Hancock: Google and Facebook Effect on Journalism Is ‘Incredibly Important Issue’

Google and Facebook’s domination of the digital advertising market and the effect of this on the sustainability of journalism produced by news media publishers is “an incredibly important issue” for Government, Matt Hancock has said.     

Speaking in a Lords Communications Committee hearing on Tuesday as part of its inquiry into the advertising industry, the Minister for Digital highlighted the huge growth in online ad spend compared to declines in print advertising.

Earlier the same day, MPs grilled witnesses from Google, Facebook and Twitter during an oral evidence session which was part of the Home Affairs Committee inquiry into hate crime. Committee chairman Yvette Cooper accused the platforms’ algorithms of facilitating grooming and radicalisation.

She claimed: “The problem you have is that all three of your organisations use algorithms to encourage people who are interested in one particular thing to then follow something else. The police have said very clearly to us that they are extremely worried about online radicalisation and online grooming.

“Isn’t the real truth that your algorithms, and the way that you want to attract people to look at other linked and connected things, are actually doing that grooming and radicalisation? Once people go on one slightly dodgy thing, you are linking them to an awful lot of other similar things, whether that be racist extremism, Islamist extremism—your technology is doing that job, and you are not stopping it from doing so.”

This allegation was denied by Facebook’s Simon Milner and all three witnesses went on to outline the steps taken by the platforms to tackle the problem of radicalisation online.  

In the Lords hearing, Committee member Baroness Kidron said Google and Facebook “seem to be a duopoly” in the online advertising market and asked Mr Hancock if the Government was planning to take a look at it.  

He said: “It’s clearly an incredibly important issue. The first lens through which we look at this is the need for a sustainable business model for the press because high quality objective journalism has a public policy value as well as an economic value, an incredibly important wider value.

“Digital advertising spend grew by 13.4 per cent on the year to 10.3 billion in 2016 and print advertising fell by £112 million which is equivalent to half of Fleet Street’s aggregate profits in 2015. I read those facts out, although they are also in my written evidence, because they show starkly the impact that this change is having.

Separately today, new figures from the Internet Advertising Bureau reported by AdAge show that global digital ad revenue in the first half of 2017 has surged to record levels, up 23 per cent on the previous period to reach $40 billion with 75 per cent of the revenues going to the top 10 companies. 

According to AdAge, the IAB did not disclose how much growth was attributed to Google and Facebook although it is reported that the duopoly accounted for 73 per cent of all digital advertising in the US in the first half of 2017.    

Speaking in the Lords hearing about the effect of Google and Facebook on journalism, Mr Hancock added: “It’s something that we are very interested in and concerned about. The question to do with competition is a live debate but it isn’t one that we in the UK Government have yet made a foray into.”

The Bundeskartellamt, the Federal Cartel Office in Germany, announced this week that its preliminary legal assessment in an “abuse of dominance proceeding” was that Facebook is abusing this dominant position by “making the use of its social network conditional on its being allowed to limitlessly amass every kind of data generated by using third-party websites and merge it with the user’s Facebook account.”

In Australia, competition authorities have launched an inquiry to examine the effect digital content aggregation platforms such as Facebook and Google are having on competition in media and advertising services markets.

The News Media Association has called for an urgent investigation into the impact of Google, Facebook, and a digital advertising supply chain which has been described by the world’s largest advertiser Procter & Gamble as “murky at best, fraudulent at worst”.

In the Lords hearing, Baroness Kidron pointed out that a lot of revenue from advertising was now leaving the UK as a result of the digital disruption so for the Government there was an advantage in following the money.

Taking up the point about whether Google and Facebook offer “free” services to consumers, Baroness Kidron said: “If you’re not paying you are the product, and their cultural and economic dominance is, I think even by their own standards if you read Peter Thiel, monopoly driven.”  

Lord Colville asked whether the Government could do something to introduce transparency and greater openness into the digital advertising supply chain.

Mr Hancock responded: “You talked about your concerns about high quality journalism and we’ve heard from both publishers and advertisers about their concerns about the lack of transparency and the lack of value for money they are getting from the incredibly complicated advertising supply chain.

Hancock said: “I do think this is something that we should look at, whether it’s best or not to be done on a regulatory basis is a good question.”