Complements and/or Substitutes? The Competitive Dynamics Between News Publishers and Digital Platforms and What It Means for Competition Policy
30 Pages Posted: 13 Mar 2019 Last revised: 27 Mar 2019
Date Written: February 20, 2019
This paper is to analyse the competitive dynamics between news publishers and digital platforms. News publishers and digital platforms are vertical complements in that news publishers publish content that helps digital platforms to attract users. In turn, digital platforms generate traffic for news publishers. However, the relationship between news publishers and digital platforms is not harmonious. While digital platforms are an important source of traffic, news publishers are concerned that digital platforms free-ride on their valuable content, but also that that distribute that content in a manner that commoditizes it, hence harming their brands.
News publishers and digital platforms also horizontally compete for user attention and advertising revenues. Internet users in search of news can go to the website or app of their favourite newspaper, but they may also go to Google News, Facebook or Twitter. Similarly, advertisers can spend their online advertising budget on news publishers, but also on Google or Facebook online properties, which for that matter are also publishers. Linked with technological development, the growing ability of digital platforms to target audiences due to their data advantage has turned the market for online display advertising into a Google and Facebook duopoly.
Whether the relationship between news publishers and digital platforms is of a vertical or horizontal nature has implications for competition policy. From a vertical standpoint, some of Google and Facebook’s practices vis-à-vis news publishers could be exploitative in nature. Exploitative cases are, however, difficult to run and in some jurisdictions such as the United States, taking advantage of one’s market power is not illegal even if it harms one’s trading partners. Thus, other avenues may need to be explored to counterbalance the digital platform’s market power and to create a sustainable source of income for news publishers, such as, for instance, joint bargaining or the creation of collective licensing mechanisms for their rights.
From an horizontal standpoint, while digital platforms cannot be blamed for seeking to maximize their revenues, competition authorities should however prevent them from engaging in strategies that draw traffic away from news publishers and deprive them of advertising opportunities, either through self-preferencing, discrimination, the imposition of formats and standards that reduce the ability of news publishers to monetize their content, or by making it harder for them to access the data generated by the users’ interaction with their content.
Keywords: News Publishers, Newspapers, Digital Platforms, Google, Facebook, Twitter, Online Advertising, Ad Tech, Competition, Big Data, Joint Negotiations, Collective Societies
JEL Classification: K21, L12, L40, L86
Suggested Citation: Suggested Citation