The traditional model of a “marketplace of ideas” was intended to justify freedom of speech in terms of its optimal outcome in the production of truth. But today our behavior on the internet, the main locus of the “marketplace of ideas,” is continuously monitored and processed through the analysis of big data. Complex algorithms categorize our choices and personalize our online environment, which is used to provide, among other things, bespoke news and information. In their quest to gain more traffic and advertising dollars, news providers often shape their content for online consumption in mobile formats (e.g., Facebook’s Instant Articles) and often with “clickbait” headlines. Investigative journalism and local newspapers, by contrast, are in the midst of a transformation due to the limited profitability of traditional models. It is in this context that the competition between sources of information in the “market for ideas” currently takes place.

The new mechanisms introduced by the internet have obviously brought efficiency benefits. But they also have severe downsides that we have only very recently begun to discover. These drawbacks concern not only deadweight losses (of economic efficiency) caused by market distortions, but also involve crucial public policy issues, particularly in the case of politically significant news. Our ability to evaluate regulatory and public policy issues surrounding online speech has been severely hampered by models of a marketplace of ideas that bear little resemblance to today’s information environments.

To build a new basis for substantive policy discussion regarding the freedom of speech, we need a clearer picture of today’s information environment, with particular reference to the algorithmic curation of news feeds and the creation of echo chambers. Nowadays the selection of news is directly connected to its generation and dissemination (although the relationship is not necessarily a linear one). Online publishing platforms, blogs, and social networks permit the creation of information and its immediate dissemination within specific social environments, and the internet offers a platform whereby ideas can compete and be immediately compared. Yet all the participants in the electronic distribution of information take actions that skew the internet away from being any kind of stereotypical “marketplace of ideas.” Manipulation by users constitutes an exogenous effect on the internet marketplace with which we are all familiar. Further, the internet is not merely “a platform” but consists of commercially designed subplatforms (each of the social media companies, for example) whose architecture, including algorithms, creates endogenous conditions that further depart from an idealized market exchange. The widely discussed creation of echo chambers also exacerbates the polarization of “communities of interests,” which in turn reduces the amount of information that each user has in order to make an educated choice about reliable sources of information.

The traditional accounts of a marketplace of ideas emphasize a competition out of which the truth emerges as a kind of product: they generally assume that a diverse information environment has the power to establish “the truth” in society. In other words, the market of ideas is thought of as a self-regulating institution which only needs the presence of diverse opinion matters to function. Such a misleading picture has long hampered the efforts of Western governments to regulate the dissemination of information on the internet. In the present environment, it is necessary to go beyond the “market of ideas” model if economic forces and the principles of democracy and public interest are to be reconciled.

The Behavioral Market for News

Behavioral scientists long ago demonstrated that the “doublethink” prophesied in Orwell’s Nineteen Eighty-Four—“the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them”1—is readily achievable. Marketing techniques aim exactly at familiarizing consumers with ideas that contradict known truths, all the while behaving as if only their claims were true. To take a classic case, consider the illusion that cigarettes are for happy, athletic, successful people—a message that, in the heyday of smoking, overwhelmed the consumer’s tendencies toward skepticism or caution. In most cases, of course, the separation between ideas and arguments in advertising is more complex. News and information now often come as products attached to sponsored goods, aimed at newly created consumer segments that can propel the commercial efficiency of the advertisement and the related products. These means of content delivery have more in common with doublethink than with a “marketplace of ideas”—with perilous consequences for society and democracy.

In recent years online behavioral advertising has given rise to broad concerns regarding the violation of internet users’ privacy.2 But the phenomenon of using these techniques for delivering news has become increasingly sophisticated, and not only in the explicit category of “fake news.” Facebook, as Josef Drexl has pointed out, serves information to users on the basis of their connection to the friend who shared the item, and of their past history of interest in content of that variety.3 Facebook users, he concludes, are “exposed to cross-cutting news” that does not align with their political views, but such news tends not to be shared further.4

Facebook’s News Feed algorithm utilizes hundreds of variables to predict what is relevant for each user, based on “relevance scores” that predict what a user will “like,” comment, share, hide, click, or mark as spam.5 Advertisements as well as user-generated content all receive relevance scores. According to a 2015 study the most important factors are friend relationships, followed by status updates, and the age of the post.6 Facebook and other media providers have made many further algorithmic advances since then, and have begun to look for ways to leverage additional information on user preferences, such as location data and other data generated from Internet-of-Things devices.

All these elements have the goal of creating a specific online environment aimed at serving the user news that, according to his tracked behavior and networks, will generate more traffic. While this system claims to shows us what we are more interested in reading or watching, its far more powerful purpose is to segment readers as “consumers” and news as “products” used to convey advertising, ultimately putting highly reliable sources and fake news websites on the same level—and diminishing the importance of serious sources altogether. Algorithms such as those used by Facebook and Twitter are crafted in order to show online content without selecting for the credibility of the source. The watchword is instead the “effectiveness” of a post in generating traffic—a loophole that populist movements have used very effectively.

Even setting aside patently false statements, social platforms have also been shown to be very effective in creating consensus and molding political values. In this sense, social media companies’ efforts to address explicitly fake news have obscured other, deeper problems. While the Cambridge Analytica scandal drew attention to the illegal sharing of user information for political purposes, the “analytical revolution” first described by Sasha Issenberg’s The Victory Lab (2012) is still going strong.

Content delivery on today’s internet may give the illusion of a marketplace of ideas, but it is not a market in which the user goes shopping for ideas in an open competition. Every internet user occupies an online environment tailored for him or her, polarized among different “communities of interest,” each segregated in such a way that network effects are amplified. The result is that internet users’ environments are populated with content primarily from their own community—with few chances of being exposed to crosscutting news. Users, too, rely on filters to sort through and select information from within the vast amount generated by the internet. Depending on the type of filter used, readers may end up being exposed to an even more limited amount of information. The internet’s “open platform” for the exchange of ideas is limited by user manipulation on the one hand and by algorithmic and platform distortions on the other. Yet typical discussion of the politics of the internet draws on the metaphor of a “marketplace of ideas” that is very far from this reality.

Freedom of Speech in the “Marketplace of ideas”

The metaphor of the “marketplace of ideas” is usually traced back to John Milton’s Areopagitica, although he never used the term “marketplace” and some researchers contend that his words have been misinterpreted.7 “Let [truth] and falsehood grapple; who ever knew Truth put to the worse, in a free and open encounter?” Milton admonished.8 Based on Milton’s work, neoclassical researchers have maintained that only a diversity of sources competing on a level playing field can ensure an open information market.9 Free markets for speech are commonly thought to be the most efficient way to achieve this goal. The theory posits that markets with large numbers of participants are particularly effective at aggregating information and coping with the limits of perception, thus solving problems related to uncertainty and cognitive limits.10 But just as in any other market, trade in ideas may be subject to distortion due to a number of conditions, not least bounded rationality and cognitive limitations. An adequate discussion of freedom of speech and of the press must take account of these distortions.11

According to the free market vision of knowledge transmission and truth creation, protecting the marketplace of ideas means ensuring a plurality of information sources so that consumers can freely choose and select the truth. But this proposition assumes that the public has access to the whole information output and that there is a rational and informed process for selecting the truth. While digital society seems to make such a process theoretically possible by making information constantly available, cultural biases along with cognitive limitations and echo chambers get in the way of such efficient information processing.12

Moreover, information sources frequently have an innate bias explained by an intellectual, political, or market affiliation, which may benefit the information source both in its relationships upstream (e.g., with a political party) and on the demand side. In this vein, many outlets are blamed or simply recognized for pursuing ideological agendas.13 Instead of diminishing the significance of Mill’s proposition, however, this antagonism ends up reinforcing it. The presence of antagonistic sources supposedly recreates an adversarial system in which the jury—the readers, and society as a whole—ultimately decides the truth of the case.14 As Frederick Schauer put it, “just as Adam Smith’s ‘invisible hand’ will ensure that the best products emerge from free competition, so too will an invisible hand ensure that the best ideas emerge when all opinions are permitted freely to compete.”15 But what if the jury (consumers) has a cognitive limitation or an ideological bias, facilitated by the very same societal structure (the market, and platforms created by market actors) that it is called to judge?

The promotion of truth through freedom of speech is based on an epistemic argument. The study of knowledge and the search for truth may be done by an individual or, as social epistemology explains, it can be seen as a collective achievement.16 The collective view of the search for truth focuses on the transmission of knowledge from agent to agent, and envisions alternatives to markets for the social promotion of knowledge and, ultimately, of truth.17 As Alvin Goldman and James Cox observed some years ago, when we intend to pursue knowledge generation and truth, we design highly regulated speech forums—for instance, scientific, professional, and academic journals, or civil and criminal procedures.18 Standard competition theories that encourage the “survival of the fittest,” they suggest, do not necessarily imply that superior goods will be delivered as a result. “What economic theory actually says,” they conclude, “is that, under competition, the levels of outputs for each type of good will reach efficient levels. . . . This makes no categorical prediction about which types of goods will be produced in relatively greater quantities, where types of goods are antecedently classified by some specific intrinsic characteristics.”19 Thus, sound limits to the abuse of free speech, and promotion of the of dissemination (not only creation) of diverse sources of information, can promote the transmission of knowledge and prevent its restriction or distortion.

The Regulation of a “Marketplace of Ideas”

Ronald Coase famously argued that the different treatment of markets for goods and markets for ideas is the result of a misconception regarding how markets for ideas function.20 The reception of Coase’s 1974 article was initially quiet. He observed that we welcome regulation in the market for goods and services because we assume that consumers “lack the ability to make appropriate choices” under certain conditions, yet we exclude a priori regulation in the market for ideas under the opposite assumption.21 Coase concluded that the distinction between the two markets is a fictitious one and that it is not justified on the basis of public policy considerations.22 While observing that certain markets for ideas have characteristics requiring a different approach, he encouraged government intervention to remedy market failures, just as in any other market.23

In his analysis of regulatory policy in the marketplace of ideas, however, Coase did not consider the multitude of interests and legal rights related to “information goods.” Information goods are simultaneously tradable goods and objects of the exercise of the freedom of speech. These are two faces of the same coin for, as Antonio Nicita observes, regulation on one of the two sides inevitably produces effects on the other.24

Yet the development of digital markets for ideas requires one to rethink such a dyadic vision of information exchange. The most popular social networks for the dissemination of news today are separated both from the generation and the commercialization of information, all the while capitalizing on the related advertising market. Nevertheless, most news is now created for the internet, according to the standards dictated by the specific medium, and paid for by the online advertising industry.

In the digital era, companies that initially advocated free speech have since insisted heavily on the propertization of speech.25 Indeed, they play whichever card is most readily available to them. In the name of economic efficiency, restrictions on freedom of speech are justified through property rights,26 contracts,27 antitrust, and economic regulation,28 while at the same time dominant firms readily invoke the unrestrained application of freedom of speech against the same body of laws.29

When we conceive of the market for ideas as having a sufficient level of competition and, at the same time, delivering the truth, we impose an obligation to achieve a specific result which does not generally encumber other markets. But is “the truth” really the result of a process which is triggered by the diversity of opinion found in a market?30 Philosophers as divergent as the Greeks and Foucault have noted that parrhesia (freedom and courage to speak) is a fundamental feature of every democracy, but it introduces at the same time a danger that can undermine its foundations31—namely, a bad parrhesia in which people can say anything.32 The competition between a number of formally independent sources of information does not ensure that the truth is revealed.

Freedom of speech is generally thought to be a personal right to express ideas and beliefs. At the same time, however, within the “marketplace of ideas” structure it fulfills a broader function as a right benefiting society as a whole and forming the basis of a right to information. Freedom of speech, in other words, is not confined to a personal right to express one’s thoughts and opinions but also promotes an informed citizenry. It therefore serves a public interest function which transcends the nature of private rights. The private right is purported to secure the public benefit, but when it fails to achieve it, any restriction or modification is resisted on the basis of the right.

Toward the Regulation of Internet Speech

Internet speech can be regulated either by intervening in the network infrastructure or in the platforms themselves.33 In the former case, regulation may impinge on net neutrality principles, and in the latter direct censorship may be involved. From the standpoint of the exercise of free speech, both solutions are undesirable. They would also be outdated: most of the distortions taking place in internet speech are the result of strategies aiming at shaping views rather than directly censoring them.34 Behavioral science has, fortunately or unfortunately, long since progressed to the point at which beliefs can be manipulated through indirect rather than direct means.

Copyright laws, competition laws, and merger regulation may instead offer a better solution to market distortions.35 But this approach would be possible only if one adopts a broader vision of competition laws that would guard against forms of anticompetitive conduct which damage democratic institutions.36 Yet that is exactly the shift that now must occur. In well-functioning markets, choice gives active consumers more opportunities to switch and, therefore, more bargaining power to put pressure on firms to improve their products. The supposed marketplace of ideas works very differently, however. While “markets for goods and services,” as Vincent Blasi puts it, “generate prices and levels of output,” the marketplace of ideas “generates a collection of individual beliefs and, in some sense, the production of observations and arguments.”37

The sources of social value in the market for ideas differ from the ones in “conventional economic markets,” as they depart from the simple interaction of supply and demand. Media sources deliver an economic service and at the same time are an important building block of every democratic society. The function of free speech in modern society highlights the positive roles that, at least theoretically, journalism plays: to inform, educate, interpret events, mold opinion, enable decision-making, and also to be an independent monitor of power.

The traditional press is generally described as striving to serve the interest of the widest community possible, while the specialized press and local news outlets focus on the interests of the niche they address. Despite the fundamental function they play in modern societies, local newspapers have been the first to suffer from competition on the digital markets—partly because of their failure to keep up with the fast-paced development of the digital revolution, but also because of the lack of profitability of a business model which does not sell enough compared to online advertisement. Many researchers have tracked the dramatic and steady decline of local newspapers all over the world.38 As a result, the current trends suggest that the digitization of news and its opening to the general community has diminished the average quality of news sources available39 and made it also more difficult to choose among them.

Even aside from the limitations of a free market approach to information and knowledge dissemination, the role of information providers is not just to offer a “product” for competition but—if free speech has any justification at all—to perform a public service, informing the community, scrutinizing power relations, and facilitating the conditions of a functioning democracy. In that case, even the democratic principles which animate Western democracies can justify a wide range of interventions to prevent harm to the spread of truth that private platforms, unfortunately, have all too often caused.

The Concept of a Marketplace of Ideas Revised

The classic accounts of a “marketplace of ideas” omit the crucial, even determinative modern relationship between speech and advertising. In his passionate dissenting opinion in Abrams v. United States, for example, Justice Oliver Wendell Holmes argued that “The best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out.” Recent interpretations of Holmes’s dissent emphasize his conception of the marketplace of ideas as “a much-needed counterweight, both conceptual and rhetorical, to illiberal attitudes about authority and change on which the censorial mentality thrives.”40 Yet even these updated arguments leave out the interaction between the supposed marketplace of ideas and the advertising and data markets.

When an idea is tied to an advertisement (particularly when the product belongs to an aftermarket), it becomes more difficult to differentiate between the world of ideas and that of products. Moreover, the diversity of sources alone does not necessarily ensure a free and diverse information environment. As Matthew Gentzkow and Jesse Shapiro point out, “there is no compelling reason to equate the number of independent sources with the number of firms. Adding competitors will have little value if they all have access to the same sources or reprint the same wire stories.”41 However we conceive the role of the sources, the generation of news alone does not ensure a diverse information environment if it fails to reach the public.42

As Justice Hugo Black observed in Associated Press v. United States, the First Amendment “rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public, that a free press is a condition of a free society.”43 In stressing the importance of how news is disseminated, rather than only on the generation of news and its diversity, the Court pointed to a crucial element in ensuring the diversity of ideas. Online news disseminators such as social networks and news aggregators indeed have the power to select the information to display to a targeted audience. They also exert important “buyer power” vis-à-vis newspapers. Distributed content services in the mobile sector are now becoming more demanding with regard to the structure and content of the articles that they deliver.44 Generation, dissemination, and monetization of knowledge through advertising and data analytics are not independent markets but are connected by vertical relationships. As they have become interdependent, so too has the information which must be tailored to the new medium.

The metaphor of the marketplace of ideas—a picture of a direct competition taking place solely between competing ideas—could hardly be further removed from current practice. Any regulatory effort should consider this fundamental aspect of modern information markets. Markets contributing to the generation and dissemination of ideas occupy a special role in society, which entangles a number of constitutional principles and public policy concerns.

In homogenous product markets, it is in theory possible to achieve perfect competition, even in a situation of duopoly. The internet medium, however, has created a competitive ground which has propelled the homogenization of news toward an economic model which meets its specific needs. This is leading, according to the market data available, to the disruption of “fringes” of the market which are not as efficient—for instance, local news and investigative journalism.

Competition no longer takes place between diverse ideas but rather between diverse products and comparatively homogeneous ideas. Advertised goods compete over consumer attention and the retention of consumer data. In that competition news is only a vehicle which, if controlled and cogently boxed in, can yield optimal economic outcomes.

The legal system could respond to this challenge in several ways. Competition law can be interpreted in a way that also accommodates, to some extent, noneconomic concerns. In particular, it may consider the diversity of the sources of information and tackle the concentration of power at the level of dissemination of information.45 It would be also possible for the government to intervene through direct subsidies or to facilitate collaboration among newspapers, creating block exemptions to antitrust enforcement. Direct regulatory intervention, however, may entail important drawbacks. Direct subsidies may discourage investments in innovation as participants would receive such aid irrespective of their merit or prominence. On the other hand, block exemptions may in some cases paint with a “broad brush” collaborations that enable the creation of positive countervailing power and anticompetitive behaviors. Hence both regulatory solutions have to be carefully designed around the domestic legal system and the economic and social environment in which they are applied. And they should be implemented only if strictly necessary to solve problems not otherwise solvable through the application of current laws. Competition law is not the only institution available, as media laws, copyright laws, and privacy law could also find application. They should, however, be adapted in order to consider issues of competition and concentration in the “marketplace of ideas.”46 The sector-specific authority may therefore be able to tackle issues of concentration and power in the media and information sector without being bound by the technical constraints of competition law.

The political dimension of competition in the market thus has to be reconciled with the theoretical backbone that supports its enforcement, not only in antitrust enforcement but also in other spheres of law. The metaphor of a marketplace where ideas can compete in an unconstrained way is therefore a misleading one. It directs attention to the free expression of thought, assuming equal impact in the dissemination and rationality of who receives the information. But the platform-driven internet is a very different place, where advertising businesses are able to determine and control the spread of information. Combined with bounded rationality and the echo chamber effect, the generation of information by a vast number of sources is insufficient to result in the spread of objective truth. This result should be obvious by now to any citizen of a twenty-first-century democracy. Regulation of “information markets” is needed in order to aid better dissemination of news and sustain less profitable sources that have a special role in our democracies. But to do so, one has to consider not solely the diversity of potential sources but the public interest of a right to reliable information—not or not only the right to free speech, but the rights of and to truth.47

This article originally appeared in American Affairs Volume III, Number 1 (Spring 2019): 198–209.

Notes