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The U.S. Federal Trade Commission has concluded that The New York Times and its affiliates violated antitrust law by failing to license its online stories.
The FTC made its preliminary determination with regard to newspaper publishers in a complaint announced on Friday. The agency, which is part of the Department of Justice, was joined by the U.S. Attorney’s Office in Houston and the Federal Trade Commission.
The complaint said The New York Times’ newspaper business violated antitrust law because its practice of refusing to pay licensing fees for the use of its editorial content was unlawful. That practice would mean the Times was engaged in a practice that “impairs competition in the market” and harms its consumers, the complaint said.
The Times says it will challenge the allegations. “The allegations are without merit and will be vigorously defended,” the Times says.
The New York Times is a member of the American Press Institute and the Association of American Publishers, and its parent company is the New York Times Co. According to FTC filings, “The Times Company owns most of its newspaper sites through its New York Times Group. The Times Company maintains that it licenses its newspaper articles, but has given no information to support that conclusion.”
The FTC complaint says: “The Times Company owns most of its newspaper sites through its New York Times Group and publishes, syndicates and develops many of its own magazines, newspapers and digital products.” The Times’ “business model is based on its own, separate, and independent publication process. The Times requires those it licenses to perform certain functions at cost to its business, which gives it an incentive to seek to exclude competitors.” The FTC added:
“While the Times business model was originally designed for an era of print journalism, it has evolved as digital technology and the Internet have matured. As such, the Times’ business model evolved to include digital products, including blogs, newspapers, and other digital content. The Times Company is concerned that a practice that is intended to compete effectively in a market and thereby harm its competitors and that impairs competition in the market may otherwise undermine competition in a legitimate and nondiscriminatory manner when done in combination with the creation of an undue and unreasonable influence on competition.”
The Times says it did not know that its practices impeded competition at the time it entered into an arrangement with Facebook to license stories for its Facebook page. It says it had a strategy of not paying for stories
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