By Kirk Cheyfitz, Story Co-founder
The Internet’s early days were rife with talk of utopian democracy finally triumphing through technology. Now, instead, we have America’s decimated news organizations begging Congress for help to defend journalism from two Internet monopolies.
The News Media Alliance, representing some 2,000 news companies, said earlier this month, “Google and Facebook dominate online news traffic and consume the bulk of digital ad revenue.” The duopoly has “commoditized the news and given rise to fake news,” the newsgroup said. The news organizations want an exception from the antitrust laws so they can negotiate as an industry against the online behemoths.
There’s no disputing the facts: Fully 60% of all online ad revenue now goes to Facebook and Google; their share of total ad dollars is growing rapidly. More importantly, the bulk of the money to finance fake news and crush real news comes from the digital ad buys of America’s brands.
Economists in the U.S. and Europe who study the Internet’s workings have warned that Google and Facebook are so dominant that it’s now impossible to compete with them. Other potential online monopolies are gathering momentum.
This has a lot of people in media asking, “How did we get here?” This certainly was not the Internet-transformed world most people envisioned — a world where the little guys got a better break.
“Hyperlinks subvert hierarchy,” trumpeted “The Cluetrain Manifesto,” 1999’s declaration of the coming Internet-driven revolution. Cluetrain was just one of a thousand voices proclaiming that power would be universally shared among “the people” in a networked world.
This belief about equality and the web rose with the advent of social media beginning in 2006. Social would give everyone the power to be “a global publisher.” The money wouldn’t matter since publishing would be virtually free. Big corporations would lose their grip on everyday people. Freedom would ring across the net. By 2012, the chairman of the U.S. Joint Chiefs of Staff was crediting widespread revolution in the Middle East to “Facebook and social networking….”
Flash forward to the present, however, and the utopians can be seen shaking their heads disbelievingly at what the World Wide Web has wrought. I should know; I’m one of them. Instead of utopia, we have fake news. In place of perfected democracy, we have autocrats and skinheads meddling in democratic elections. In place of personal empowerment, we have surveillance by the NSA and others. Countering dreams of increased economic opportunity, we have more monopoly.
While the web does confer vastly more connections and publishing power on individuals, as predicted, it also turns out the Internet’s “network effects” favour and promotes winner-take-all monopolies. Dreams of a web-based utopia have disappeared beneath the reality of web-based monopolies like Google, Facebook and, coming up fast, Amazon, Airbnb, Uber and others.
The irony, of course, is that democracy and journalism are just collateral damage in this networked drama. The power of Google and Facebook depends completely on the billions spent by brand advertisers and it’s the advertisers who are bound to suffer increasingly as the monopoly power of this pair inevitably leads to higher prices and ever-greater control of the web.
While the news industry begs for mercy, it’s high time for the ad industry to rise up and demand a more equitable marketplace online. My bet is that adland’s push back must be now or it’s likely to be never.