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Fix “dysfunctional” online ads market, Lords Committee report says

27 November 2020

The Communications and Digital Committee publishes its report ‘Breaking news? The Future of UK Journalism’.

Background

The Committee recommends that Ministers should lead a new plan to fund journalism, to support innovation and pluralism in an industry facing “an existential threat.

And Peers have urged the Government to stop dragging its feet over plans for a new regulator for the “dysfunctional” online advertising market in a bid to help hard-hit media outlets.  Digital platforms such as Facebook and Google are “part of a bigger problem” for news publishers with a “fundamental imbalance of power” between them.

Peers want the proposed Digital Markets Unit (DMU) – proposed in the Furman Review in March 2019 and agreed by the Government – to be set up urgently to regulate online platforms that have 'strategic market status' and a new code of conduct.

News publishers rely increasingly on crucial online revenue but Facebook and Google profit from adverts alongside news organisations’ content – which neither pays for the right to carry at present.  The DMU could also require Google, for example, to give data to rival search engines and require social media companies to let their users see posts on other platforms.

The Government should also introduce a compulsory news bargaining code – similar to an Australian model which Facebook and Google have strongly opposed - in its Online Harms Bill, to force platforms to pay publishers for the right to use content, the committee says. 

Chair's comments

Lord Gilbert of Panteg, Chair of the Communications and Digital Committee said.

“Journalism is important to a healthy democracy. There’s an opportunity for the Government and organisations to come together, step-up and support journalism – now and in future.

“Online advertising is crucial to news publishers’ success, but there’s a fundamental imbalance of power between them and platforms such as Facebook and Google whose overwhelming market dominance means they dictate the terms on which they use publishers’ content, including whether and how much they pay for it.

“Publishers need platforms far more than the platforms need them and are disadvantaged by a dysfunctional online advertising market.

“It’s essential that the Government acts swiftly to remedy this and sets up the Digital Markets Unit as a matter of urgency. The possibility that it could be delayed until 2022 or later is unacceptable - the news industry can’t afford to wait that long.”

The Government should reform the Apprenticeship Levy too, the committee says. Failure to do so has “cost young people who want to work in the media.”

Government should either allow money to be pooled to create training agencies and for some funds raised to be spent on apprentices’ wages and the costs of employing young people, or fund news organisations to take on apprentices giving local providers priority.

Lord Gilbert added:

“More programme making in and for the regions can help to bring about an expansion of journalism, creating local jobs and opportunities for aspiring journalists - particularly those from disadvantaged backgrounds.” 

Other recommendations

Other recommendations include:

  • Ofcom should have the power to regulate public service broadcasters’ online news. (Ofcom’s broadcast code does not apply to online content.);
  • Ofcom should have the power to ensure that public service broadcasters monitor the accuracy and impartiality of their journalists’ public social media posts and take appropriate action where necessary;
  • The BBC news website and app should include a new aggregator section linking to stories on smaller and local news organisations’ websites. The committee heard concerns that these organisations could be a victim of the BBC’s success.

Further information