Google and Facebook Emerge as the New Media Barons

(Bloomberg Gadfly) -- A handful of big technology companies are becoming the next William Randolph Hearst and Walt Disney: They wield enormous power over what news and entertainment get made.

In case you needed more evidence of the power of big tech in people's lives, Google is giving you more. The company is negotiating with some news and information companies, including Time Inc. and CNN, to create tailor-made news and information for a new Google project. The idea, as the Wall Street Journal first reported, is to funnel people from Google to allied organizations' articles, photos and video that people can swipe through quickly, presumably on their smartphones. 

It's worth cautioning that Google parent company Alphabet Inc. releases a bunch of different projects and many of them languish. This reported initiative -- dubbed "Stamp" -- could, too. Regardless, it's another reminder that Google, Facebook and a small number of other technology companies now have the power to control what news, entertainment programming and information gets made.

This has been de facto true for a while. If a news organization like this one wanted to lure people to read its articles, it needed to make sure people could find them prominently in Google searches, and it made sure the articles, headlines and other information were alluring to people scrolling through their Facebook news feeds.

Then the powerful gatekeepers started to dictate the format of news and entertainment. Google wanted web pages to load on computers and smartphones without even fractional seconds of delay

But something new is happening. This has gone well beyond the powerful technology companies as gatekeepers. Now they are calling the shots about what news and entertainment gets made in the first place and whether the businesses survive.

Facebook CEO Mark Zuckerberg believed the future of the internet was going to be video, and he is effectively orchestrating his vision into reality. The company has created financial incentives for companies and celebrities to make videos to reach more than 2 billion people on Facebook and related digital hangouts each month. The company can tweak its computer algorithms to make Facebook users more inclined to watch those videos.  The company has faced pushback for its video demands, but Facebook can create its own positive feedback loop to slowly compel the internet to reshape to Facebook's tastes and business goals. 

Likewise, Snapchat has persuaded everyone from the National Football League to the ABC television network to custom-make videos or posts that Snapchat thinks will appeal to the young fans of its app. Google also has the power to dictate what its partners create for Stamp given how many people use its internet search, YouTube, Android phones and other products and websites. 

There's no question the global popularity of digital hangouts such as Google and Facebook have created a much bigger potential audience for entertainment and news. Of course the question is whether the billions of potential readers and viewers are worth the drawbacks of being "serfs" toiling the land of Facebook and Google, as one advertising executive put it to my Bloomberg News colleagues. Google and Facebook are taking almost all the new advertising dollars, which has forced television, digital music and news organization to increasingly ask their customers to finance their industries directly or shift into digital video that (for now) commands higher ad prices.

And history shows that allowing a few people or companies to have so much influence over information and entertainment hasn't been great for the world. William Randolph Hearst and Joseph Pulitzer agitated for a war and got one. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

1. Those are: Google web search,  YouTube, the Chrome browser, the Android software for smartphones, Google Maps, the Google Play app store and Gmail.

To contact the author of this story: Shira Ovide in New York at sovide@bloomberg.net.

To contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.net.