Digital Empire in the Making

By acquiring local media Law and Justice secured its hegemony over the Polish digital landscape. However, PKN Orlen’s takeover of the Polish local private media could serve as a real-life stress-test for European lawmakers.

The last two months of 2020 turned out to be very eventful in Polish politics. While most of the attention was focused on the EU Multi-annual Financial Framework negotiations and the dispute over the rule of law conditionality mechanism, another piece of important news shook the general public.

PKN Orlen, a state-controlled petrol behemoth and one of the country’s largest companies, acquired a private media conglomerate Polskapresse in early December, a move that was accurately described as Orbán-like.

As soon as the allegedly 120 million zlotys transaction gets an approval from the Polish consumer protection agency (a mere formality, since the party also controls it) 20 out of 24 regional newspapers, 120 weeklies and 500 news portals will be owned and directly supervised by ruling party appointees.

Both local and international coverage of the purchase rightly focused on the threat that the government’s recent media market concentration poses to journalism’s freedom and independence in Poland. There is, however, another and perhaps even more worrying and potentially dangerous part of the story, concerning European democratic standards.

Direct access to user data

PKN Orlen’s acquisition makes a lot of sense from the point of view of modern digital marketing, especially since online media have become the number one source of news for the majority of Poles.

Apart from establishing a strict political control over hundreds of renowned regional titles, the move allows the Law and Justice-dominated coalition government to directly access user data (localisation, e-mails, social media profiles, search history, etc.) of at least 17 million Polish citizens.

With the help of the public broadcasting (leading TV channels, radio stations, online news portals), regular inflows of taxpayers’ money and virtually unlimited media budgets, Kaczyński’s political party Law and Justice (PiS) has secured total ‘information dominance’ on the Polish market. This situation leaves every competitor behind in terms of available funds and user engagement rates.

By doing so, PKN Orlen, headed by loyal PiS party wunderkind manager Daniel Obajtek enabled PiS to conduct wide-scale, efficient and relatively cheap communication campaigns under the regulatory radar of national and European authorities.

It is easy to downplay the case (in an orientalist fashion) as an example of Eastern European politics’ inherently anti-democratic nature. On closer inspection, however, the picture becomes convoluted.

First of all, PKN Orlen’s future use of its new media branch will not substantially differ from how large, usually, private corporations operate.

With antitrust and deconcentration legislation having been removed or diluted in many developed countries, the media landscape all over the world has become more oligopolistic than ever before.

Financial struggles

One must also remember that Polskapresse was not Soviet-style nationalised but instead acquired in a typically capitalistic fashion. To be sincere, the previous German owners of the media group have all reasons to be happy about the final deal that can only be described as generous in current circumstances.

Over the last decade, media worldwide have been struggling financially due to the growing economic competition posed by major digital platforms. Thanks to their brilliant algorithms and an equally important lack of sufficient administrative oversight companies such as Google, Facebook, Amazon or TikTok offer much more precise ways of reaching key consumer groups (formerly known as readership).

Bluntly speaking, a private business no longer needs to buy a whole editorial page in a newspaper or magazine to convince its readers to buy their products or services. Instead, it is easier and more efficient to use the Silicon Valley approach based on personal search history to cyberstalk users with specifically designed and targeted ads and sponsored content.

Local media find itself in an especially paradoxical situation. On the one hand, the general public considers local media to be most trustworthy and worthwhile. On the other hand, it has the most challenging time finding financial resources allowing for its independence and objectivism.

Regarding Polish local newspapers and portals, the divide between high social trust and weak financial standing is particularly striking. While local media is considered the most reliable source of information, it has since 2012 noted a 20 per cent fall in overall incomes.

Thus, from a financial perspective, PKN Orlen’s acquisition may appear as a late-hour salvage to decades-long economic woes. Unfortunately, particularly for thousands of hard-working, professional and devoted journalists, it is also the last good news story.

A telling postscript to the purchase appeared in the form of an advertisement in Gazeta Pomorska, one of the most valuable titles in the Polskapresse portfolio published a few days after the transaction.

Local members of PiS – six of them in total – privately financed an advertisement expressing gratitude for the acquisition. It read: “Solemn thanks to Mr Daniel Obajtek, who we thank for the defence of Polish language, Polish culture and bringing back 20 Polish daily newspapers to the Motherland. Vivat the King, Vivat Sejm, Vivat all three states”. The use of words is quite revealing: “Macierz” in Polish can be translated either as motherland or… matrix.

One might say that by nationalising local media Law and Justice achieved completion of a next-level matrix: a symbolic cultural and technological content generating system allowing the party to secure its hegemony over the Polish digital landscape.

Digital empire

One of the most underreported factors contributing to PiS’s power in Polish politics is its digital savviness. Despite the ruling party’s grandiose posturing, Andrzej Duda did not win the 2020 presidential elections by a landslide. Even though he was the frontrunner from the get-go, his success against conservative-liberal Civic’s Platform (PO) candidate Rafał Trzaskowski did not come easily.

On the contrary, his eventual victory came by a margin of little over one per cent of the votes. It would likely not happen if it were not for the quality and effectiveness of Duda’s team web game, designed and carried out by the PiS strategists.

During the whole election season, his campaign produced and distributed for Polish politics a staggering number of unique advertisements (1709 on Google and 820 on Facebook), targeted specific regions and over a dozen carefully-chosen demographic groups. Apart from being the most technically advanced one in the elections, it also turned out to be the best bang for the buck making Duda’s cost per user ratio the lowest among all candidates.

The conservative nationalist candidate had a more modern and innovative communication campaign based on direct engagement principles and high personalisation.

The creation of PiS’s internet communication strategy in the previous election cycle was attributed to Paweł Szefernaker, a now 33-year-old high ranking cabinet member in the Ministry of Internal Affairs.

Since then, the party’s digital operation only grew in terms of professionalism and available budgets due to its takeover of public institutions. As of now, Law and Justice’s digital empire consists of three interdependent elements, most of which are paid for by the taxpayers’ money.

Chronologically the oldest and relatively most transparent and traceable part of PiS internet operations is the party one. Since the parties must undergo financial scrutiny for every election by a special chamber of the judiciary (Państwowa Komisja Wyborcza), we know that in 2019 PiS spent around 12,5 million zlotys on advertising, both digital and traditional.

According to Polish law, electoral spending is in the vast part publically funded: parties receive sizable cash transfers proportional to their results in the previous cycle.

For instance, in the last parliamentary elections, PiS received from the national budget 18,5 million zlotys. Duda’s presidential campaign of 2020 was paid for by a little less than 29 million zlotys coming from PiS’s funds.

There’s also the PR and marketing spending by the government. Apart from official media budgets of the prime minister and ministers spending on ads, every cabinet member has access to national and European funds to promote specific governmental or EU-funded programmes.

Take the example of Zbigniew Ziobro, a recently troublesome and increasingly anti-EU Minister of Justice, whose administration besides presiding over Polish judiciary operates a 400 million zlotys fund to the law should be distributed among NGOs helping victims directly or by running social rehabilitation and crime prevention programs.

It has been widely reported by the opposition press (such as OKO.press) that less than 20 million zlotys of the whole sum – five per cent of the whole budget – effectively reaches real victims of crimes or their families.

The rest is being used mainly as pocket money delivered arbitrarily by Ziobro to NGOs, the Catholic Church or media run by his Ziobro’s critical allies in exchange for political favours. It is virtually impossible to imagine that newly acquired regional media will be treated differently.

The third and perhaps most interesting branch of digital platforms supervised by PiS is run by the state-owned businesses. PKN Orlen (petroleum & energy), KGHM (copper), PGNiG (natural gas) Energa (electricity) or PKO BP (banking) are just a few among many enterprises with huge, often de-facto monopolistic market share operating in Poland. Their role in supporting pro-PiS agenda or far-right and sympathetic nationalistic media is carried out via the free market of paid advertisements.

Thus, without directly violating any national laws or global standards, ruling politicians can stuff pockets of their affiliates which in the scope of almost five years in power has led to systematic changes in not only media but even broader social structure.

After the purchase of Polskapresse, all these three pillars of the Law and Justice communication empire have just been armed with a robust local division reaching up to 17 million people daily.

Possible scenarios

What exactly can Law and Justice digital mavens do with their new toys? The move will make spin doctors’ work easier and, due to the scale effects, much more efficient. With the help of hundreds of digital media titles and, what’s probably even more important, fan pages and social media profiles PiS will be able to carpet-bomb Poles with precisely crafted sponsored content (think ‘Warsaw Analytica’).

What complicates the picture is the profound shift in perception of the relationship with the state and its role in the economy. After more than a decade of the practically unlimited flow of government bailouts, subsidising mainly big companies and their shareholders, even staunch free marketeers started noticing that modern capitalism has little to do with utopian ideals of Friedrich von Hayek, Milton Friedman and Ayn Rand.

There is also substance for a critique of the unabashedly naive ‘étatist’ approach. Proponents of an entrepreneurial state such as Mariana Mazzucato often argue that publicly owned companies can, and often do a better job than their corporate counterparts.

All that being true, it is crucial to point out that to excel both private and communal institutions, they have to compete under the set of equal, fair and stable rules. This is certainly not the case of the current Polish media market.

The rise of PKN Orlen’s new media empire is assisted by extraordinarily friendly administration. The aforementioned governmental consumer protection agency (UOKiK) just recently ex post facto blocked the acquisition of Radio Zet (one of the biggest private radio stations) by Agora (publisher of Gazeta Wyborcza, Gazeta.pl and other influential titles).

Officially, the agency forbade the liberal-leaning and pro-EU Agora corporation from establishing an oligopoly, but one cannot underestimate the political motives behind it. By blocking the inception of a new Polish private media group, PiS paved the way for a national conglomerate, which in a couple of years may resemble (or mimic) the landscape of Western, highly concentrated digital media.

In a way, PKN Orlen’s market position will be not that different to the ones of Amazon’s, Samsung, Huawei, Shell or Google’s, all of which would not be able to achieve or maintain their leading roles in today’s global economy without the tutorship of their respective governments.

However, the difference is that in the Polish scenario, the main goal of that collaboration is in its nature not a question of technological progress or consumer satisfaction, but political partisanship.

Thanks to indirect ownership of the titles by the ruling party Polish and European regulators will most likely have no legal tools to limit neither its tone nor scope. Imagine a situation, in which a PiS has a PR problem, be it politician’s gaffe, corruption scandal or a striking display of lack of competences.

With the help of an army of digital tools, one of the local media titles can publish a seemingly unrelated article presenting him or her in a more positive light. The team responsible for social media will then spend an unlimited amount of money promoting the piece via Facebook, Twitter, Instagram or TikTok.

Should an overseeing institution want to claim that it is a form of political advertising and thus ought to fall under the scope of adequate norms, it will be almost impossible to attribute it in a legally sound way directly to the party.

The same mechanism is being used, though only on a higher, national stage already by the public radio and TV. Now, this method will be applied on a local level.

Then there’s a disturbing possibility of more nefarious use of user data collected over the years by the Polskapresse. Naturally, the Polish government has more direct means of surveilling its citizens.

First, police, intelligence agencies and other institutions are legally allowed to obtain the content and metadata of Poles’ communication. These actions require the approval by courts, thus making it more cumbersome and prone to criticism. Civil watchdogs, NGOs, independent media and international institutions have raised concern over the government using illegal spying methods on Polish citizens.

Earlier this year five Polish lawyers applied to the European Court of Human Rights claiming a violation of their rights to privacy and to an effective remedy caused by the implementation of the Anti-Terrorism Law of 2016. The complaint specifically mentions a questionable legal basis for and scope of secret surveillance and metadata collection by intelligence agencies and the police. It seems highly unlikely that the purchase of local media by PKN Orlen will lead to more of this type of direct Orwellian invigilation.

Instead, PiS will be able to achieve more with spending fewer resources. One can imagine that thanks to its portfolio of 17 million citizens, PiS will be able to work around regulations that the EU wants to put on political advertising on social media.

It does not mean though that there is nothing to fear from the perspective of human rights and personal liberties. It is quite likely that the databases built around media readership will one way or another (for instance via PiS-controlled Sigma Bis PR company that is operating a huge chunk of state-owned enterprises media budget) end up being used by the PiS for political purposes.

Again, it seems that the practice of use of personal data packaged as ‘marketing know-how’ by the government-controlled companies and institutions will be almost impossible to stop or impede. Especially given the official body supposed to supervise data privacy according to the General Data Protection Regulation (GDPR) also falls under the ruling party’s direct personal control.

What will happen next?

How will Polish civil society as well as the opposition respond? Right now, the only way to combat CEE state propaganda is to bolster independent informational infrastructure consisting of nonpartisan professional journalism, think tanks, politically-affiliated social media profiles and fan pages as well as direct (and preferably encrypted) peer-to-peer communication networks.

Theoretically, according to the GDPR, the closest thing to modern internet’s ‘Magna Charta’, users can simply opt-out and by collective action withdraw consent to use their private data by the media (and data processors).

In reality, the so-called ‘dark patterns’ (or ‘asshole design’) of websites make it super difficult for us to pick settings that would keep our privacy safe and sound. Combined with our frivolous and impatient ‘accept-all-ASAP’ web privacy habits such hopes are simply baseless, deeming potential consumer boycotts certainly futile.

The problem is by no means restricted just to Poland, Hungary or other CEE member states.

As we have seen over the last decade with far-right populism worldwide, what happens today in Budapest can quickly spread to other governments and societies. In order not to let it happen, action must be taken on the European level.

PKN Orlen’s takeover of the Polish local private media could serve as a real-life stress-test for European lawmakers. Over the last years, the EU has put a lot of effort to prove its ability to navigate the waters of the emergent digital markets. Europe certainly has all the tools required to do it efficiently, since one of the rules of internet law is that the bigger the size of a market, the higher the chances of norms being implemented and abided by actors.

The momentum is surely there: Brussels is about to introduce legislation to regulate European cyberspace: the Digital Service Act, Digital Market Act and the Democracy Action Plan. While announcing the latter initiative, Vice President of the European Commission for Values and Transparency Věra Jourová focused on their future role in safeguarding free elections. Although much needed and long overdue, it is crucial to define its framework and goals to tackle the problem. It would help broaden the Democratic Action Plan’s potential scope beyond strictly defined electoral campaign periods, which nowadays tend to last way longer than in the pre-internet era.

Then there’s the question of declining economic conditions of journalism in general. The need for an independent and unbiased European media system has never been more urgent. European local media would benefit significantly from EU programmes dedicated to helping them survive the current economic decline while establishing strong links between Brussels and small communities, often underfunded or struggling with pressing economic issues and unable to sufficiently support journalism.

A local media fund could play that role, mostly if money would not be distributed by national politicians but instead at the European level, according to criteria based on quality, professionalism and transparency.

 In the digitally transformed political landscape, freedom of speech can only be protected if regulators understand the multidisciplinary, intersectional and multi-layered nature of contemporary information environments.

Although it is vital to make sure that legal definitions of ownership and control will include cases concerning publicly controlled companies, the future rules regarding digital media concentration should apply to both state and privately-owned enterprises.

Without such provisions, the digital commercial and political advertising marketplace will remain an oligopoly entirely dependent on big tech players’ whims and their major platforms.

Amid a once-in-a-lifetime combination of deadly COVID-19 pandemic, an economic recession and deep political polarisation, Europe can not afford to turn a blind eye to the new digital threats to its traditional core values.

If it fails to do so, politicians across Europe will be eager to quickly learn all-new (apparently legal and acceptable) tricks in the digital book.

This article is part of the #DemocraCE project. Data visualisation prepared by Maria Ciupka. A Polish version of this article is available at Polityka.

• DemocraCE
• Democratic Security
• Digitalisation
• Economy
• EU
• Information Sovereignty
• Journalism
• Media
• Media Sovereignty
• Multi-annual Financial Framework
• Poland
• Social Media