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News Corp attacks internet platforms for hurting news business

News Corp.'s general counsel blamed internet platforms for hurting the news business by siphoning off profits and promoting less reliable news for readers in his prepared remarks for a congressional panel exploring the impact of technology companies on the media industry.

"The marketplace for news is broken," News Corp.'s General Counsel David Pitofsky said in his prepared remarks Tuesday. He criticized what he described as "free-riding by the dominant online platforms," which he said have diverted advertising dollars away from the companies that created the content and into their own coffers.

The House Judiciary antitrust subcommittee led by Rhode Island Democrat David Cicilline invited Pitofsky to testify at the hearing along with Atlanta Journal-Constitution editor Kevin Riley and Matt Schruers, a vice president of Computer & Communications Industry Association, an industry trade group.

The panel is kicking off the first hearing in its broad antitrust investigation of the technology industry with a focus on the market power of online platforms over news outlets.

Rupert Murdoch, an ally of President Donald Trump, owns News Corp., which holds media and broadcasting properties including the Wall Street Journal, the New York Post, Fox News and publisher HarperCollins.

Cicilline's inquiry comes after news last week that the Trump administration's top antitrust officials have divided up scrutiny of Alphabet Inc.'s Google, Apple Inc., Facebook Inc. and Amazon.com Inc. The Justice Department's antitrust division will examine Google and Apple, while the Federal Trade Commission will look into Facebook and Amazon.

The developments are increasing pressure on the tech giants, which were already under fire in Washington over Russian campaign meddling and data breaches, and come while Congress is trying to draft a tough federal privacy law and to hold tech companies responsible for the content disseminated by their services.

"In recent years, there's been a cascade of competition problems in the internet," Cicilline said in his opening statement. "Concentration in the digital advertising market has pushed local journalism to the verge of extinction."

He said the investigation would document anti-competitive conduct online, explore the impact of dominant firms and assess "whether our competition system and current enforcement levels are adequate to address these problems."

Read about the secret meeting where U.S. regulators carved up the tech industry.

Riley emphasized the need for local journalism to thrive by pointing to his newspaper's years-long coverage of the Atlanta public schools cheating scandal, in which teachers and administrators were found to have received bonuses based on bogus student test scores.

"Too often, the debate about media and tech platforms is framed within a discussion of international news brands," he said in prepared remarks. "But the greatest peril for our nation lurks at the local level, where a regional or community paper must cope with a fast-changing technological and financial landscape."

(With assistance from Ben Brody.)

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