Google and Facebook are facing new competition to their online business models after President Donald Trump signed a bill putting Internet service providers on a path to being able to monetize online users the same way these technology giants do. Next up is the threatened unwinding of the Obama administration’s “net neutrality” rules, which could put these companies in a double bind, because they could soon have to pay Internet service providers a metered rate to move their content to customers’ screens.
Google and Facebook will argue—as they did during our fight on net neutrality in 2015—that ISPs should not be able to prioritize and price the flow of online content. The problem is that they make the exact opposite argument in their role as distributors of news content crucial to our democracy.
The two digital giants increase or reduce users’ exposure to news content based on whether publishers—such as the Wall Street Journal or the Indianapolis Star—agree to play by their rules. Those rules are crafted to maximize the flow of advertising revenue, not quality content.
Proponents of net neutrality, including Google and Facebook, persuaded the Federal Communications Commission to treat ISPs as “common carriers,” akin to traditional telephone companies. Under decades-old law, such entities are subject to high levels of government regulation on price, access and other consumer issues, all in the name of the public good. Because of the elevated levels of regulation, ISPs aren’t permitted to favor any content, regardless of consumer demand.
Now that Ajit Pai—who has said that net neutrality’s “days are numbered”—has become chairman of the FCC, many think the agency will help ISPs reclaim the ability to set their own rules and “toggle” content based on revenue opportunity. News outlets, as creators of high-quality (and expensive) news content, like a level playing field and have supported net neutrality.
But it would be hypocritical for Google and Facebook to be the faces of this fight, given their business models. The digital giants have become central to how millions of Americans consume their news, and as these companies rely on consumers’ ever-increasing appetites for news to capture their audiences, the business terms they dictate put intense stress on news industry economics.
For example, Google requires publishers to offer “First Click Free” content, lest they be punished—with demoted content that doesn’t abide by the rules in search results. Facebook’s “Instant Articles” allows articles to load faster in user news feeds, even with the newly announced changes and trials, but doesn’t allow a simple or direct way to subscribe to a publication.
Meanwhile, both companies pressure newsrooms’ bottom lines by soaking up online ad revenue. A study by Digital Content Next, a publishing trade group, found that major publishers with large digital operations earned only about 14 percent of their total revenue in the first half of last year from distribution platforms—and most of that was from YouTube. Smaller news publishers get peanuts.
This debate—as well as the spread of fake news and questions about digital companies’ responsibility in weeding out false content—seems to be leading the tech giants into an increasingly fraught political landscape. Media reporter Michael Wolff observed that the Trump administration and Republican-controlled Congress are creating a “uniquely dangerous moment” for the digital industry as its “customers and employees demand that companies swear ever-more anti-Trump oaths.”
Google and Facebook understand the burgeoning vulnerability in their positions. Each has teams to think through its relationships with news content providers. Facebook brought on former CNN anchor Campbell Brown to “help news organizations and journalists work more closely and more effectively with Facebook.” Although welcome, such outreach won’t be enough. Newsrooms have always cooperated with Facebook—so much so that they have co-opted their economic models. What’s really needed is a fair and sustainable split on the advertising income earned off breaking news and good reporting, not just more happy talk about the importance of journalism.
As the net neutrality issue heats up again, Facebook’s and Google’s conflicting positions won’t go unnoticed. These companies argue that their content shouldn’t be prioritized based on revenue-driven decisions by ISPs, yet they are doing the same thing to news organizations. It’s an inconsistency that even ardent defenders of net neutrality will be unable to resolve. Something’s got to give.
This appeared in Sunday’s Washington Post.
For decades, and particularly since President Richard Nixon’s administration, public pressure has led presidents to become steadily more open with citizens about how they conduct business, and more mindful of ethics. Major party candidates have released their tax returns, revealing information about their finances and any potential conflicts of interest. Presidential relatives have avoided high office. The Justice Department has insulated itself from the Oval Office. And, as of the Barack Obama presidency, the White House has released voluminous records on who visited the executive mansion grounds so citizens could know who was meeting with the president and his staff.
Some of these practices flowed from formal rules, others from norms based on the American notion that the president works for the people and that transparency and ethical guidelines are essential checks against abuse of that trust. Though presidents have chafed at the expectations that follow from this principle, none before President Donald Trump has so brazenly attempted to reverse the decades-long trend toward an above-board presidency.
The latest news is that Trump will not routinely release White House visitor records, as Obama did. The White House cited “grave national security risks and privacy concerns.” The former is not persuasive, since a national security exception was built into the policy. So Trump must argue that his right to privacy, or that of the lobbyists coming to see him, outweighs the public’s interest in knowing who is getting an audience. We don’t find that persuasive, either.
Trump’s decision to claw the White House logs back into the shadows follows several other moves that show contempt for the public. As a candidate, Trump promised to disclose his tax returns; then postponed the release date; then seemed to decide that he never need keep that promise. His excuse—that the IRS is auditing his recent tax forms—has been thoroughly discredited as a rationale, and provides not even phony cover for refusing to release older returns. Given Trump’s sprawling, secretive business, and unanswered questions about its ties to Russians, his departure from tradition in this matter is particularly unsettling. Nor has he made as clean a break from his business as taxpayers have a right to expect.
Judging from his public statements, Trump calculates that there is little to no political price to be paid for flouting norms of ethics and openness. But his dismal poll numbers consistently show that Americans question his honesty. A time may come when he needs to ask the American people to have confidence in him. After undoing the nation’s progress toward transparency, he may find that the reservoir of trust is very shallow.
In regards to the gentleman dragged from the United plane, I too encountered the same situation with Delta Airlines. Trying to get back to Twin Falls from a visit to Las Vegas, changed planes in Salt Lake City, had purchased my ticket months in advance, was given my boarding pass, boarded the plane, was seated in my assigned seat, and buckled up. An airline employee called my name from the front of the plane. I raised my hand and she approached me and informed me I had to get off the plane. When I asked why she said that I had been randomly selected.
I gave it a moment’s consideration and realized that if I did not comply an air marshal would take me off. I was 75 years old at the time and realized it was pointless to refuse.
At what point will the disrespect for aged paying customers ever end?
The question is, who is taxed?
We’ll circle back around to that, as we review the last hot topic of the Idaho legislative session, the grocery tax.
Or, to be more precise, the sales tax as it applies to groceries, which in Idaho it does. In nearly all of the 45 states that impose a statewide sales tax, groceries are exempt from the tax, or in some cases their sales carry a reduced rate. Idaho’s in the minority on this one.
The idea of exempting groceries from the Idaho tax has been around for decades, and it has had backers from both political parties. (Shall we mention that Idaho’s current sales tax was pushed through half a century ago by a Republican governor and legislature?) In an era of tax cutting among anti-tax legislators, the grocery sales tax cut hasn’t engendered really strong support for a long time. But backing for it energized this year, picking up support from various wings of the Republican legislative caucuses and among Democrats as well. The vote margins were strong enough that a veto likely would have been overridden if the Legislature were still in session.
All that said, the veto by Gov. C.L. “Butch” Otter, who proudly has pointed to many tax cuts in recent years, but also criticized the repealer bill, did not come as a shock.
This section of his veto message did, though: “The advice from Utah was simple and straightforward: Don’t do it. The ramifications of lifting the sales tax from food had made budgeting much more difficult with the loss of what indisputably was their most stable and consistent source of revenue for essential government operations. Taxpayers benefited almost imperceptibly while lawmakers found themselves dealing with the peaks and valleys of income tax and other financial supports that are far more susceptible to economic fluctuations. Everyone benefits from some kind of government service. Everyone eats.”
There’s a real logic to this, a reasonable case. What’s a little shocking is that Otter, he of such libertarian background and inclinations, would be the one making it. You could make similar arguments for any number of the tax cuts enacted over his governorship, which have been estimated at a billion dollars worth, but Otter never did before this. Otter making the case for a veto that a benefit to taxpayers would be “imperceptible” while legislators would have to struggle? Imagine what he might say if a Democratic governor ever had the temerity to use that line of logic.
We don’t much have to guess, since the response from other Republicans has been mostly angry. On Facebook, legislator Marv Hagedorn (a contender for lieutenant governor) declared himself “Very disappointed. This repeal would not have affected the next year’s budget, so we would have had next year’s session to tweak it as needed. There is no way to know how much sales taxes come in for food alone as the state has no method of garnering that information, nor do we know how much sales taxes are being lost due to Idahoans shopping across state lines where there are no taxes on food.”
Lt. Gov. Brad Little, one of Otter’s closest allies, took the unusual step before the announcement of publicly urging Otter not to veto, setting himself up to take the contrary point of view in the race for governor. In that developing and crowded race, he won’t be alone; at least two of his fellow candidates also favor repeal.
What constituents might be pressing for, at least as much in the coming debate though, is an answer to another question.
In a legislature so eager to cut taxes, why has this one—one of the most regressive taxes on the books—had so much more trouble making a way to passage over the course of so many years, than so many other tax cuts? Not only Gov. Otter should be the recipient of that question.