Consumer Groups Want to Tax Facebook to Save Journalism

A proposal would tax targeted ads in a bid to bring some money back to those that actually make the news.

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Mar 13 2019, 12:20pm

Image: Shutterstock

It probably goes without saying, but US journalism is in dire straits. Google and Facebook’s domination of online advertising is making it harder to fund quality reporting, especially for smaller outlets. The steady erosion of media consolidation rules is letting a few key broadcasters dominate local TV news, resulting in a documented dumbing down effect.

America can somehow throw millions of dollars at toddler instagram influencers, but can’t fund an essential, if often flawed cornerstone of democracy. As a result, skilled journalists are increasingly being laid off at an alarming rate, then receiving death threats from online trolls for good measure. It’s not a sector for the weak-kneed.

How to fund ethical journalism in the Facebook era is the multi-billion dollar question of the hour, and a technology-focused consumer group by the name of Free Press believes it has a solution.

The group has unveiled a new proposal that suggests taxing all online targeted advertising, then using that money to fund the nation’s struggling news empires, big and small.

The program would apply a 2 percent tax on companies generating more than $200 million in annual targeted-ad revenues, then use that money to create a “Public Interest Media Endowment.” The $2 billion collected annually would then be managed by the government itself, or an outside, existing institution such as the Corporation for Public Broadcasting.

Such a tax would most obviously apply to both social media giants, but also the giant telecom monopolies increasingly trying to elbow their way into the online ad space.

This endowment, in turn, would help fund local journalism, investigative reporting, media literacy, noncommercial social networks, civic-technology projects, and “news and information for underserved communities,” suggests the group.

“The problem for journalism is that Facebook and Google control nearly 70 percent of this marketplace,” Free Press Director Tim Karr told Motherboard via email. “And neither are news organizations. In fact, only one of the top ten digital advertisers in the U.S. (Verizon Media Group/Oath) is in the news business (HuffPost, Techcrunch), and then only partially so.”

As a result, Karr notes that there has been a massive transfer of capital away from companies that actually produce journalism to those that don’t. These giants (Google, Facebook) are exclusively focused on quarterly profits, with little incentive to truly serve or inform the public.

As Facebook has shown, this often results in comically cavalier treatment of your private data, and an inability or refusal to rein in often dangerous propaganda perpetuated on their platforms.

“On a day seven months after Facebook re-engineered its feed to promote more 'trustworthy' news sources, the top-10 most-engaged news stories on the network included a Nike boycott story that Snopes later debunked as fake, a story from a hyperpartisan news aggregator that featured no original reporting, and three posts by Ladbible, a social-media company that spreads celebrity and viral memes,” the report noted.

Presidential contender Elizabeth Warren last week proposed breaking up tech giants like Google and Facebook. But while that might drive a little more competition and accountability to the sector, it’s not enough to solve the country’s journalism problem, Karr notes.

“Even under a scenario where the largest online platforms are broken into their component parts, digital advertising will remain under the control of non-news media; newsrooms will continue to be shuttered and reporters laid off,” Karr said.

The negative impact of the death of quality reporting is quantifiable. One recent study showed how the erosion of local reporting in particular is directly contributing to Americans becoming less informed and more divided. Another highlighted how the death of local news encourages more rigid partisan thinking to the point it can actually sway election outcomes.

Free Press acknowledged that the plan won’t cure everything that’s wrong with online media. The US will need to address other key issues, like improving antitrust enforcement and updating our dated definition of monopoly power. As location data scandals make clear, the US also desperately needs to craft stricter privacy guidelines to protect private consumer data.

But the group notes that taxing the biggest, most profitable sources of targeted ads to fund journalism is something that’s gaining traction in countries like Australia, Austria, France, South Korea, and the United Kingdom. And they’re confident it could work here.

“If we really want to address the crisis in journalism we’ll need to look toward these types of solutions,” Karr said.