It offers a perspective on the Finkelstein and Convergence Reviews noted earlier this year.
The report comments that
News media have a significant role to play in supporting the effective functioning of a democratic society. There is a clear and widely accepted public interest in ensuring that measures are taken, where needed, to secure at least two key goals: first, that all citizens can access a range and diversity of high-quality news, opinion, and analysis from different sources, and second, that no single media owner can exercise undue power and influence over the political agenda.
What these measures should be is a topic of gathering significance, not just in the UK but the rest of the EU. Here we have relied on a ‘public-interest test’ which can be applied in the event of certain media mergers, plus a ban on large newspaper groups owning a significant proportion of the main commercial broadcaster, Channel 3. Elsewhere, caps on market share and media ownership are sometimes used, alongside public funding to fill any gaps in market provision (especially in broadcasting).
But there are threats to commercial news provision, and plurality rules face stresses and strains. Caps on media ownership are very blunt tools when faced with the twin challenge of convergence and the increasingly uncertain long-term viability of the news sector as a whole. Public funding is under scrutiny and for some carries the risk of too much compliance or self-censorship. Even a media market as big as the UK’s may not in future be able to support the range of competing local and national news brands that have been available to date.
Some hope that digital media will help to address this plurality gap. It has the potential to transform our consumption of news, and the way in which we engage in the democratic debate. It can help users find many more sources of news than ever before. Over time it may support new business models for high-quality news. But there are risks, too. New and powerful digital intermediaries, such as Apple, Google, Amazon, and Facebook are emerging. They can play a hugely positive role in facilitating wide and open access to news content. But the decisions they take could equally constrain or control access to news and affect the viability of third-party news providers. The scale and scope of their activities could have wider consequences for society as a whole.
This report focuses on those digital intermediaries, examines their activities and their implications for plurality – now and in the future – and assesses options for addressing any concerns through changes to the existing plurality framework.Foster argues that -
Digital intermediaries can be classified into four broad groups: news aggregators like Yahoo, search engines like Google, social media like Facebook, and digital stores/devices like Apple. They all bring news content from third-party providers to consumers, using a variety of digital software, channels, and devices. They are increasingly important providers of access to news. According to the recent Reuters Institute Digital News Report, 30% of online news users use search engines as one of the main ways they access news, 22% use news aggregators, and 20% use social media.
The first group – news aggregators – are close to established news media in the way that they operate, providing carefully curated packages of news content for their users, and sometimes originating new content themselves. They should be treated in the same way as established news media when considering plurality, ownership, and press regulation.
The other intermediaries – search, social, and apps – are rather different, being neither neutral ‘pipes’ nor full media companies. One way of thinking about these enterprises is as gatekeepers, controlling information flows, selecting, sorting, and then distributing information. In doing so, they have a potentially profound impact on how we take part in and think about our democratic society and culture. Their activities could have a bearing on plurality of news in four broad areas:
- their control of what might be thought of as distribution bottlenecks through which users access news;
- the editorial-like judgements they make about the news content they link to or carry;
- their role in shaping future economic models for news provision;
- their inclination and ability to influence the political agenda.
Together, these could have an important impact on the range and diversity of news readily available to users in the UK – that is, on news plurality.
Regarding distribution bottlenecks, it would be hard to argue that any of these intermediaries are as yet an ‘essential’ channel for news: news providers have other routes to market, and news consumers can find news on many different platforms. Nevertheless, as the importance to news of digital media grows – especially for some key demographic groups – their role will collectively become more critical. Decisions taken by these privately owned players could impact significantly on the public-interest goal of securing universal access to high-quality news.
Regarding editorial-like judgements, most digital intermediaries do not currently originate news or make the sorts of editorial decisions that are the everyday currency of mainstream news providers. But their judgements and policies do affect the nature and range of news content that we have access to. To varying degrees, they sort and select content to provide news which is of ‘relevance’ to their customers, and decide which sources of news to feature prominently. Whether intentionally or not this can have an impact (positive or negative) on the range and diversity of news available to their users. They also take decisions about the nature of content they are prepared to link to or carry. Such decisions, as they affect privacy, fairness, and other content standards, are a matter of public interest.
Regarding future economic models for news, digital intermediaries have so far had a mixed impact. They have helped news suppliers to find new markets, customers and revenue sources, but at the same time they have contributed to the disruptive effect of the internet on advertising markets and enabled disaggregation of news content, hence making it harder for news suppliers to make money. The future of commercial news provision will depend on news providers, with the cooperation of digital intermediaries, finding compelling and viable new propositions, such as apps for smartphones and tablets.
Regarding political influence, it is clear that very large global companies like Google and Apple will increasingly expect to have a seat at the table when governments and regulators are considering actions which might affect their business interests. It is less clear (yet) whether any of these organisations has the inclination or means to get more involved in shaping the wider political agenda – in the manner of newspaper proprietors of old. Should they in future decide to acquire content companies or to invest in news media in their own right, this would give them more leverage in any such lobbying activity, and would be a plurality concern.
A related concern to emerge during research for this report is connected with the increasingly important and pervasive role which – at least some – digital intermediaries play in the everyday lives of their individual users. This touches on, for example, issues of privacy, identity, social relationships, notions of acceptable behaviour, shared culture, and values. While not strictly relevant to this discussion of news plurality, and hence not covered in detail in this report, these wider concerns add to the case for including these enterprises in any overall discussion of plurality in its broader sense.
Across all these areas, a common concern is how to ensure that intermediaries face appropriate levels of accountability to the UK public and parliament for their actions – actions which can have a profound impact on all our lives. They are large global players, and understandably approach their businesses from an international perspective. Some maintain only a nominal corporate presence in the UK. It will be an important challenge for policy- makers and others to find ways of ensuring that these intermediaries understand and fully engage with the UK’s own particular public interest and citizenship concerns in the area of news plurality and beyond.In considering policy and regulatory implications Foster comments that -
A new framework for news plurality will need to last for at least the next decade. It must therefore reflect and respond to these four concerns. Policy- makers and regulators must pursue a balanced approach, taking care not to chill innovation or penalise success while acting where justified to address evident plurality concerns. A range of tools will need to be considered. Competition law should be the starting point, especially where concerns arise about the potential dominance of intermediaries and their ability to distort competition. A competitive market outcome may still leave plurality shortfalls, however. It does not guarantee either the range and diversity of news prized by most democratic societies, or the principle of universal access to such news across different networks and platforms. Additional measures may therefore be needed.
This suggests a four-tiered approach:
- Securing effective competition: active use of existing competition rules to ensure that news consumers and suppliers are protected from any anti-competitive behaviour.
- A new plurality dialogue, involving government, intermediaries and other relevant parties, to ensure that intermediaries understand and are fully engaged with UK citizenship priorities, and are properly accountable to the public.
- Incorporation of digital intermediaries within the new plurality review framework proposed recently by Ofcom.
News suppliers now have to deal with powerful digital intermediaries to distribute their content to users. The commercial terms on which they can do this will have a big impact on the future viability of high-quality news. These are in the first instance business negotiations, but could also have implications for longer term plurality if powerful intermediaries use their market power to restrict or distort competition. Using existing competition powers to secure effective competition in relevant markets should therefore be a key priority. These are complex and fast-moving markets, however, and competition processes can sometimes be lengthy. It will be important therefore to seek ways of ensuring that the relevant authorities have a good and up-to-date understanding of these markets, and that developments are kept under review to ensure quick and effective action in the event of any emerging concerns. Regular monitoring of market developments by a designated authority – perhaps the communications regulator – could be part of this process.
- Consideration of remedies or backstop regulatory approaches, particularly in the area of access, that might be called on should intermediaries over time prove to be a threat to plurality.
There is an opportunity here, building on the initiatives some intermediaries have already taken, to engage them fully in the plurality debate and to ensure that their actions and policies are properly informed by the UK public interest. Three main issues could be on the agenda:
- how intermediaries will help secure universal access to a diversity of news;
- how intermediaries will ensure that the news content they provide access to meets UK public expectations in areas such as accuracy, privacy, fairness, and compliance with UK laws (this could cover, for example, notification and take-down policies and any pre-approval processes);
The overarching principles should be open access, consistency with UK public expectations, transparency of policies, and clear accountability for any decisions taken. Intermediaries should be encouraged, as many do already, to publish the criteria used in making access decisions, including access to news. Search companies, for example, would be encouraged to publish in a clear and simple format the principles they use in designing search algorithms. Digital stores would likewise be asked to publish details of their approval processes and how they decide to give prominence to certain apps.
- how intermediaries will ensure that any decisions they take in these areas are properly accountable to the UK public.
In parallel, they should be encouraged to participate in sector-wide initiatives to help devise a transparent, coherent, and widely understood approach to content regulation as it applies to their unique roles, including news. This does not mean that intermediaries would be forced to take responsibility for all the content they provide access to, but that appropriate guidelines, codes, and processes would be put in place for the types of editorial decision they do take – whether in response to complaints about illegal content, or in applying any wider standards.
In both cases, digital intermediaries should be encouraged to build on their current processes to put in place procedures for responding effectively to complaints and ensuring appropriate action is taken in the event of any breach of published criteria or codes. Such processes could include a clear route for content suppliers or users if they wish to complain about any significant and unexplained changes in search rankings or other forms of prominence, and any decisions to block access to content.
While much of this can be left to intermediaries themselves, experience of media self-regulation elsewhere suggests that there are advantages in having some form of statutory underpinning, to secure public trust and clear and independent accountability. There may therefore be a role for an independent body, such as Ofcom, to establish the basic principles and ground rules, to keep processes under review, and to take action in the event that they prove unsatisfactory.
For UK policy-makers, a dialogue of this sort will help avoid the need for potentially intrusive regulation. For intermediaries it would help sustain public confidence in their activities, and, perhaps, help them develop models of good behaviour which could be adopted elsewhere. Digital intermediaries could also be challenged by government to voluntarily play a more proactive role in securing future news plurality. For example, they could be asked to help create a ‘breathing space’ for news providers to develop compelling new products by looking again at all aspects of their relationships with news providers, especially access to customer data.
Alongside this, digital intermediaries should be incorporated in the new plurality framework proposed by Ofcom. They should be included in any future review of plurality, whether carried out periodically or triggered by a market event. In a plurality review, Ofcom could, for example, examine:
- the positive effects associated with digital intermediaries – improved access to a wider variety of news, multi-sourcing, etc.;
In carrying out its assessment Ofcom could, for example, examine indicators of consumption and impact, such as the share of news consumed via intermediaries collectively and via any single intermediary, levels of user satisfaction and trust associated with intermediaries, and the extent to which intermediaries enable easy access to sources of impartial news and other news deemed to be of public interest.
- the potential risks to diversity, including the observed availability of news via different platforms, the ways in which search, social media, and app stores are selecting and sorting news, and the impact of any ‘filter bubble’ effect.
The conclusions of such reviews would indicate whether any measures needed to be introduced to help secure desired plurality outcomes. The legislative framework would need to be adjusted to enable such action to be taken – either directly by Ofcom (as with existing telecommunications regulatory powers) or perhaps via referral to the competition authorities. Such action would need to include plurality concerns arising from organic growth or change in the market, not just mergers or acquisitions. Consideration would need to be given to whether regulation was best formulated at a UK or EU level – given the cross-border nature of many intermediaries, the latter might be more appropriate.
Ofcom, in its recent review of plurality measurement, has concluded that bright-line ownership caps would not be effective in securing plurality of news media. This is even clearer in the case of digital intermediaries, whose value to users often comes from scale or network benefits. Nevertheless, if plurality concerns are identified, Ofcom would need to consider the available remedies or actions it could take. The focus should be on ensuring transparent and open access to news. Approaches might include:
- A requirement that digital intermediaries should guarantee that no news content or supplier will be blocked or refused access, unless for legal or other good reason, such reason to be explained with reference to publicly available criteria.
- A requirement that digital intermediaries should carry or link to in a prominent position a range of news content deemed to be in the public interest (for example, a search engine could be asked to list at least x different news sources on the first page of a search, app stores could be asked to provide appropriate prominence to public-interest news over a period of time).
Such steps could be taken after Ofcom has carried out a plurality review and found that there are significant concerns, and has also demonstrated that regulation will not impose any net costs.
- Establish an independent review body which could audit access practices and take complaints.
A risk of relying on periodic plurality reviews and specific remedies, however, is that there is a time delay between reviews and action, during which plurality could be significantly affected. An alternative approach, therefore, would be to consider some form of backstop regulation, either to secure fair and open access and/or to address media ownership concerns. A precedent for access regulation exists in the existing application of ‘must carry’ and ‘appropriate prominence’ rules to broadcast content on digital transmission networks and electronic programme guides. These might be adapted to apply to some or all digital intermediaries, although designing appropriate rules will not be straightforward.
Given the problems associated with ownership caps even in the established media, it is unlikely to be appropriate to consider fixed limits on ownership and control for intermediaries. However, cross-media ownership could be an exception to this general rule. As suggested earlier, if large digital intermediaries decided to move extensively into content production in their own right – perhaps through acquisition – then their ability to exercise political leverage might be enhanced. Consideration could be given, therefore, to formulating specific cross-media ownership constraints, which would seek to enshrine the principle that any company with a large market share (level to be determined) in ‘mediating’ activities should not also be a major player in content creation. The potential risk associated with any cross-media merger would, of course, need to be weighed against the opportunity that might be created to secure increased investment in high-quality content.