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US Congress opens inquiry into power of big tech

Washington

A CONGRESSIONAL investigation into the power of big tech companies began on Tuesday with bipartisan concern from lawmakers that the government's lax oversight of the industry may be doing more harm than good.

In its first hearing about the power held by Google, Facebook, Amazon and Apple, lawmakers focused on the decline of the news industry. They said they were troubled that the online digital advertising market, which is dominated by Google and Facebook, had siphoned off too much revenue from news organisations.

"Concentration in the digital advertising market has pushed local journalism to the verge of extinction," said Representative David Cicilline.

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Tuesday's hearing gave publishers a microphone after years of complaining about the big tech platforms. The News Media Alliance, a trade group representing 2,000 news organisations, including The New York Times, has long argued that Facebook and Google have become the biggest online advertising companies at the expense of publishers, which now rely on the platforms to find audiences.

Leaders of the committee have pushed for passage of a bill that would give news organisations the ability to band together to negotiate greater compensation from online services that distribute their news. Lawmakers of both parties pointed out how some of their local newspapers had shut down in recent years.

"Smaller news organisations don't stand a fair negotiating chance when they try to negotiate deals with the platform giants," said Representative Doug Collins, a co-author of the bill with Mr Cicilline. "These giants stand as a bottleneck - a classic antitrust problem - between consumers and the producers of news content."

David Pitofsky, the general counsel of News Corp, which owns The Wall Street Journal, said that "the marketplace for news is broken". Online platforms are "free riding" by selling ads tied to News Corp's content without paying to create it, he said. Those ads take money away from publishers' individual sites, he said, because advertisers now prefer services that aggregate news.

News Corp supports Mr Cicilline and Mr Collins' Journalism Competition and Preservation Act. The law would exempt the publishers from antitrust rules for four years, protecting them from charges of price collusion.

Matt Schruers, a vice-president at the Computer and Communications Industry Association, said at the hearing that his tech industry trade group accepted additional scrutiny because of the size of the companies being reviewed by Congress. And he said that the industry wanted to encourage good journalism.

But Mr Schruers said that giving antitrust exemptions to publishers was risky and could ultimately harm consumers and the economy.

Google, in a statement, said: "We've worked for many years to be a collaborative and supportive technology and advertising partner to the news industry as it works to adapt to the new economics of the Internet." NYTIMES