Monday, February 08, 2021

These local newspapers say Facebook and Google are killing them. Now they’re fighting back. (WaPo)

Wonderful news about a news media antitrust lawsuit that deserves success in federal courts.

The Charleston newspaper went bankrupt as a result of collusion between Facebook and Google, the complaint alleges.  I hope they win. 

Antitrust was my first love in the law, going back to undergraduate school work investigating Howard Baker and coal monopolies in East Tennessee, empowered by a Fund for Investigative Journalism Grant. I am forever grateful for FIJ support and grateful for the advisce from experts, including the late Harvard Law School antitrust scholar Philip Areeda (who now has an HLS building named for him).

From The Washington Post media columnist:



These local newspapers say Facebook and Google are killing them. Now they’re fighting back.

Paul Farrell is the West Virginia attorney behind a federal lawsuit setting up a David-and-Goliath battle that some believe could offer a path for the struggling media industry.

By Margaret Sullivan

Media columnist

Feb. 4, 2021 at 6:00 a.m. EST

Lurking behind a groundbreaking lawsuit recently filed in federal court in West Virginia is a haunting question: What if?

What if local newspapers had been able to compete successfully for digital advertising revenue as their readers moved online? What if the powerful “duopoly” of Google and Facebook hadn’t sucked up all the oxygen in this new digital economy, essentially asphyxiating traditional media by depriving it of the ad dollars needed to survive?

Would the newspaper industry be healthier — and therefore would our democracy be healthier? Is there still time for an industry to get up off its deathbed?

The people behind this antitrust lawsuit hope to find out. Although there is no dollar figure identified in the complaint, West Virginia attorney Paul Farrell, who filed it, thinks the numbers could be astronomical: 

The two behemoth companies have pocketed billions of dollars in ad revenue — more than half of all the digital advertising dollars in 2019, for example — while newspapers have been struggling to replace the print-ad dollars that once sustained them.

“There is no financial stake large enough,” to make up for what’s happened to the newspaper industry in the past two decades, said Farrell,  the lead lawyer in HD Media’s suit against the tech giants.  Nationwide, more than 2,000 local newspapers have shuttered since 2004; half of all newsroom jobs have been eliminated. That tragic trend has only accelerated during the coronavirus pandemic, just when the information they provide is most needed.

Certainly, the West Virginia papers have felt the pain. And just as certainly, local journalism is hugely important in the state.

There are flickers of hope for local journalism. So far, it’s not nearly enough.

In 2017, the Charleston Gazette-Mail won a Pulitzer Prize in investigative reporting for revealing how the pharmaceutical industry was, in essence, poisoning West Virginia communities by shipping them an astonishing overload of opioid pills.

“Follow the pills and you’ll find the overdose deaths,” Eric Eyre’s two-part investigation begins. Set in Kermit, W.Va., where the population is only 392, it describes a horror: “There, out-of-state drug companies shipped nearly 9 million highly addictive — and potentially lethal — hydrocodone pills over two years to a single pharmacy in the Mingo County town.” Rural and poor, Mingo County had the fourth-highest prescription opioid death rate of any county in the United States.

For a newsroom of fewer than 50 employees, winning a Pulitzer was a triumphant moment, a demonstration that the paper could still live up to its proud, long-held mission of “sustained outrage” against wrongdoing. “I didn’t know a darn thing about this subject a few years ago,” Eyre told me in 2017“but over time you can specialize and become an expert.”

The glory was short-lived

The very next year, the paper declared bankruptcy. HD Media became its owner with the leading bid at auction.

By 2020, the paper’s prize-

winning investigative reporter and some of its top editors had decamped to a new, nonprofit newsroom, =Mountain State Spotlight They are doing vital work. But with only three full-time reporters, they can’t cover the area the way two robust newspapers once did. And for residents without Internet access or tech savvy, their journalism may go unseen, though they offer it free to newspapers across the state.

Even with their efforts — and those of the Gazette-Mail, which still has plenty of talent and ambition — “there is a dearth of local reporting that goes beyond the news conferences and really digs deep,” said Greg Moore, executive editor of the nonprofit and a former top editor at the Gazette-Mail.

Goodbye to the hometown paper: Margaret Sullivan has watched the decline of local news with growing alarm

The lawsuit focuses on what it portrays as illegal monopolistic practices by the tech companies, and on a secret agreement  — code-named Jedi Blue — between Google and Facebook, which is also at the heart of a separate, price-fixing lawsuit brought by several state attorneys general.

HD Media, which owns not only the Gazette-Mail but the Herald-Dispatch in Huntington and several weekly papers, is urging “every other newspaper in America” to join their suit.

“We are fighting not only for the future of the press but also the preservation of our democracy,” said Doug Reynolds, the company’s managing partner, in a statement last week.

Google and Facebook have said little publicly  in response to the new suit, and have maintained that Jedi Blue agreement was legal and aboveboard.

For many years, both companies have contributed to journalistic causes — helping newsrooms with their digital strategies, sponsoring industry events, sharing revenue and directing readership through various initiatives.

But investigative reporter Eric Eyre, for one, is unimpressed.

“They try to make up for what they’ve done by donating huge sums of money to support local journalism while they’re killing local journalism,” he told me.

Can these small newspapers really go up against the tech giants? And even if successful, would it even matter at this late date?

“I’m just a hillbilly lawyer in West Virginia,” said Farrell, who has also sued some of the nation’s largest drug companies  on behalf of communities affected by the opioid crisis.

But, in representing the papers, he finds himself inspired by the famous “Braveheart” scene where Mel Gibson’s character leads an against-the-odds charge with an exultant cry of “Freedom!”

Well, maybe. Those who care about local newspapers may not love the little guys’ chances in this David-vs.-Goliath situation.

But given the importance of their quest, we can wish them godspeed.

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