Medium is sort of a content facilitator that charges its users for premium content and passes on part of that fee to authors, when the reader interacts with their work. However, over recent months, Medium has become increasingly focused on their own partnerships and internal publications, to the point where it's hard to argue that there is not an ethical conflict of interest. My question is whether there's a legal conflict of interest.
To put it into general terms, consider three parties, A, B, and C. Party A offers party B and C the opportunity to profit from an operation, where parties B and C are in competition with one another for a finite amount of revenue in a given month (the total available from subscription fees in this case). Further suppose that the operation relies on party C for success (it seems easy to argue that Medium would have trouble surviving if only their own content was on the platform), and that party A provides biased support to party B. Finally, B and C are paid by A, from the revenue generated by the operation, rather than B and C obtaining the revenue directly from the operation's customers.
In such a scenario, there seems to be both an ethical issue and potentially legal issue. However, I am not familiar with any specific civil statutes that may come into play. Does it appear that the above scenario might violate any specific statute? The one potential reason why Medium might be saved from a valid lawsuit is that an author does not have to pay for the service. However, they are providing support, in their aggregate, through the massive volume of writing that they provide to the platform, without very much chance of being able to actually generate revenue. Precedent from cases involving pyramid schemes may apply here.
Michael Seifert raised an interesting question: "How would this be different from Publishing House A promoting a more profitable Author B instead of a less profitable Author C?"
The difference is that the publishing house does not rely on C's work for sales. To continue this analogy, consider a situation where the publishing house put in a request for chapters for an anthology, where the majority of the chapters came from C, and a few came from B. Further suppose that the publishing house paid its authors based on how many sales the respective authors generated, but almost exclusively promoted author B's website that sold the anthology. Even though readers likely would not purchase the anthology, without the chapters provided by C, because of A's disproportionate support of B, C would receive very little of the revenue stream.
BlueDogRanch made a point that Medium's terms of services "says nothing about being fair, or ethical." Agreed. Its terms of services say nothing, and therefore it does not say that they reserve the right to unfair, unequal, or unethical, biases. If the terms of service stated that Medium reserves the right to unequal promotion of work regardless of whether it reduces the potential revenue by other authors, then Medium would have a greater chance of winning in court, and greater justification for their actions. However, without such statements, it becomes less certain that one should assume that a content facilitator that provides revenue streams as part of a partner program would engage in actions that disproportionately shift revenue streams towards their own content.
A final point. It seems that in California, an individual must pass the "ABC" test, at least when it comes to wage orders. Specifically, Medium's authors do not pass B: the worker performs work that is outside the usual course of the hiring entity’s business. It seems that, contrary to the suggestion that Medium's authors are subcontractors, they are, at least as far as California law is concerned, employees.