U.K. Government Report Calls for Investigation Into Digital Advertising Market

Cairncross Review reads as a damnation of Facebook's and Google’s effects on media

The report recommended the creation of regulator-enforced 'codes of conduct' for news publishers. Getty Images
Headshot of Kelsey Sutton

The realities of digital advertising are so damaging to local and investigative news in the U.K. that a report commissioned by lawmakers is proposing government intervention across the digital media ecosystem.

The Cairncross Review, a report examining the health of U.K. news media and digital advertising, read as a damnation of Facebook’s and Google’s effects on the digital media landscape and represents the latest indication that regulators and legislators are looking for new ways to limit Facebook’s and Google’s power in digital media.

The report, released Tuesday, recommended the creation of regulator-enforced “codes of conduct” for news publishers to govern the relationships they strike with Facebook and Google, and called for the creation of a regulatory body that would oversee the tech giants’ efforts to tamp down on fake and misleading news spreading on their platforms.

The report also recommended that the U.K. Competition and Markets Authority conduct a comprehensive investigation into the digital advertising marketplace, particularly because of the overwhelming dominance of the two digital advertising giants.

British Prime Minister Theresa May in January 2018 commissioned the report to study the state of U.K. news media. Frances Cairncross, a British economist and former journalist who authored the report, wrote that “the opacity of the market for online advertising” and Facebook’s and Google’s market shares were reason enough to call for an investigation into the market.

Cairncross considered the possibility of Facebook and Google paying for the news they share on their platforms, she wrote in the report, but ultimately determined that a requirement might prompt Facebook and Google to “restrict access to news” to avoid the imposed cost. As to the issue of fake news and misinformation, Cairncross recommended the British government establish news literacy programs in addition to oversight of how the duopoly addresses news moderation, saying that the fight against fake news and misinformation should not be left entirely to the companies alone.

“While each platform should devise solutions which best fit the needs of their particular users, their efforts should be placed under regulatory scrutiny,” Cairncross wrote in the report. “This task is too important to leave entirely to the judgment of commercial entities.”

The report also underscored what has been a reality for small and local publishers on both sides of the Atlantic: For many publishers that do not enjoy a national scale, digital advertising revenues are not nearly enough to offset the decline of print advertising. The existing digital advertising landscape has tipped the scales in Google’s and Facebook’s favor, the report concluded, because of the companies’ massive sizes, and the wealth of personal information those companies collect give them an advantage.

“Given the evidence of a market failure in the supply of public-interest news, public intervention may be the only remedy,” the report concluded.

The Cairncross report suggested tax reliefs that encourage the purchase of news subscriptions and help support the financial viability of local and investigative news reporting, and suggested a number of other governmental interventions to help stabilize the precarious digital news media, including the establishment of financial aid programs, the creation of an Institute for Public Interest News government body to help support local news and the development of a media literacy initiative. The report also recommended that the BBC, a U.K.-based national broadcast organization, do more to help support local and investigative journalism.

It’s unclear whether these recommendations will be implemented or what it might mean for the companies’ operations in the U.S. The report, though, is likely to continue to fuel the intense criticism Facebook and Google are facing as the companies continue to suck up the majority of digital advertising dollars, leaving digital news media in dire straits.

The idea of intervening in some way to balance the scales between Google and Facebook and news media isn’t a new one. The News Media Alliance, a group of about 2,000 local and national news publishers, is trying to get congressional approval to negotiate collectively with Google and Facebook, which the group says would allow them to negotiate fairer terms. Jonah Peretti, the CEO of the digital publisher BuzzFeed, has floated a mass merger among digital media companies to create more leveraging power over the so-called digital duopoly.

As for governmental intervention, some legislators and advocates have suggested that Facebook and Google are violating antitrust regulations. Congressman David Cicilline, D-R.I., the chairman of the House Judiciary Committee’s antitrust subcommittee, has signaled that he is interested in taking on Facebook and Google over antitrust concerns.

@kelseymsutton kelsey.sutton@adweek.com Kelsey Sutton is the streaming editor at Adweek, where she covers the business of streaming television.