Hearing on Online Platforms and market power focussing on the free and Diverse Press. I recognize myself for an opening statement. In recent years, there has been a cascade of competition problems on the internet. Concentration has pushed local journalism to the verge of extincti extinction. The combination of predatory acquisitions and high Network Effects and switching costs undermine entrepreneurship and startup rates. The sheer dominance has resulted in less products leaving people without a competitive alternative of services. In response to these trends, the committee announced we would conduct a bipartisan investigation into competition in the Online Market place. The purpose stoof document anticompetitive conduct online and sense whether our competition system and current enforcement levels are adequate to address the problems. We will conduct a top to bottom review to a series of hearings, request information relevant to the information and engage in a series of discussions. This is the first significant antitrust investigation undertaken by congress in decades. Led congress to consider whether it needed to make changes to our laws and agencies. I strongly believe that this investigation is long overdue. This subcommittee has a constituti constitutional duty to ensure that they are properly working. Congress, not the courts, agencies or private companies enacted the antitrust laws and Congress Must be responsible for determining whether they are equipped for competition problems of our modern economy. Todays hearing is the first step in the process for examining the trends. The free and Diverse Press is the back bone of the democracy. Those who won our independence believe public discussion is a political duty and the greatest threat to freedom is uninformed citizen citizenry from 2006 to 2017, advertising revenue has fallen to 15. 6 billion. Roughly 2,900 reporters have lost their jobs. These massive cuts are happening to traditional News Companies and online news sources alike. For example, earlier this year the dealer announced layoffs, reducing the staff by 80 from employment levels just seven years ago. Buzz feed and the Huffington Post have announced significant layoffs. They are designed to appeal to readers on social media sites. This raises a critical question. If online news publishers cant survive, then who can. At the same time they have operated with virtual immunity. Since 2007 google as acquired several competitors resulting in significant concentration and complete lack of transparency in this market. And since 2011, another dominant Online Platform facebook has acquired two of its rivals, instagram and whats app in an effort to corner the market for social media services. Facebook now controls a user base of 2. 7 billion people worldwide, the largest Communications Platform in human history. A move critics have suggested. As noted in the preliminary report both google and facebook have substantial market power in a number of markets that is unlikely to erode over time through new competitive threats. There have been numerous reports of platforms engaging in anticompetitive conduct. That has gone unchecked by congress and unchallenged by antitrust enforcers in the United States. These trends strongly suggest it is not the result of the arrival of the internet but a direct consequence of enforcement choices that have created a Market Structure where a small number of platforms are capturing value. These has affected in two key ways. They rely on google and facebook for the vast majority of traffic online. Even minor changes can have significant effects on the news industry overall. Furthermore, as a result of this immense have little Bargaining Power with the Online Platforms exacerbating economic crisis for trustworthy news. These platforms have a dominant position in the Advertising Market. Last year facebook and google amassed more than 60 billion from Online Advertising. The majority of all online ad revenue while controlling 90 of the growth in this market. This dynamic has resulted in an economic catastrophe for news publishers. In response, i have introduced the journalism conservationism app. While i do not view the information as a substitute, it is clear that we must do something in the short term to save trust worthy journalism before it is lost forever. Whether it is an online publisher we cannot have a democracy without a free and Diverse Press. Our country will not survive if we do not have shared facts, if corruption is not rooted out and if power is not held to account. This is the reason the press is called the fourth estate. My hope is that todays hearing will serve as the starting point in this discussion. I thank our panel of extraordinary experts for participating in todays hearing and look forward to your testimony y. Yield to mr. Armstrong for his opening statement. I dont know where the button is over here. I appreciate that. And i at this time ask unanimous consent to enter the statement into the record. Without objection. And the best thing i can do for all of you is give you as much time as possible. So with that i will yield. The chair recognizes the chairman of the full committee, mr. Nadler for his opening statement. Thank you for holding todays hearing. And before i deliver my statement, let me apologize that i will have to leave afterwards. We have a slight resolution on the floor i have to deal with. Over the course of the last 200 years, congress has routinely passed laws to protect and advance a free and Diverse Press. We never knew technologies have transformed how americans produce and transfer news. Congress has sought to ensure that the new markets were structured to facility the free flow of information and to protect the independence and financial viability of the press. Today as the internet becomes the dominant platform for accessing news and as this platform grows more and more concentrated in the hands of just two major companies, the news media once again faced serious threats and congressional action once again may be required. As avenues for accessing news have narrowed, advertising revenue which is the primary means of support has steadily declined. As revenue has fallen so too is the number of journalists whose work can dee supported. Local news outlets have been most severely affected with n r nearly 2,000 ceasing operations since 2007. The majority of counties in the United States no longer have hundreds of other publishers have been forced to consolidate or shrink their operations. This journalism crisis is also a democracy crisis. Sources of trustworthy news disappear, American Civic Life suffers. Majority of local newspapers and television stations no longer assign a reporter to cover state and local government matters. With the citizenry, communities generally see lower rates of voter turnout. And cities where newspapers shut down have even seen borrowing costs rise suggesting according to one study that diminished transparency may enable governments to engage in riskier and more inefish or perhaps more corrupt financing arrangements. While there are a number of causes of this decline in the news industry including reduced print circulation and reduced revenue one major concern is the power of a small number of gate keepers over the news and information that citizens see. Today the vast majority of americans consume their news online. And two Online Platforms have immense control over how americans access their news sources. A single algorithm change can entirely distort what information the public shares and consums and what revenue the publisher receives. The same platforms dominate the Online Advertising market and account for nearly all of the growth in this market in recent years. No single factor has led to this immense concentration of control. But it is incumbent on congress to understand the sources of the problem and to address it urgently. The american tradition has long recognized that preserving an open market place of ideas is vital to safe guarding the First Amendment and vital to a democratic form of government. Antitrust and antimonopoly laws have been a primary way that lawmakers and regulators have when congress enacted the antitrust laws it was with the purpose of protecting Economic Opportunity and political equality. Senator john sherman, the author of the sherman antitrust act referred to the first law as a bill of rights and a charter of liberty. He didnt regard it as simply a question of economic efficiency or reducing prices. Overly concentrated markets concentrate economic and political power and stifle competition. It is important to keep these broad goals of reducing concentration and promoting competition in mind as we examine how Online Platforms impact the free and diverse media. As the judge reviewing the descent decree wrote, the values underlining the First Amendment coincide with the policy of the antitrust laws. Congress has a constitutional duty to ensure that markets are structured in a way that is compatible with our democrat values. It is vital that we maintain open and competitive markets which will best foster a robust independent press. With this in mind, i welcome todays hearing as the beginning of the committees investigation of competition and Digital Markets and i look forward to hearing from our panel of experts. I thank the chairman and yield back. The chair now recognizes the Ranking Member of the full committee, gentleman from georgia, mr. Collins, for his opening statement. Thank you. Thanks for holding this hearing today. I am glad that you and i have found some commonality and look forward to working together. This is the first of many hearings and oversight hearings the subcommittee hopes to hold. I firmly support this initiative. The conversations we will have in our committee are critical as congress evaluates the importance of these tech issues and whether any amendments to the antitrust laws are needed. The evauchbling role of tech in the daily lives of the American People are equally important. If we do identify needs for new legislation it is important we keep two principles in mind. First, like the existing antitrust laws new legislation consistent in keeping free market free. Proposals should be viewed with caution. Experience shows that Regulatory Solutions often miss the mark, solve problems less efficiently and can create new opportunities for anticompetitive companies to suppress. That is true when regulation attempts to take on evolving problems in fast moving markets like tech. I speak from experience here. I have worked through these before. We have to make sure that we are not looking for an immediate solution. We need to make sure we are working this through. Secondly, big is not necessarily bad. Companies that offer new innovations, Better Solutions and more consumer benefit at lower prices often become big to the benefit of society. Shockingly. Proposals to break up Big Companies just because they are big risk throwing out the baby with the bath water. Any discussion this moves to that discussion first is not the right way to move. It is because i embrace the principles that i am excited to have joined in the introduction of the competition and reservation act. Th this. In the old days, as the News Consumption has moved to the internet traditional subscriptions are drying up and online revenues are being dominated. If individual news outlets can count on being able to with the Online Platforms the bleeding could be stopped. The problem is that smaller News Organizations dont stand a fair negotiating stance. These giants stand as a bottleneck, a classic antitrust problem but consumers and the producers of news content. Journalism competition act seeks to solve this problem simply by lowing news publications to thak the bottleneck together. The bill allows the publications four years in which they can negotiate with the platforms without fearing antitrust enforcement against that activity. In other words, the bill allows news publications to take on an antitrust antitrust problem without wering their it does not threaten to break up any company. It does promise to simply solve the problem. Todays hearing provides an excellent opportunity as we begin this for all that are here and many are here representing a large diverse group. Understand from my position as i have studied clearly the principles that i have laid out and as we go forward in this, anything that happens should be done when everyone comes to the table. Everyone has a chance to share their opinion. Everyone has a chance to offer what may or may not be good legislative solutions. It is up to this body to hear from the people and the companies involved. If we take everybody at face value, it is the American People at the end of the day that will benefit. We, i promise from my perspective, will not rush to judgment. We encourage either side to not rush to judgment and companies to participate in a positive solution. When this body does that, we have seen great things happen. When we do not, we end up with more problems than we began to initiate. With that, i yield back. Our first witness is the president and ceo of news media alliance. He received our second witness, before his time he served as the director of the internet human rights project at the numeric foundation and chief council for the antitrust division and served as chief council and staff director for the antitrust subcommittee as well as legislative director with Consumer Federation of america. He serves as professor at Georgetown Washington University school of law, senior fellow at the silicon flat iron center for law at the university of colorado and on the boards of the International Media support and Global Partners digital. He received his b. A. From Brown University in providence, rhode island. Our third witness is sally hubbard, the director of enforcement strategy at the open markets institute. She was Senior Editor of antitrust she earned her bachelors of arts and jd at new york University School of law. Our fourth witness is matthew sheers, the Vice President of law and policy at the computer and Communications Industry association. Our fifth witness is executive president and General Council at news corps, the son of the dean of the law school i attended. He was a partner where he focussed on white collar defense and Securities Litigation and enforcement and served as assistant u. S. Attorney where he was deputy chief of the criminal division. He is an officer of the federal bar foundation. He received his b. A. From university of michigan. It is my pleasure to yield to the gentleman from georgia, mr. Collins. I appreciate this is an interesting thing from being a member of congress to introducing a member of the press for my own state. It is an honor and privilege to welcome kevin rowley. Those of you from georgia know the ajc is one of the best in the business. It is where i would argue where the entire state of georgia goes to get their news. In 200124 Newspaper Association of america named him one of 20 over under 40 up and comers. We asked one of his reporters to describe how he would describe his boss. I think it is very telling. Kevin is the type of editor who encourages those to experiment and try new things. He wrote a masterful story about a world war ii veteran returning to the french battlefield for the first time helping to unlock a 69yearold mystery in the process. Kevin headlined a season of the break down show as we thas more demands. The perfect cases lead by example and i cant think of a better compliment. Earlier this year kevin called to explain how this critical disabilities for the ajc for communities across georgia and entire newspaper industry. It is a core part of every it is an honor to have a member of our local media here today. We welcome all of our distinguished witnesses and thank you for participating in todays hearing. If you would please rise i will begin by swearing you in. Please raise your right hands. Do you swear or affirm under penalty or perjury that the testimony you are about to give is true and correct to the best of your knowledge information and belief so help you god . Let the record reflect that the witnesses answered in the affirmative. Please note that each witness statement will be entered into the record in its entirety. To help you stay within the time there is a timing light on the table. When the light switches from green to yellow you have one minute to conclude. When the light turns red it signals your five minutes have expired. Thank you for inviting me to participate in todays hearing. I am the president and ceo of the news media alliance, a nonprofit trade association representing over 2,000 publishers across the United States. Our members include some of the largest News Organization covering events around the dploeb as well as local publishers focussing on issues that Impact Communities in the daily lives of citizens in every state. The news media has played a key role in our democracy. The mission has been to foster Public Discourse that is vital to a healthy democracy. Over the years, the news media has fulfilled that mission extremely well. We are also an industry that has fully embraced. Publishers offer a wide array of online experiences sustained by truly great journalism. My membership includes a number of digital only news publishers. The rise has introduced new threats to the news industry. Specifically, the emergence of dominant tech platforms as intermediateiaries between Online Platforms serve an important service. 93 of americans get at least some of their news online. These platforms help users find great journalism and they have contributed to the Enormous Growth in news audiences over the past two decades. In the same way the digital platforms are crit krl for online news, online news is critical for the digital platforms. The public demand is massive and growing and that is driven deep engagement with facebook and google. A Study Released yesterday estimates news content generated 4. 7 billion in 2018. It would not be a problem if not for the fact that the concentration of the platforms a couple of dominant firms act as regulators of the news industry. These regulators are not constrained by legislative or democratic oversight. The result has been to de the trend is clear if you compare the growth in the total advertising revenue to the decline in the news industrys ad revenue. The u. S. Revenue was 2. 1 billion. The newspaper industry accounted for 48 billion. In 2017, in contrast, the u. S. Revenue has increased over 25 times to 52. 4 billion while the newspaper industrys ad revenue had fallen. The effect of the revenue decline has been terrible. They have been forced to cut back in investments in journalism. That is the reason why Newsroom Employment has fallen nearly a quarter. One question might be asked is if the platforms are unbalanced then why dont publishers do something about it . The answer is they cannot at least under the existing antitrust laws. News publishers face a collective action problem. The risk of demotion or exclusion from the plorps is simply too great. And the antitrust laws prevent News Organizations from acting collectively. Publishers are forced to accept whatever terms or restrictions are imposed on them. The act is an innovative marketoriented solution to the collective action problem. Markets work best when both parties have some leverage to ask for better terms. Our goal is actually to find a way to work with the Online Platforms to give americans the best journalism possible. Present trends in the News Business cannot continue without some action to give news publishers a voice in their future we will all experience the fathreats of deep financial stress. It is not too much to say that the fabric of our Civic Society is at risk. This is not a problem that will be solved by private charities from individuals or big platforms themselves. What we need are Sustainable Business relationships that return value to the great important journalists who create the news content on which we all depend. Again, thank you very much for having me here today. Thank you. Thank you, mr. Chairman, members of the subcommittee on behalf of Public Knowledge i appreciate the invitation to testify today. Your Opening Statements across the board highlight what i think are the natural economic tendencies of what has happened in the digital market place. We have enormous platforms that return scale economies and scope economies with declining costs. These are Network Effect industries. Its not new to our economy. This is a new form of it. What we see is a tendency towards a few Companies Dominating in that space. You have also highlighted the concern about gate keeper roles and bottlenecks. And we have a history of this, of concern about this. The history includes all of the media including the newspapers for abuse of power when we have had too much concentration and too few independent voices that stifle a market place of ideas. We have had the problems in the past with previous technologies. We are having them again now. In some instances antitrust has been the right tool to address them. Congress has stepped in with other policy solutions. I urge you to consider all of that. We have massive power here in the market place of ideas. And it stems both on the Technology Side and on the content and distribution side. I think all of it needs to be looked at. Its important to fight against concentrated power and dominance at all levels of the distribution chain and to maximize competitive Market Forces particularly when they involve the market place of ideas. We need to consider new laws. I appreciate the committee stepping in to begin this detailed study. But its important that as we attempt to stop these abuses where we find them, that we dont create new monopoly power just to take on dominance. Its critical to tackle dominance head on and not create more monopoly. The digital market place as we all know has totally transformed our lives. It has destroyed all kinds of brick and mortar players, industries, companies. And that includes classified display ads in the print business. Its much broader than just news as being important. What im afraid we need to confront is the money from that old model, from that Business Model will never come back. It is gone. I think journalism needs to consider a new Business Model and we should do everything we can with Public Policy tools to help. The digital age will require new forms of creative financing in order to get local news and fight misinformation in the market place. Public support will be necessary. I urge you to consider creating some kind of Public Service duty of care to deliver trustworthy information, not subsidizing companies or industries, but instead promoting Fact Checking information accuracy services that deliver value and that can be supported to protect local media and news in particular. In a digital platform space, i think what is most important is to look at the natural economic tendencies dominance, creating barriers to entry that make it very difficult to foster competition and innovation in the market and examine whether anyone is putting their thumb on the scale either in violation of the antitrust laws or otherwise principles of fairness in our society. Thats why your inquiry is important and i commend your effort to look carefully both at what the problems are and what the possible solutions should be. Consumers themselves are actually reinforcing the problem. Were on the negative side lazy, but mostly just complacent to do whats simple. That reinforces the power of those who have our attention in the first place and can find ways to make it very attractive for us not to consider competitive options, new options, better news as opposed to salacious information. Its important that we look at all policy tools that are available to address these concerns. Antitrust can do something to try to improve enforcement. Where you have dominance few often news broader policy tools. I urge you to consider nondiscrimination, interoperability. We have done this in telecommunications before and in the cable industry. This would not be a first for congress. Now is the time to consider it for digital platforms. The chair recognizes mrs. Hubbard for her opening statement. Members of the subcommittee, thank you for inviting me to speak with you today. In my view as a former antitrust enforcer, the starving of journalism and the disinformation crisis are both in good part monopoly problems. I have been writing about antitrust and tech platforms since the summer of 2016 when i noticed that the tech giants, google, apple, facebook and amazon, were all doing the same types of things that microsoft had been sued for nearly 20 years earlier. They were leveraging their market power to make fair competition impossible. These tech giants are gate keepers that also compete against companies that must get through gates to reach users. News publishers must get through facebook and googles dpats due to the concentrated control over the flow of information. Facebook and google compete against news publishers for user attention, data and ad dollars. They are controlling the game and playing it, too. Publishers never had a fair shot nor do they have Bargaining Power against the platforms. The platforms can cut them off with a simple tweak of their algorithms. Facebook and google exploit their middle man positions to divert ad revenue away from publishers and into their own pockets. And the platforms can hypertarget users based on their 360degree views of what their users read, think and do. Thanks to their ability to track users across millions of websites and even offline. Last year facebook and google accounted for approximately 85 of the growth of more than 150 billion doll billion digital dollar. As for disinformation, facebook and Youtube Program their algorithms to prioritize engagement which amplifies propaganda. Through surveillance facebook and google learn what messages people are suspectable to whether ads or propaganda. Then they rent out these manipulation machines to others for huge profit. The scale of the manipulation is massive because of facebook and googles dominance and the platforms lack pressure to fix the problem because the closest substitute for facebook users is instagram which facebook owns. Users need to be able to vote with their feet and switch to alternatives. Facebook and google started on paths to dominance with innovation. Their monopoly power is not purely the result of competing on the merits. Facebook has repeatedly acquired riechbls including instagram and whats app. And googles acquisition cemented the market power throughout the ad ecosystem including applied semantics. Together facebook and google have bought 150 companies in just the last six years. Google alone has bought nearly 250 companies. Thus far, antitrust enforcers have not stood in their way nor have they stopped facebook and google from leveraging their power. Weak antitrust enforcement set the stage to extract the fruits of publishers labor. Monopolies are putting the American Dream at risk as people including journalists are not rewarded for their efforts. Beginning immediately, antitrust enforcers should prevent facebook and google from acquiring threats. They should unwind deals and sivest to open up competition and sue to stop exclusionary practices. Antitrust alone wont solve everything discussed here today. We wont be able to solve anything unless we weaken the power. Its a necessary but not sufficient decision. It was a journalist that took down the most notorious monopoly in u. S. History, standard oil. News deserves special production like it has through nondiscrimination and interoperability rules. We need rules to curve invasive Data Collection and give citizens ownership of their data. The good news is we have been here before. These are not new challenges. We have stood up to powerful tech monopolists. Each time we were better for it. We have restored our markets and removed gate keepers. If we dont act now to change the structure of our markets, journalism will continue to wither and so will our democracy. Thank you. Thank you. The chair recognizes mr. Sheers for five minutes. On behalf of the computer and association of technology, internet and Communications Firms i appreciate the opportunity to appear today. Let me begin by acknowledging that success brings scrutiny. Digital technology and the internet has revolutionized the u. S. Economy and the global economy, the Industry Leaders are names recognized around the world some of the most prominent brand we know. We welcome an evidencedriven conversation of the furmirms leading it. Firms that date at the oldest from the 90s did not start this trend in the 80s although technology has challenged some news publishers Business Models in part by ushering in new competition, globalizing the Advertising Market and disrupting the local advertising position that many once had. Because journalism is important to any democracy, we share the goal of insuring that it continues. Digital Services Play an Important Role in doing that. In fact, Digital Services provide benefits to three separate constituencies. News producers and advertisers. We know users attribute thousands of dollars of value to free of charge Online Services and turn to them for answers, entertainme entertainment, education, connection and communication and commerce. These Services Provide users with access across multiple devices and formats. News producers receive 10 billion viewers a month from Digital Services, traffic which they can monetize with digital tools. Many publishers have embraced the internet using technology to better engage their audiences. Numerous outlets appeared and estimates 13,000 employees worked in these news rooms in 2017. Digital Services Also enable and benefit advertisers. As the saying goes, an advertiser doesnt know which half is wasted. With technology, advertisers can figure out where their budget is best optimized and where their money is wasted and direct funds accordingly. This is increasingly important for small firms who have a global reach regardless of the size of the business. How does antitrust fit into this . U. S. Antitrust law focuses on maximizing consumer welfare. Separate policy goals are usually pursued elsewhere through legislative means. This ensures consistent and apolitical application of the law. The law doesnt punish success. Instead, it applies additional obligations when successful firms possess market power. These markets arent defined ad hoc. We use economics. We see if consumers respond to changes in prices given factors like competition and substitu s substitutes. They assess whether the firms can decrease quality. I note that some digital firms are sometimes subjectively identified. This is not necessarily a relevant market. Economic Analysis Shows us news publishers fight fiercely for ad dollars. Its one reason why we are here today. This intense competition is generally healthy and undermining of antitrust exemptions. Prices will be higher. Quality will decrease and innovation will slow. Broadcast newspapers led to the newspaper preservation act, we tried this and it is widely regarded as having been unsuccessful. Some argue it fostered press monopolies. So in conclusion, let me remind us all that the antitrust Modernization Commission of 2007 looked at many of these issues and considered them at length. They as well as antitrust enforcers from both parties have criticized antitrust exemptions. We do share the objective of promoting diverse, robust economically sustainable news production. Proposed alternatives which are discussed in our testimony include tax incentives and deductions, grants, new nonprofit categories. All of the options deserve consideration. Thank you. Members of the subcommittee, thank you for inviting me to speak with you today. I am the general counsel of news corp, the proud home of news publishers like wall street journal. Im here today because the market place for news is broken. Healthy markets incentivise risk, investment and effort by Rewarding Companies that develop superior products. Unfortunately, in the News Business, free writing by dominant Online Platforms which aggregate and then reserve our content has led to the lions share generated off the back of news going to the platforms. Many in Silicon Valley dismiss the press as old media, failing to evolve in the face of online competition, but this is wrong. We are not losing business to an innovator who has found a better or more efficient way to report and investigate the news. We are losing business because the dominant platforms deploy our news content to target our audiences to then turn around and sell that audience to the same advertisers we are trying to serve. The erosion of advertising revenue under cuts our ability to invest in high quality journalism meanwhile the platforms have little if any commitment to accuracy or reliability. For them, a news article is valuable if viral, not if verified. To address these challenges, we need meaningful dialogue. It is therefore dispirting when the platforms claim they only help consumers or publishers ignoring the harms inflicted on the news industry. The fact is news publishers have been busy innovating online, expanding our reach to digital audiences while the dominant platforms have benefitted from our innovation and premium content. In part, this is made easier by the platforms control over the internet ad tech space. They control the tech infrastructure, the data and the tools used to sell and serve ads online and at the same time they also compete against news publishers for those same ad dollars. News publishers have no good options to respond to these challenges. Any publisher that tried to with hold its content from a platform as part of a negotiating strategy would starve itself of reader traffic. In contrast, losing one publisher would not harm the platforms at all since they would have ample alternative sources for news content. To escape this prisoners dilemma, News Organizations need to act collectively, but this is prohibited by antitrust law. What is the solution . First, we need more dynamic and modernized antitrust enforcement. We are hopeful. After a generation of obsession of price effects without adequate consideration of the other aspects of consumer and social welfare including quality, innovation and choice, some very recent encouraging signs of reexamination have occurred. Second, and in the meantime, news publishers need a fighting chance. The journalism competition and preservation act is well desi designed to help restore the proper balance between content. This Bipartisan Legislation is narrowly tailored both in scope and duration. Id like to close by sharing a quote from my late father who you mentioned earlier. He was a giant in the antitrust law in academia, private practice and government where his service cull miinated in his term as chairman of the ftc from 1995 to 20 o11. He recognized the need for antitrust regulators to give a higher degree of scrutiny to competition matters because of the implications for democratic values. In a november 2000 newspaper article on the topic he was quoted as saying antitrust is more than economics and i do believe that if you have issues in the newspaper business, in book publishing, news generally, entertainment i think you want to be more careful and thorough in your investigation than if the same problems arose in cosmetics or lumber or coal mining. In a law review article from 1979 that has been happily rediscovered he wrote it is bad history, bad policy and bad law to exclude certain political values in interpreting the antitrust laws, close quote. Informed by history, policy and political values, the antitrust laws should protect the pillars of our economy and our democracy and there is no industry more central to our democracy than the news media. Thank you. Thank you. Members of the subcommittee, thank you for inviting me here today. Im kevin riley, the editor of the Atlanta Journal constitution. A few years ago journalists established that 80 doctors in georgia had sexually abused patients including patients under anthesia and those doctors were still licensed. The newspaper investigated and found a nationwide problem. Hundreds of doctors were abusing patients and getting away with it. The investigation prompted reforms. It was a finalist for the pulitzer prize. Of equal importance, readers of that investigation told us thats what they want from their newspaper, that kind of coverage. The victims of those doctors called our reporters and thanked them for telling their stories. About a year before that story, dozens of educators in the atlanta Public Schools had been found guilty of altering students standardized test scores in the largest cheating scandal in the nations history. The convictions cull miinated a years long journalistic effort by the Atlanta Journal constitution. Reporters had noticed that students scores on georgias standardized tests showed extraordinary improvement. They analyzed the scores. The improvements in some schools defied statistical possibility. The reporting triggered a state investigation that found system wide cheating in 44 atlanta Public Schools. 178 teachers and administrators participated. The test cheeding infladed the scores of thousands of students giving false impression of progress. It cheated the students. The story would never have been uncovered without the ajc. Educators would never have faced justice. The system would not have been fixed. And most important of all, students wouldnt have been offered the chance to gain the knowledge that they had been denied. No other News Organization in atlanta has the capacity for such deep reporting. No other organization could have with stood the relentless pressure to back off. No other News Organization would have stopped with the story for five years. This kind of investigative reporting is hard. Its upsetting. Its important. It has real impact and we are proud of it. Newspapers do other important stories, too. I was reminded of one last week as i prepared for this testimony. Let me tell you about the woman congressman collins mentioned. Her name is shirley sessions. She is the widow of a world war ii veteran. She spent decades trying to unearth the story behind her husbands service. I have been able to discover many daeetails about her husbans time in combat. She still hungered to know more about his service. She was so enthralled that she journeyed to france. I joined her. In a story i wrote about brought ajc readers along. She literally retraced the steps of that young private, the man who would later be her husband through the combat in tiny french towns during world war ii. It was the unknown story of a local hero and one that only the Atlanta Journal constitution could tell. It would be lost to history without us. Mrs. Sessions sent me a text as i prepared for this testimony. She said in part, your stories have become a touch stone in my life. I watched the coverage of dday, cried a lot, but im more grateful than ever. We invested a lot of time, money and effort in these stories i mentioned. Thats what newspapers do. We use our resources to tell our communities stories, the good ones and the hard ones, telling them makes our community better. I share these examples because they illustrate the every day challenge faced by local journalists. We must be vigilant to tell important, wellreported and thoughtful stories. We must care that they get wide distribution. Thats our job and crucial to our communities. Were accountable to people like ms. Shirley and her neighbors. Almost always the debate about media and tech is framed within the discussion of International News brands. But the greatest peril for our nation lurks at the local level where a regional or Community Newspaper must cope with fast changing, technological and financial matters. We are concerned with our communities, their government and their well being. Our staffs live in our community. They have a big stake in informing the public. Social media and Technology Companies have enormous influence on the distribution and availability of news. But we should be worried about losing newspapers, the fount heads within the local news ecosystem. It is worth considering stories that would go untold. Thank you. Thank you. I will proceed under the five minute rule with questions. We will begin with the gentleman from georgia, mr. Johnson. Thank you, mr. Chairman and thank you witnesses for being here today. And i would like to extent a particularly warm welcome to the editor of my hometown paper, mr. Riley from the ajc. The purpose of this hearing is to face an important problem head on, the media from local newspapers to major publishers to online innovators is dying. This is in some part because of a shift in how we consume our news. But its also because of the mass availability of information on digital platforms. While the news medias market presence is increasing, their revenue is decreasing. This is untenable. No business can prosper this way and no reasonable investor would want to get involved. We cannot continue to rely on the good grace of concentrated wealth to do the right thing. A free market approach is applied to the Online Platform gateway and its relationship to a free and Diverse Press is not working. Moreover, it poses a direct and pressing threat to our republic and therefore to our freedom. Something must be done to level the playing field. And im looking forward to talking with all of you about potential solutions to this problem. And i thank the chair for hosting this very important hearing. Lastly, i will note that a free press content has a cost. And that price is profoundly expensive and could price freedom out of the fragile market place for freedom. Mr. Riley, according to a recent study americans have shifted from traditional media sources for local news to the television and internet. Interest in local print news in particular has declined resulting in massive down sizing at newspapers. Newsroom staff declined by 45 from 2008 to 2017 how has the ajc worked to overcome this challenge . Thank you for that question i think that one important point you make about the statistics that you cite in terms of preference of news sources is this. We are typical i think of most newspapers of our size and our market similar to ours in this way. Our audience has never been larger than it is now. You combine the people we have who read the printed newspaper and that audience that we can garner online in our markets, we have more people reading the Atlanta Journal constitution than at any other point in our history. The challenge here is sort of simple which is in what kind of world do you grow your audience, reach a bigger market and somehow face greater financial challenges than you did before . Something is out of whack in that equation. And it is just counter intuitive to how American Business works. Thats a missing piece. What are your projections for the ajc . And how has your digital platform presence approximately 2,000, sir. Is there any requirement that local newspapers be prioritized on digital platforms . Prioritized in terms of the search . Yes. In any respect . There is no requirement that they be prioritized. But the digital audience as was noted is exploding across the board. One of the major issues in market dominance today is the ability to use individuals data in targeted advertising. How do you how do the online giants control user data . And why is this such a powerful phenomenon . Thank you, congressman. The advertising has changed profoundly. Rather than reaching an audience they reach individuals to the degree they are able to get more and more detailed data from individuals they can send them targeted data. The more data a company has, ha more consecutive the market, the more they can deliver targeted ads and the more they are light years ahead of competitors in terms of their data, such their dominance in the digital ad space. Thank you, i yield back. The chair now recognizes the Ranking Member of the committee, phil collins, for five minutes. Thank you, mr. Chairman. One of the things ive been asking a good deal, and i think its vitally important. We can put things out there and if its not a workable solution, were just talking about things and generating a lot of hype that doesnt end up in solving something. Im not a member of congress that believes we should throw ideas out there but actually find ideas that work. The question that comes up a great deal about this is how can be we sure that any agreement that in the platforms will be adequate and flexible enough to endeure fire long time ior a lo quickly evolving market . How does it play out 15, 20 years down the road . Thank you, congressman. Obviously there are no infinite solutions, but i think there is a real chance for us to develop an Enduring Partnership with the platforms. At the end of the day, i view them as a potential solution for news and journalism rather than a problem. And i think the issues are well understood and pretty well defined. We have issues about revenue, we have issues about data, we have issues about algorithms and our brand, but these are all things that i think are solvable, achievable, and that im confident that we could develop a solution that would greatly support journalism for some significant period of time. I dont think this is one of those issues thats not solvable. I think its imminently solvable. Would you also agree that this is an issue that both parties in a lot of ways need each other . This is not really one upset at the other. There is not mutually exclusive positions here, that the Online Platforms need the content of others, and at the same time, the locals also need to have these divergent technologies that are good in many, many ways. Do you see that it should be kich kind of an adversarial relationship . Absolutely. These are programs that have allowed us to grow our digital audience larger than its ever been in terms of any audience. They need good content to engage their users and we need access to those users. Its just that in this world where we cant act collectively, that means we have this problem of any one publisher really doesnt get a say in how its content is distributed to those users. One of the things we came up with last year in this committee, Joaquin Jeffries and i worked this for a long time that had a similar issue where you had the content owner and the knowledge that has been great for many segments, but there was a disconnect where many of the rules going guarfor, that content, which both tech platforms have and also the local platforms do as well, is something worth protecting. You cant sort of kill the goose with the golden egg. You cant say the one producing the content is bad and were just going to keep taking, keep taking, keep taking, because one of these days theyre not going to exist anymore. My hometown paper that i grew up with for years just 20 years ago had 25, 35,000 deliveries. Now its just gone down to an internet paper. There are some issues we have there, but as we look at that, we need to make sure both are involved in this. I think thats the concern that i have. I think as we go further in this process knowing there is the online capability, knowing what weve heard so far, i want this to be understood, and unfortunately ive had to do a lot of interviews where these whole hearings were adversarial. Not really, it just says what do we need to do in a perspective now . I appreciate all these wnt witnesses, because when we engage, people win. Mr. Chairman, again, thanks for this and thanks for the partnership on this bill and i look forward to continuing to work together. I yield back. Thank the gentleman for yielding back. I now recognize the gentlelady from washington for five minutes. Thank you, mr. Chairman, and thank you all for being here. I represent a district that includes seattle, and we used to have a number of papers in seattle. We are down to one now. And so and im also somebody who read the morning paper, like the actual paper, for a very long time. But Digital Technology is amazing and im continually astounded by the proliferation of information that feels like its at our fingertips. I watched my child grow up immersed in the digital world. They know no other world, and they have access to a breadth of information that i think never could have been imagined several decades ago. My district is a hub of innovation. A lot of the Tech Companies are right there in the district, and there are these exciting new ways that i think were finding to use technology and share information. However, i will tell you that many of my constituents who work with those Tech Companies want to make sure were using technology with appropriate regulations. A good Many Companies exert control over news and information that each of us sees as we go online or use our phones, and those companies do have sophisticated systems that track what we do, where were locat located, what were interested in. It never ceases to a maze me that if i go to a shopping site, the very next day i see the very same thing to see if ill buy it. We know our systems are being monetized. These companies are selling access to our attention to advertisers and using their own proprietary algorithms to determine what articles we see and what we dont see. And its easy to forget that when we do a very quick Google Search for news about a particular topic or we click on an article in our facebook feed. Its easy to forget that when we go online or into our phones looking for good information, we are actually being controlled by those corporations and the algorithms that are being used. Ms. Hubbard, let me start with you. Youve worked for the antitrust division, youre also a journali journalist. Which would you say is tracking journalism and why . Thank you for the question. I think in terms of disinformation, the platforms having the most impact are facebook and youtube, and thats because of their Business Models which are to prioritize engagement, engaging content because of the human nature, the survival instinct, we tend to tune in to things that make us fearful or angry. So by having an engagement, these platforms are actually prioritizing disinformation as well. It serves their profit motives to keep people on the platforms as long as possible to show them ads and collect their data, and because they dont have any competition, theyre free to pursue these destructive Business Models without having any competitive constraint. Theyve also lacked regulation. Normally corporations are not committed to just pursue profits without regard to the consequences. Lets go to that question of regulation. The federal trade commission has repeatedly declined to interfere as facebook and google have acquired wouldbe competitors. Since 2007, google has acquired applied semantics, double click and ad mom, and since 2007, facebook has acquired whatsapp. I think regulation is seen as something out there, but this has very direct impact for consumers. Can you explain what that means as these companies have acquired more and more . Sure. In my view all of the acquisitions you just mentioned were illegal under the clayton act which prohibits mergers that may lessen competition. Looking back, its clear that all those mergers did lessen competition. And when you lessen competition, the harm to consumers are not just high prices, which are harder to see in the digital age, but its loss of innovation. Its loss of choice and loss of control. So when we approve anticompetitive mergers, consumers are harmed. So what do you think about the ftcs current work around these . Do you think the ftc should be doing more and how . I definitely think the ftc should be doing more. I think there is a possibility of unwinding some of the mergers that are now obviously illegal now that we have the evidence. Particularly facebooks accusation of whatsapp. There is public documentation that facebook had identified that as a competitive threat using its vpn technology, and it also observed the u. S. Commission, but it has been fined by defying the u. S. Commission by saying it couldnt share data between whats up on facebook. I do think the ftc needs to do more in this regard. Thank you. I see my time is expired. I yield back. Now for the gentleman from north dakota, mr. Armstrong, for five minutes. Thank you, mr. Chair. I especially appreciate talking about small town papers, because you know how affected those Small Businesses are affected. My first job was coaching the softball team, and i learned two things about dealing with the press and dealing with parents. One, you never get in trouble for what you dont say, and two, you should always criticize in private and praise in public. Ive carried those with me for a long time, so i appreciate that. Just earlier we had heard mr. Shivern and mr. Katoskky talk about antitrust. We already have longstanding remedy and thats an antitrust if necessary. There is some disagreement whether thats sufficient. We need antitrust laws that allow them to come together and negotiate terms. Why should we limit the competition act to just antitrust law . Ill start with mr. Shivern. Thank you very much. The current antitrust laws protect google and facebook from us, interestingly. Its ironic from our perspective. What were suggesting is really what we view as the lightest touch option on the table in terms of giving us the power just to stand up for ourselves. Also there is a real hurt in the industry. This is an industry that cant wait years and years for antitrust solutions. Were at a crisis point now, and what were asking for is relatively simple and relatively straightforward. Were not asking the government to regulate anyone or tax anyone, were really just asking to be left alone to defend ourselves. Thank you. Mr. Kohn . I do think antitrust can help. I think we had a lapse in antitrust. I dont know about specific cases, its always easier in hindsight to Say Something was anticompetitive. We do need stronger enforcement. I dont believe it solves this problem, certainly doesnt solve an immediate crisis, but i do worry that you should look carefully at the kind of negotiation that mr. Collins was talking about and the way it would happen is what would actually happen in the marketplace. Im not at all sure thats how it would work. Im not sure who is the news content creator. You have wonderful news creators in front of you here today. There are tabloids, a lot of r purveyors out there, you have a lot of bad people out there, too. I honestly believe there are better ways to do this but it requires a different approach. Mr. Patovsky . I would say antitrust has been interpreted rather narrowly for the last 40 years and these markets are presenting new challenges and its going to take time and this committees investigation is helping move in that direction of understanding how these new markets work. For example, when some of these mergers were approved, some of the people objecting raised privacy concerns, but the regulators felt that privacy was not an area that antitrust could cover. I think as weve had experience with these platforms, we understand that privacy is an aspect of product quality. All of the users of these tools have interest, and antitrust just hasnt stretched to understand all those quality issues. The law is complicated. Additional precedents need reexamination. So the bill is a good shortterm remedy while the larger issues are tackled. Ms. Hubbard, do you want to talk . I agree with mr. Pitofsky. I caution what i worry about what mr. Kimmelman is saying, that sometimes when we say things are too complicated, its a way of not doing anything, and thats what weve been saying in this space for a long time where weve seen regulators around the world and enforcers around the world address this problem, and weve just been sitting back worrying its too complicated. I think its important to take action quickly and not keep kind of viewing complication as a reason to do nothing. I agree with that. I dont think too complicated is ever an answer. But i would also say this is not an apples to apples comparison but were going to get to watch this play out a little bit, because the eu just adopted really strict internet rules, and one of the goals was to increase and remove barriers entry. But by holding the platforms themselves liable for copyright violations, the cure may actually be worse for them than the disease. Time will tell, but Automatic Filter programs and scrubber programs that youtube uses, you mentioned youtube earlier, are incredibly expensive to run. Plus its not quite the same, and im sorry for going over. Its okay. They passed the rules. Each member country is going to have to promulgate their own laws in association with those rules that can cause all kinds of problems, and companies will have to operate in a patchwork of different laws or just follow the most strict laws of any of those countries, or probably the worstcase scenario is not to do business in some of those countries. So when you come from a small state and know that states like california and new york will dictate a marketplace, you always get concerned about that. So i agree with you, but we are going to get to watch it. Can i respond quickly that we do have a tool that weve had a very long time which is the antitrust laws. So before you look at Different Solutions that europe is pursuing, we use the antitrust laws against microsoft. It led to innovation. Many people say if it werent for our antitrust enforcement against microsoft, google wouldnt have been able to come on the scene. Its not actually a novel problem or novel tools. We have these tools. I agree, which is why i asked the antitrust question to start the questioning process. Sorry about that. No, no. I now recognize the gentlelady from florida, ms. Demmining nd five. We talked about how people ha newspapers have seen additional subscriptions and yet they continue to shut down. Can you please talk a little bit about why the news industry continues to struggle despite the increase in online leadership and digital subscription . Sure. Thank you. Our audiences are growing and moving quickly to online spaces, and those spaces are dominated by just a few companies that take the vast bulk of the advertising revenue, determine everything about the experience you get with your news publisher. Again, i call them my regulators because they get to decide what news is delivered to who and when, h when. How the news is delivered to me is different than how its delivered to you. How we can monetize it and on what terms. I think its important for everyone to hear your words on that topic. Please go ahead. They are incredible and powerful advertising engines that do great targeted advertising, often around our content. And they take the bulk of the Digital Advertising revenue. So, really, the rules of the game for Online Engagement of news are set up against content publishers, but one thing i do know is that people love news. The audience is bigger than ever. Certainly the platforms know this. Interesting what we define as news these days. Please go ahead. The platforms know this. They know that people go on line to consume that product and then they get to make money monetizing them to our detriment. Thank you. Ms. Hubbard, some researchers have estimated that for every dollar advertisers spend on digital ads, only 30 cents go to the publisher. Meaning that ad tech mediaries could be capturing around 70 of all digital ad spending. What, if anything, does the 70 figure tell us about the market . Id love to hear from you about that. Yeah, as an enforcer as a former enforcer, i would say that 70 cut shows that there is extraction thats happening and its not theres not fair Bargaining Power between the press and the tech platforms. Because that is not, you know, a fair price. Its a monopoly rent, really. Why is the fair bargain power so important to this industry and to the consumers . So as i said, throughout the economy, when you have such concentrated markets, there is a lack of Bargaining Power. That means that everyone else has to play by the terms of the dominant companies. Were talking about press here which is so critical to our democracy. We do not want them playing by the terms of dominant companies. You know, its critical that they have Bargaining Power and can have a fair deal with getting this important content to the world. And finally, mr. Riley, you know the 20second sound bites are fine and being able to click on a lot of Different Things which many times they really dont have the same effect as the headline does. But theres just something about reading the newspaper. I believe you get not half of the story, you get more of the whole story, and i heard an editor say once that, and the other big benefit is that you may bump into another story that you had no intentions on reading. I think an informed america is a better equipped and a smarter america. Could you tell me what is lost when a local or regional newspaper goes out of business and what effect does that have on the local community . Youve shared two very powerful stories with us today, but when a newspaper goes out of business, whats that effect on the local community . Well, let me try to explain it this way. There were several references to the engagement of citizens and voting and that sort of thing, but let me give you a real world georgia example. We cover the state. We have a big group of reporters who cover the state legislature in georgia when its in session. I try to go down there each year and spend a day with our reporters and editors who do that so that, you know, i can meet the legislators and really get a good idea of work. Ive been down there and sometimes it feels like our reporters are the only ones there. Whats happened is its gotten too expensive to send reporters to macon or augusta or columbus, georgia. Thats not good. Thats not good for our democracy, thats not good for georgia, thats not good for any of those communities because of whats happening in the industry. And ill be honest with you, its not good for us, because the competition, we like to see them around and it would make us better and we would all be better. The state would be better and all the local communities would be better. Thats the kind of real world example amidst all of this discussion about these complicated issues, thats how it really plays out. Thank you so much. Im out of time. Mr. Chair, i yield back. Thank you, gentlelady. I would just advise the witnesses on the panel, they have called votes. We only have two, so well have mr. Gates, the gentleman from florida, to question. Well briefly adjourn and come back. I apologize for the inconvenience. Mr. Gates is recognized for five minutes. Thank you, mr. Chairman, and i believe we are presented with a historic opportunity here where right wing populists and left wing populists have joined together to attempt to change the way consumers interface with major metropolitan platforms. In a country that often sees division, its nice to be working together toward such an important goal and it truly is historic that we are working together. There are three ways in which the consumer can be altered. Technology companies can voluntarily choose to be more transparent with customers about their data and information, and they can choose to act in better faith with partners in the news industry. The second way is through investigations and hearings like this, we would be able to animate the department of justice to engage in more rigorous enforcement of existing antitrust loss. The third option would be a legislative option. Obviously, someones voluntary action is selfevident. If our goal was the second one that i outlined to investigate the antitrust, what goal would you give . There is a lot of incapacity in these markets. There is a lot thats not understood about the fees taken out, about how algorithms work, about how theyre structured, if, in fact, theyre structured to benefit consumers as the platforms say, or if theyre structured with the intent of blocking competition. So i think the most important first step is for the community to really dig into the facts, bring some transparency that transparency objective is a virtuous one, one that i believe in. What specific allegations would you want the department of justice to lay out to achieve that . I think i would follow the money at this point. The engine of the platforms is the advertising they sell. And the amount the possibility of competition, the fact theyre able to extract so much from that ad suggests something fundamentally broken and the lack of competition in those markets which are the key profit generators of the business, so i think i would go with the ad tech first. Thats very helpful. Mr. Chavern, im going to ask you about the legislative options available to us, and i know we can force our antitrust statutes, but another element of the communication decency act applies to Major Technology platforms and doesnt apply to the people you represent, section 230. Section 230, as i understand it, and im happy to be corrected by others, would say if a Technology Platform is a neutral public platform that they enjoy certain Liability Protections that newspapers dont enjoy, that newscorp doesnt enjoy with its assets. Does it make the anticompetitive posture of Technology Platforms more pronounced that they have access to this special Liability Protection that the people you represent dont have access to . Absolutely. There is a huge disparate, frankly, when o frankly,. With our content delivered through the platform, they get the advertisement and we get the money. Were responsible for what we publish. Publishers can and do get sued. On the other hand, the platforms are allowed to deliver and monetize this content with complete lack of responsibility. I think that is a disparity that will have to be addressed. I think section 230 had a reason at the beginning. I think particularly with regard to the massive platforms, i think its time to relook at that. Thank you, and mr. Chairman, that is very instructive testimony, because as we look at the ways to rebalance the scale, there is legislation that youve introduced with mr. Collins to give the people before us the ability to ban together in that negotiating practice. But i hope we wouldnt exclude from our gaze the other statutory advantages that are baked into these Business Models that, as mr. Chavern says, shift liability from one part of the industry, at the same time giving others Liability Protection in light of the transparency that mr. Pitofsky noted that would demonstrate theyre worthy of that. Im sure there was a virtuous reason for section 230. There was likely an incarnation of section 230 that would fulfill that obligation. In the absence of the transparency that requires these platforms to show theyre a neutral platform and theyre not putting a thumb on the scale either in the way they operate their business or the way they show content, i think thats an important part of the legislative function. I would finally add that im glad the president has tried to enhance the voluntary actions of some Technology Platforms by pointing out where he sees bias in that. So among those three things, i look forward to our great work and i yield back to the chairman. You did very well in that final comment, mr. Gates. I want to assure you that this investigation is intended to look at a broad range of practices on these platforms and a broad range of remedies, so i look forward to working with you on that as well. And well just stand in recess very briefly. We now recognize the gentlelady from georgia for five minutes. Thank you so much, mr. Chairman. I thank everyone who is here testifying today. Thank you so much. I really appreciate you being here, and because i do represent georgias sixth congressional district, i would like to give a warm welcome, special thank you to fellow georgian mr. Riley. Mr. Riley, your written testimony examines the decline in competition in the georgia press. What has that meant for the information that georgians are going to receive, georgian citizens, about their government at all levels . Thank you for the question, congresswoman. In a way, i guess you could probably answer it after that Spirited Campaign in the sixth district. I think it was clear that, you know, the Atlanta Journal constitution, we devoted a lot of our folks to covering that. I mention that because, see, i think thats what can be lost. You know, crucial elections where other News Organizations may not be in a position in different parts of georgia to exhaustively cover a campaign, that the candidates deal with the controversies, to potentially misleading television ads, that sort of thing. I also think it creates a situation where were not competing with each other as News Organizations as much, and as has been acknowledged. I mean, everyone is better off with true competition. I mention that as well because thats what made our press have a true constitutional difference. Weve always had a healthy press, and we can point to that and see why our country has had so much success. Ive heard from editors that they really value their brand, and i understand about brand, and that readers can trust their content. Of course, we all know in our online world, misinformation is always a click away. What are some of the ways that Online Platforms could help the a ajc recognize information from its readers and help readers know its coming from a reliable source . Im going to touch on that. One of the things thats important to us as a Media Organization is that its clear when users of any service come to our content, that its clear to them that its from the Atlanta Journal constitution, and all that means to people in terms of its accuracy is its fairness and how well presented that it is. When its confusing to anyone about the source of content, we do invite that idea of misinformation and people struggling to get to the truth. Would you like to add to that, please . Sure. Theres always been crazy conspiracy theories. They usually were delivered to us by a crazy uncle over the dining room table, and you knew that was different than what was in the newspaper and what was on tv. All the indicators about brand are suppressed, and thats not only bad for my members in the publishing business, because were in the trust business, its bad for the public, because they lose signals about where information is coming from. So brand suppression is a serious issue that does need to be addressed. Thank you. And mr. Pitofsky, some have argued that reforms to preserve local journalism could have the effect of having higher prices for advertisers, including Small Businesses. Do you buy that argument, why or why not . I dont buy that argument. I think the lack of competition in the ad tech space for Digital Advertising is raising prices for advertisers. And if there was more competition in the space, the various platforms competing with each other would need to offer better deals to one another. I dont know if youve seen if you have it here that uber and lyft are constantly sending notifications to their riders of special deals, and thats healthy competition. Thats them giving better deals to their customers to get their business. I think thats what we would see if we introduced more competition into the ad tech space. Thank you. And for any of you, are there reforms that could preserve and promote journalism, also ensuring that Small Businesses have access to affordable advertising . And any one of you id love to hear from. If i may, congressman. Thank you. So as my testimony notes, leaders in industry have already given hundreds of thousands of dollars to supporting initiatives and provided tools that allow news editors to monetize their content. The rate at which that revenue is usually split is 7030. I know that was cited previously in the hearing saying news publishers are receiving 30 . The figure is right. Who is getting the amount is wrong. The split is traditionally 70 going to the news publishers, and thats substantiated by a government report cited in my testimony as well as other public sources. That being said, we know more can be done to promote news journalism, and as our testimony suggests, there is a variety of solutions, including a tax treatment for incentives to production as well as nonprofit status and grants beyond what our industry has been providing to various programs for journalism promotion. Thank you so much. I yield the balance of my time. I thank the gentlelady. Now for the gentleman from colorado, mr. Neguse. Thank you, mr. Chairman. I certainly appreciate the bipartisan nature of the questions and i certainly appreciate the witnesses testifying today on such an important topic. A thriving and Diverse Press, as we know, is the gateway for people to enter our political discourse. People now access their news through two options. Most newspapers are being forced to shut down. Weve lost nearly 1800 newspapers, 500 from rural communities. One of those was my own states Rocky Mountain news, colorados oldest newspaper, which closed down in 2009. We also know when communities are left with no local newspaper, there is a direct correlation to active engagem t engagement. Thats why todays hearing is so important and the testimony posed underscore that fact. Mr. Shears is it shears . Schruers. I apologize. I want to talk about your comments regarding antitrust exemptions. I reviewed your testimony. My sense, and i quote, you say attempts with complying to these protections have negatively affected consumers as a whole. You talk about the fact that while you agree there need to be potential solutions, but protections have been exemptions have been a fruitless solution. A variety of them have made arguments in the past that they were not the firms we were involved with were subject to antitrust enforcement just like any other that doesnt benefit from an exemption. And i suppose you would draw up an exemption for those firms. Fair to say . Ccia has never volunteered for any exemptions of any kind. Thank you. The second point id like to follow up on is regarding the ad revenue piece. I just want to clarify for my own understanding and the record and i missed the exchange regarding the 7030 split. My understanding from your testimony that the example theyre citing relates to google. Does it provide to other companies . Google has stated on a few occasions that the report i identify cites revenue splits between other major Internet Services that are at 70 and above, depending on the particular product thats being used by different platforms. In some cases its 85 or even 100 of the revenue is retained by the news publisher. It varies greatly by platform. I know of no revenue split whereby the news publisher only receives 30 . These reports that are cited im sorry, i have limited time. I appreciate your answer. I guess i would be interested perhaps we can follow up on this after the hearing in getting a detailed breakdown of revenue sharing across firms. Its painting with a broad brush citing one single example, and thats not advisable. On page 3 of your written testimony, you talk about the benefits, the fact that social media platforms in particular have offered unique functionalities and features showing involvement. Quote, they may help with stories and road test journalist ideas. You talk about that in a favorable sense. The footnote i was struggling to understand who would promote this idea that road testing journalists stories is a good approach to journalism. You cite a study called the future newsroom, university of melbourne, 2003. In the parenthetical you state, this study, noting the publics use of twitter, to road test story ideas where high engagement was taken as a sign to publish your story. Do you know who commissioned this study . I dont, no. I would encourage you to look up facebook. I found that on page 2 it was commissioned, and i see that only because a lot of the discussion weve had in this committee over the course of the last several months, as you may well know, has been around election interference. My former adversary in 2016. And so much of that related to social media disinformation, and precisely these types of actions where engagement on twitter is used to proliferate and propagates stories that happen to be false. I think there is a reason to be concerned about this road testing and using the engagement on twitter and a sign that the stories should be further published that that is a true test of success, i just i think is not a tenable position, in my view. Im happy to give mr. Riley and mr. Pitofsky a chance to answer that question. The time of the gentleman has expired. The witnesses may answer the question. Im not familiar with the study, and i do know a lot of times in some of those social media platforms in the same story, people will experiment with different headlines or invite users to make suggestions. To me thats sort of a tangent to the core thing that we really worry about with local jr. I journali journalism, which is getting out there, finding out whats really going on, digging deep into it and making sure it gets to an audience. Again, im not familiar with the study. I would add that some of your earlier questions pointed out a factual dispute in the room which are fees that go to the public instead of the platforms . I would encourage this committee, as part of its investigation, to look there. Its a profound question and there is a lot of disagreement. I think youll find the statistics are closer to the one cited by the congressman in earlier proceedings. Thank you, gentlemen. Im now recognizing myself for five minutes. Mr. Schruers, i want to start with you. Google captures 85 of the Online Search market. 94 of all searches on smartphones, 70 of the search is ad test market and 29 display ad market. I take it you dont believe, at least on their face, that these are competitive markets . Which precise market are we talking about . Lets talk about searches on smartphones, 94 of the market controlled by one platform. You would agree thats not dpet active given any market. I would say 99 of relevant market. You think ad search is not a relevant market . I think a relevant market in that case would be what columnists tell us compete with that. I know by searching on your phone in my browser, i can also search by asking siri, i can ask the assistant Smart Speaker in my room. There are a lot of places theed use need a market. I dont know any economists who agree thats not a competitive market. Im asking you, do you believe thats not a competitive market, 94 of the market share . I believe 94 of a relevant market is something up for drgs. I guess the question is whether thats a market. Its been found that google has given preferential treatment in the digital ad market. Do you think people should get preferential treatment . Its not the same in the antitrust law and i believe its even stricter on the act of selfprefacing. Im asking you whether the conduct sells self hmd. Is there any way for a competitor to identify this approximate self hdonselfmade. There is a rule, for example, that the Grocery Store cant put its own products at eye level in the store. It would be helpful since this investigation is being undertaken that we agree to a common set of facts. Well figure out Solutions Later in the process, but i think this factfinding is very important. You encouraged caution when forcing antitrust against big tech platforms, but i think our caution is what weve had in the last decade which i think resulted in the emerging of monopolie monopolies. The president reported that a single change to google caused it to fall by 60 . A single tweet by facebook, facebook traffic dropped by 90 . How does this power dynamic, the fact that a platform can effectively shut off a and have the ability to have news . No company has the right to decide which company has publications and which ones dont. The ability to unplug anyone is basically a shield to criticism. Many journalists will not have the courage to speak out and criticize big tech in the first place, knowing this can be done. Thank you. Several leaders have pointed out that antitrust are too consistent with mergers and basic competitors. For example, the university of california at berkeley have noticed that googles double click in 2007 and instagram in 2007 will result in too much competition. You note in your written testimony that we cant rely on antitrust alone. I wanted you to share what tools do you think that congress has traditionally used to face competition and what we ought to be thinking about as we confront these challenges. We do believe that competitiveness is there and we raised the question of online video distribution. It wasnt the first time but it was seldom that tool was used. I think antitrust Companies Need to use that. Going back to those transactions, there are some that should be reviewed now to determine whether they were rightly decide sting. Its critical where we get news content. We need to be most careful of promoting as many new incidents. Many. Mr. Chevran, one final question. He made reference to the increasing number of people who obtain their, so huge increase inially. I think mr. Zmz. We cant continue. If we continue at these paths, well lose environment throughout the country. Its utterly destructive and cannot be allowed to happen. What weve asked for is a chance, a chance for a different kind of future. We need that future collectively. Id like to ask unanimous consent to allow a member a member of the full Judiciary Committee, not a member of the psych committee. Joining us is the gentlelady from texas. If you would allow her to ask her question. Without objection. Mr. Schruer, let me thank you for the journey youve started this subcommittee on, and out of your courtesies, i hope ill be able to join you as we make this journey. Forgive me for my delay, but i was in the rules committee, which is a long process of dealing with online amendment. Iver served on this committee in the past. My election might have served me and i might even have become Ranking Member at some point in time. It is an Important Committee but there is important work, as we speak. So i will try to be focused in my questions, but to read a statement, a small number of digital platforms with outside control over access to trustworthy news online. I am a partaker of the nnpa, which is the association of africanamerican newspapers, newspapers that have an enormous history back to construction, periods after slavery as the vehicle of information for many. Im in a Diverse Community like houston that speaks 98 languages. There are many other communities that reflect other communities. They seem to be adhering to newspaper. So then in the last election, of course, in 2018 and 2016, we know a specific invasion of foreign adversaries who utilize online fools to mislead voters, to utilize russian bots which we expect to occur in the 2020 election. As i see from the journal of the atlanta constitution, papers are on line. We understand that. Was that mr. Chavern, as i came in, said, we cant last this way . Im going to go. I know that mr. Chairman sissolini will have a number of Digital Privacy issues. I want to have everyone answer, if they would. Our achilles heal of dealing with online sdprooprouting. If everybody takes that question, maybe the Atlanta Journalism may be curious. Go ahead, sir. Thank you. Just briefly, the audience is more if they have a problem with quantity and quality, they are more sustainable. Its achievable but the platforms have been unwilling to do that to date, and thats why were here. Thank you. Sir . I totally agree that we need quality content. We have a problem online that comes from every user of the platforms and every Media Company that is not doing careful curelation. It comes all across the marketplace with the same incentives. I would urge you to consider, as you do your fact gathering investigation, continue whether you need legislation to create some Public Service duty from everyone on line, whether it be a news Media Company, a newspaper or a platform, to deliver trustworthy information and create the financial incentive of what is fact and what is fiction, and hopefully it would create the kind of money were hearing from local newspapers they need to sustain themselves. Thank you. Ms. Hubbard . Thank you, madam congressman. As i said earlier, i think competition would help with this problem, because consumers right now dont have the option of choosing a platform that doesnt boost disinformation, whether its the engagement algorithms. Facebook and youtube both used these sites for information. Youtube and google have the risk of losing profits and theyre motivated to fix this problem by not losing profits. The other thing i would like to add quickly is privacy regulation will also help, because its this 360degree area that allows them to collect data about people. If we collect less data about people, at least in ways they would least open them up. The statement from Consumer Reports expressing their support for the investigation. Without objection, i join the statement from Laura Bassett and john stanton, two journalists who were laid off from the hu Huffington Post. This concludes todays hearing. I want to thank the witnesses for their testimony. Without objection, all members will have five legislative days to submit additional questions or additional for the record. This hearing is adjourned. Are there resistance to these frameworks . Its a different economy now, so looking at are the statutes sufficient, is the resources necessary, is the enthusiasm of the antitrust agencies efficient, but also, are there other things we can be doing to create for competition in this space to prohibit anticompetitive or discriminatory conduct, to promote competition, to ensure that companies are not acquiring their rivals. There is a whole range of issues about the way these markets are not working and what congress can do to make them more competitive to protect consumers, to protect users ability to control their own data to prevent these platforms from engaging in misconduct. I think part of it is you look at the the acquisitions just one example of what happened with instagram, i think it is clear that those were rivals of facebook and they were acquired. I think that is something that we have to look at, is how did that happen, why did it happen, are there ways to look at those scitions. Acquisitions. [ inaudible ]. I think all of the potential legislative solutions are on the table. This is just the beginning of the investigation. The purpose is to gather the best evidence, the best information, to hear from the smartest technologists who have been thinking and writing about these issues for a long time, to bring them before the committee, to conduct witness interviews and document production, so that when were making judgments about what is the best way to respond to these challenge, were doing it with the best information, the best thinking, and a full understanding of how the market is working and the behavior of these large Technology Platforms. Can you talk about how much resource and time, how much resources or time might be required for this kind of investigation . It is obviously farreaching. This is a farreaching investigation. I am very pleased to remind everyone it is a bipartisan investigation. I think members on both sides of the aisle recognize the importance of this review. You know, this will take some time. Im certain, im confident that we will conclude the investigation and complete a report in this congress, and have time to act on the recommendations, and you know, as we begin this work, may require some additional resources, and if so, ill obviously speak to the chain and the Ranking Member. Any concerns about any investigations in the Judiciary Committee that my circumvent that and obviously the secretary had to leave the nature of our work. We have to multitask. Other things going on. Absolutely. We have to do both. Whats next for i mean i think, you know, were going to continue to have hearings. Were going to look at the dominant platforms impact on innovation and entrepreneurship in our next hearing so we will have a series of additional hearings. I do think looking at how these acquisitions occurred, and looking at retrospectively whether they ought to remain, you know, the ability of congress to unwind is pretty limited but i think we need to understand how it happened, if in fact, it resulted in anticompetitive conduct of these particular platforms, we ought to know that and figure out how to prevent it in the future. How are you looking in another hearing and do you have a sense when that might be . Lets see. We, you know, were going to have, as i said, we will be hearing from a number of experts, expert technologists, hearing from people who have suffered the impact of the monopoly, or dominance of these platforms, and thats the benefit of having the investigation. Those who are concerned about economic retaliation, will have the ability to share information with the investigators, and that can be useful to our consideration of these issues. So we will, you know, we will lay out when our next hearing will be with the witnesses, et cetera, but this is going to be a very comprehensive look at this marketplace, i know there is a lot of interest, and i have referenced particular companies, but the truth is, this is about the digital marketplace broadly, and there are obviously large, you know, dominant actors in the space that we all know but it is really to look at how this market is functioning and what the absence of competition means for users, consumers, both on privacy, and behavior which favors their own products and services and the effect on consumers. Has the committee asked facebook or google to testify . We havent made requests yet for the next hearing. Say that again. Have you heard from competitors like yelp or spotify. Heard from them . Called me up and said hi . Reached out to you or other lawmakers . Look, i dont think there is anything surprising that congress is undertaking this investigation. This is an issue which i think everyone recognizes requires federal review. These are easy problems to diagnose. Theyre nor difficult problems to solve. I think all of the Technology Companies recognize that this is an important responsibility of congress. I expect that they are all going to engage in this investigation in an authentic way and share their perspectives and share their best thinking but we are going to do this and come up with a set of recommendations when with or without their cooperation but i fully expect them to be part of this evidencegathering initiative. Do you want to know why did you help to see i was in here. I didnt. Do you want to know why the ftc dropped the case, after examining a lot of the same issues that youre talking about here is, that something that you are going to look into . Yes, because in addition to the existing antitrust statutes, and they need to be modernized and updated and we want to make sure the antitrust agencies are using them properly and they are fulfilling their own responsibilities. I have very serious concerns about the ftc sort of commitment to some of these issues, it hasnt been a serious antitrust case here in decades and i think part of what were looking at is not only the legislative architecture but what the antitrust agency is doing, how aggressively are they pursuing procompetition policies and are there things to do in the statute that can make it easier, more effective and it is a thorough review. How are you reviewing acquisitions of niche competitors . Because you know, when you look at what the ftc and the d. O. J. Have said on what they want to change, i think there is an ap tute to do more on that, and in the tech space so i mean what is your thinking on that . I think that is going to require a review of the conduct of some of these large platforms. And their acquisition practices and both in specific cases and what their Business Model is. But thats a very serious issue, and look at, you know, the kind of clearest example of facebook acquiring instagram and whatsapp, and you know, their effort now to integrate them so to make separation much more difficult. Those are i think concerns of the committee and it will be a subject of part of the way we think about how these very large dominant Technology Platforms are behaving in a space that doesnt provide a lot of competition. Instead of looking at like a facebook, instagram, isolated, youre saying lets look at a pattern oh, yes, this is really not about a specific, this is not an investigation that relates to the prosecution of one company for wrongdoing. This is an investigation that is designed to give us a lot of information about how the market is working broadly. And you know, examples will help illustrate those practices of these company, but the goal here is to come up an understanding, a deep understanding of the way the market is working, where the deficiencies in competition are, what the implications of that are, and then of course, a set of solutions that respond to those implications. Significant changes to antitrust laws by the end of the you know, im not prejudging this. It is hard for me to believe that there wont be some ways to improve an antitrust statute that was written more than 100 years ago. That will more accurately correspond to the Market Conditions of these large technology, but i cant say for sure that will be the end result. Im he a approaching this with a very open mine, about what are the solutions that will get this marketplace to work right, that will promote, provide real competition and encourage innovation, ent pren sure neurship and prohibit zrim nare behavior and anticompetitive practices and looking at the legislative framework is just one more piece of that. Ive got to go back to my office. Tonight, here on cspan 3, starting at 8 00 eastern, the Senate Agriculture committee looks into Global Markets available to u. S. Farmers and ranchers. At 11 00 eastern, the American Constitution Society for law and policies convention. With conversations on Senate Republican efforts to confirm as many judges as possible while they control the senate. Hawaii senator macy hirono delivered the keynote address. And at 1 00 eastern, the congressional black caucus, an actress tirojip. Henson best known as cookie lion on foxs tv drama empire Discusses Mental Health and suicide risk among black teenagers. Thats prime time tonight, here on cspan 3. The 1979 small network, with an unusual name, rolled out big ideas. Let viewers make up their own minds. Cspan opened the doors to washington policying making for all to see, bringing unfiltered con trent from congress and beyond. A lot has changed in 40 years and today that big idea is more relevant than ever. On television and online, cspan is your unfiltered view of government. So you can make up your own mind. Brought to you as a Public Service by your cable or satellite provider. Defense department and National Security counsel Officials Say there are growing concerns over russian and Chinese Nuclear development. The Hudson Institute in washington, d. C. Hosted this discussion, on Nuclear Weapons development, in those countries. And about the state of current Missile Defense systems. Thank you all for sticking around, for the second portion of this event. Now, we can spend a little bit more time considering together some of the policy implications and how the Trump Administration is navigating the current arms control landscape. And with us, i dont think we could have put together a better panel for this, so thank you all for being here with us and taking the time to do this and helping us think through these. Directly to my left we have mr. Timothy morrison, tim joined as a