Cicilline Opening Remarks at Antitrust Subcommittee Hearing

Jun 11, 2019

WASHINGTON – U.S. Congressman David N. Cicilline, who serves as chair of the House Antitrust Subcommittee, is currently overseeing a hearing on “Online Platforms and Market Power, Part 1: The Free and Diverse Press.”

 

At the start of today’s hearing, Cicilline delivered opening remarks, which can be viewed by clicking the image below. A full transcript of his remarks, as delivered, is embedded at the end of this email.

 

 

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Chairman David N. Cicilline

House Antitrust Subcommittee

Opening Remarks, As Delivered

June 11, 2019

 

In recent years, there has been a cascade of competition problems on the Internet.

 

Concentration in the digital advertising market has pushed local journalism to the verge of extinction.

 

The combination of predatory acquisitions, a growing innovation kill zone, and high network effects and switching costs appear to have undermined entrepreneurship and start-up rates.

 

And the sheer dominance of some platforms has resulted in worse products and significantly less choice, leaving people without a competitive alternative to services that harvest their data, manipulate their behavior, and monetize their attention.

 

In response to these trends, the Committee announced last week that we will conduct a bipartisan investigation into competition in the online marketplace.

 

The purpose of this investigation is to document anti-competitive conduct online; examine whether dominant firms are engaging in anti-competitive conduct; and assess whether our competition system and current enforcement levels are adequate to address these problems.

 

Over the coming months, we will conduct a top-to-bottom review of online markets through a series of hearings on these topics, request information that is relevant to the investigation, and engage in a series of discussions with key stakeholders and policy experts.

 

This is the first significant antitrust investigation undertaken by Congress in decades. In the past, these investigations—which included studies of monopoly power in the airline industry, banking, oil, and Ma Bell—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 constitutional responsibility to conduct oversight of our antitrust laws and competition system 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 the competition problems of our modern economy.

 

Today’s hearing is the first step in this process for examining these trends.

 

The free and diverse press is the backbone of our vibrant democracy.

 

As Justice Louis Brandeis wrote in 1927, those who won our independence believed that public discussion is a political duty, that the greatest threat to freedom is an uninformed citizenry, and that the freedom of thought and speech are indispensable to the discovery and spread of political truth.           

 

But over the past decade, the news industry has been in a state of economic freefall.

 

From 2006 to 2017, advertising revenue has fallen from $49 billion to $15.6 billion, resulting in mass layoffs or newspapers folding altogether. This year alone, roughly 2,900 reporters and other news staff have already lost their jobs.

 

These massive cuts are happening to traditional news companies and online news sources alike.

 

For example, earlier this year, the Cleveland Plain Dealer announced another round of layoffs due to advertising losses, reducing its staff by 80% from employment levels just seven years ago.

 

Buzzfeed and The Huffington Post have also announced significant layoffs. These are online publishers that have never relied on revenue from classified sections or subscriptions and are designed to appeal to readers on social media sites and mobile devices.

 

This raises a critical question: if online news publishers can’t survive, then who can?

 

During this same period, online platforms that are gateways to news online have operated with virtual immunity from the antitrust laws. 

 

Since 2007, Google has acquired several of its competitors in the online advertising market, resulting in significant concentration and a complete lack of transparency in this market.

 

And since 2011, another dominant online platform, Facebook, has acquired two of its rivals—Instagram and WhatsApp—in an effort to corner the market for social media services and advertising on these services.

 

Facebook now controls a user base of 2.7 billion people worldwide, the largest communications platform in human history. It soon plans to combine its products into a single platform—a move critics have suggested Facebook is making to thwart antitrust enforcement.

 

As Australia’s competition authority noted in its preliminary report on digital platforms, 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 also been numerous reports of these platforms engaging in anti-competitive conduct—such as favoring their own products or discriminating against rivals—that has gone unchecked by Congress and unchallenged by antitrust enforcers in the United States.

 

These trends strongly suggest that the decline of the news industry is not the inevitable result of the arrival of the Internet, but is instead a direct consequence of enforcement choices that have created a market structure where a small number of platforms are capturing the value created by journalists and publishers.

 

This has affected news publishers in two key ways.

 

First, news publishers rely on Google and Facebook for the vast majority of traffic online.

 

Even minor changes to the platforms’ algorithms can have significant effects on the news industry overall. Furthermore, as a result of this immense concentration of economic power, news publishers—and local news in particular—have little bargaining power with the online platforms, exacerbating the economic crisis for trustworthy news.

 

Second, 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. As David Chavern, the President of the News Media Alliance, will testify today, this dynamic has resulted in an economic catastrophe for news publishers, forcing them to cut back on their investments in quality journalism.

 

In response, I have introduced the Journalism Competition and Preservation Act with Ranking Member Collins to give news publishers an even playing field to collectively negotiate with dominant platforms to improve the quality, accuracy, attribution, and interoperability of news online.

 

While I do not view this legislation as a substitute for more meaningful competition online or antitrust scrutiny, it is clear that we must do something in the short term to save trustworthy journalism before it is lost forever. This bill is a life support measure, not the remedy for long-term health.

 

Whether it’s an online publisher or local newspapers, 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 exposed and rooted out at all levels of government, and if power is not held to account. This is the very reason the press is called the Fourth Estate.

 

I view today’s hearing as an opportunity to continue the conversation on how to address this crisis. Both I and the Ranking Member are open to exploring ways to strengthen the Journalism Competition and Preservation Act, and my hope is that today’s hearing will serve as the starting point in this discussion.

 

I thank our panel of extraordinary experts for participating at today’s hearing, and I look forward to hearing your testimony.