newspapers in their dealings with dominant Internet platforms.

That the word “preservation” appears in the U.S. legislation is no accident. The news industry has incurred losses in advertising revenue every year since 2006, according to the Pew Research Center.

The effect of shrinking advertising revenues, in part caused by underpayment from dominant platforms, is less cash flow to support journalists and a clear employment effect flowing from the exercise of monopsony power by the dominant platforms. U.S. employment among newspaper employees fell from 71,000 in 2008 to 31,000 in 2020, according to Pew. As a result of the deteriorating news media landscape, hundreds of local newspapers have been acquired or have declared bankruptcy.

Google and Facebook reframe newspaper articles in rich previews containing headlines, summaries and photos. The platforms also curate newspaper content alongside advertisements. This reframing and curation decreases the likelihood of a user clicking on the article, thereby depriving news publishers of clicks while enriching the dominant tech platforms. This appropriation of newspaper content at zero access price also decreases newspaper subscriptions. When the clicks on newspaper content eventually come from the platforms' websites, the associated advertising revenues are taxed by the platforms at excessive take rates.

The best way to correct the exercise of monopsony power is for the government to permit the news publishers to coordinate their dealings with the digital platforms over payment terms and conditions. Given the massive power imbalance, collective bargaining by itself might not be sufficient to achieve competitive payments, in which case some structured bargaining among the parties, for example mandatory arbitration with an enforcement mechanism, is needed as a backstop.

Curiously, some traditional anti-monopoly groups have stated their resistance to granting countervailing bargaining power to newspapers in their dealings with dominant platforms. In a joint statement, the American Antitrust Institute, Public Knowledge, Consumer Reports and Consumer Federation of America argued that a new antitrust exemption “will only hurt consumers, citizens, and businesses that are not invited to the negotiations that this exemption is supposed to facilitate.” It bears noting that some of these groups depend on the dominant platforms for funding.

Instead of the JCPA, these same detractors have called for greater enforcement of antitrust laws against Google or Facebook, but the conduct that is being challenged here, the mere exercise of monopsony power to achieve a reduced rate for newspaper content, is not a cognizable vertical restraint under antitrust law. Scraping, reframing and curation, and appropriation of value do not amount to violations of section 2 of the U.S. Sherman act. Unlike Europe, the United States does not have an abuse of dominance standard.

Moreover, even if one could style something else the platforms are doing as a cognizable restraint, a successful antitrust lawsuit against, let's say, Google, would provide zero relief for publishers in their dealings with Facebook. A successful antitrust lawsuit against Google or Facebook would require several years to adjudicate, and the appeals might not be resolved for nearly a decade. In the interim, newspapers would be left twisting in the wind. Given the newspapers' precarious financial state, it is not clear how long many newspapers could survive without an intervention today.

The JCPA has undergone significant amendments.