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Media freedom and digital advertising markets

Author: Mira Milošević | 3. November 2021

“There will never be an election again in which trolling, hacking, and extreme far-right politics do not play a role,” Andrew Auernheimer, American far-right hacker and reportedly a webmaster for the neo-Nazi website The Daily Stormer, wrote after Donald Trump’s election in 2016.

Auernheimer and online armies such as 4chan and 8chan came into prominence by creating distorted and false narratives, hacking opinion polls, doxing and harassing journalists and critics, baiting mainstream media, and successfully manipulating tech platforms.

Yet, despite numerous efforts to discover and counter misinformation and disinformation tactics, many of the vulnerabilities exploited by both Daily Stormer and Moscow in 2015 and 2016 remain unaffected five years later.

As their influence grew, malicious actors have sought to undermine democratic processes in the US, UK, Germany, France, Indonesia, Ukraine, Brazil, and many other countries. In orchestrated efforts, far-right media outlets, plutocrats, and political figures – empowered by micro-targeting strategies, personal data manipulation, and social media “outrage” machine – have “not only vandalised the democratic process but also turned the contemporary information system and election campaigns into guerrilla war” (Martin Moore (2019), Democracy Hacked: Political Turmoil and Information Warfare in the Digital Age).

Not surprisingly, at the peak of the first wave of the COVID-19 pandemic, in  April  2020, content  from 10 leading web pages spreading misinformation had more than four times the number of estimated views on Facebook compared to equivalent content from the top ten official health information sources, such as the WHO and the CDC.

Central to misinformation and disinformation efforts is the social media and digital advertising architecture algorithmically optimised for profit-making. The global digital advertising market continues to grow at a double-digit rate, valued at more than $300bn in 2020, for the first time overtaking all other advertising channels together. Google and Facebook remain the largest digital ad sellers accounting for over 50% of worldwide ad spending, followed by China-based Alibaba. This scale and growth are enabled by an opaque digital advertising ecosystem, which remains largely unregulated and breeds negative market externalities. Recent research shows that intermediaries’ digital advertising market is highly concentrated with large digital platforms posing risk to market plurality in the new ecosystem of the news.

About two-thirds of all digital ad spending is absorbed into intermediary layers, only a third reaches the publisher layer. This happens in a context where Google is present at several layers of the “open display” chain (“ad tech”), where it has large market shares at each stage and it also owns a major publisher layer – YouTube. Intermediaries share very limited information on processes, tools, currencies, and outcomes or transactions. This opacity is almost by design and is a manifestation of abuse of market power.

In addition to the high market concentration and high costs of ad tech intermediary structures, Google’s buying tools and advertising exchange allocate approximately 85% (up from 50% in 2004) of advertising revenue to Google’s proprietary properties, such as Search and YouTube. YouTube earned $15 billion in digital advertising in 2019, more than all newspapers and magazines globally earned from digital ads in the same year.

To add insult to injury, firms that specialize in ad tech allow advertisers to block their ads  from appearing next to anything a brand considers “controversial,”  including journalism and news content. Research from the University of Baltimore found that the incorrect blocking of safe premium news content is costing publishers $3.2 billion in four countries alone — the US, UK, Japan and Australia. Some of the world’s biggest brands are even refusing to put their ads next to content about the coronavirus pandemic.

Journalism and news media content is highly disadvantaged in the economies-of-scale model that platforms are pursuing. Moreover, this ad-tech system inadvertently funds domains that misinform and disinform and often amplifies their messages. The same forces are driving the black market for social media manipulation and disinformation sites, including those publishing false claims about COVID-19.

Despite repeated public commitments of online platforms and leading tech platforms to address vulnerabilities, surprisingly little has been done to improve the ad-tech architecture, incentives, and its algorithmic systems. In April 2021, the U.S. Treasury named four outlets operated by Russian Intelligence Services for attempting to interfere in the 2020 U.S. presidential elections: Newsfront, SouthFront, InfoRos, and Strategic Culture Foundation. Check My Ads team has confirmed that over a dozen ad tech companies, including Google, still serve ads to SouthFront, even after the U.S. Treasury described them as “an online disinformation site registered in Russia that receives taskings from the FSB”.

The ad tech industry is not only unable to correctly detect disinformation, it still has no credible plan to stop the flow of millions of ad dollars towards misinformation and disinformation. On the contrary, it has diverted the flow of millions of ad dollars away from independent journalism and news media content.

The future of our overall information system, media plurality and media freedom is intrinsically linked with how digital markets are regulated and operate. Authorities in Australia, Europe and the U.S.  are setting the stage for future regulation. Unfortunately, current regulatory discussions, including the draft of the European Digital Markets Act have failed to comprehensively address major abuses of market power and externalities created by the digital ad market.

And so the absurdity of the digital marketplace persists. Misinformation is profitable. Journalism is not. Without meaningful regulation of digital markets, independent professional journalism is in danger of becoming an expensive luxury rather than a universal public good.

Given the scale and urgency of the problem, we need multidisciplinary policy teams that can devise new, progressive market and competition policies. We need effective advocacy for the creation of equitable, inclusive, sustainable, and human rights-driven digital marketplaces of ideas and information that would nurture freedom of expression and media freedom.

Article written by Mira Milosevic, executive director of GFMD


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