Has UK found a way to curb Facebook, Google?

Slowing the inexorable rise of Facebook Inc. and Google, the gatekeepers for news consumption online, can be a fool’s errand.
For all the noise of the Cambridge Analytica scandal, Facebook’s revenue still grew by 37 percent last year, while Google parent Alphabet Inc.’s sales climbed 23 percent. Meanwhile, publishers’ revenue has faced a relentless squeeze as Silicon Valley sucks up more advertising dollars.
Which is why the approach taken by Frances Cairncross in her UK government-commissioned review into the sustainability of high-quality journalism looks to be sensible. Rather than attack the online platforms head-on, she has tried to strengthen the hand of publishers.
The drip-drip assault on tech firms from Europe is quickly developing into a torrent — but so far the punches have, at best, taken years to implement and, at worst, ended in embarrassing climbdowns. Spain and Germany are examples of countries that tried to crack the whip more forcefully, but their efforts to force Google to share more ad
revenue with news organisations backfired: Some publishers couldn’t cope with the loss of traffic when Google simply erased them from news search results.
France has imposed an early data-protection fine on Google and the European Parliament could well reclassify tech firms and put them in the same category as utilities this week, which could ultimately force them to share more data or technology. But neither move is likely to have an immediate impact.
I won’t seek to engage with all 10 of Cairncross’s sweeping proposals here, but two in particular did stand out as being the most immediately actionable: a code of conduct to rebalance the relationship between publishers and online platforms, and cutting the 20 percent value-added tax for online publications to zero.
The latter is particularly astute because it provides an incentive for publications to charge digital subscriptions rather than to lean on ad sales — which are dominated, particularly on mobile, by Facebook and Google. The two firms’ UK advertising revenue will climb to almost eight times the country’s newspaper industry’s revenue from print this year, according to estimates from eMarketer, a research firm.
Cutting the cost of a digital subscription to the consumer provides an immediate incentive, as if one were needed, for publishers to curb their reliance on ads. It would come at little cost to the exchequer: At 210 million pounds, it equates to some 0.03 percent of total UK tax income, according to a report by publishing industry trade groups.
The code of conduct with independent oversight will be harder to implement, but both Google and Facebook have indicated they’re open to the idea.
Whipsawing decisions about what content to favor, particularly by Facebook, have blindsided publishers in the past. As I’ve written before, the CEOs of the two firms would be wise to be amenable to such proposals if they’re to improve relationships with lawmakers and regulators.

—Bloomberg