Last year, Google earned $4.7 billion from news — a product it didn’t make, and for which it didn’t pay publishers. The search giant can do this because its size allows it to exercise an enormous level of control over newsrooms and publishers, getting them to present their information for free.
Newsrooms can’t push back against this because banding together to demand better terms would be a violation of antitrust law.
That’s the argument the News Media Alliance, which represents more than 2,000 news publishers across the U.S., will make in a House Judiciary subcommittee hearing Tuesday. Focusing on tech platforms’ effects on journalism, it’s the first of a series of hearings looking at antitrust activity in the tech sector. It’s running parallel with the Trump administration’s scrutiny of Google, Facebook, Amazon and Apple.
The challenge for the alliance will be demonstrating that the extensive damage for which they blame the online companies can’t be handled by existing antitrust law. Facebook and Google, in particular, have often pointed to the fact that their content is free for users, supported by ads.
That argument would be undermined if it can be demonstrated that Google is making “excessive amounts of money” from advertising, said Eleanor Fox, a professor at New York University who specializes in antitrust and competition. But that wouldn’t necessarily make it a monopoly, either.
Under existing antitrust law, being a monopoly “usually requires power to raise prices,” said Fox. “And unless they’re raising prices for advertisers, which I haven’t heard of them doing, they might not meet that requirement.”
Among the witnesses the Subcommittee on Antitrust, Commercial, and Administrative law will hear from today are David Chavren, president of the News Media Alliance; David Pitofsky, general counsel of Fox News; and Kevin Riley, editor of the Atlanta-Journal Constitution.
Zero-sum game
Publishers maintain that these platforms do, in fact, cost them money — by making paid content less visible in search or news feed algorithms and by stripping away ad revenue that might otherwise have gone to publishers. “We have an exponentially larger audience than we ever had,” said Danielle Coffey, senior vice president of strategic initiatives at the News Media Alliance. In the last decade, the number of people reading news has increased fivefold, to 146 million a day.
“People want what we’re making, and studies show that they’re willing to pay for it. But we have an intermediary. Consumers come to Google, they go to Facebook, and they get our news content. And when that happens, we’re stripped of a large portion of advertising revenue.”
Between 2007 and 2017, newspapers’ ad revenue shrank from $45 billion to $16 billion a year, while ad revenue for Google increased sixfold, from just under $9 billion to $52 billion, according to prepared testimony from the alliance. The number of newspaper employees shrank by 25% over that same period, according to the Pew Research Center.
Google has provided details about the importance of news only once — in 2008, when Marissa Mayer, then an executive at the company, estimated that news was worth $100 million a year. Using that figure and assuming all else stayed constant, the alliance estimates that news is worth $4.7 billion to Google today. That’s garnered primarily through ads sold against search results, and it doesn’t count the value of data Google collects on users that it can use to fine-tune future ads, for instance.
Some experts took issues with the $4.7 billion figure, pointing out that it doesn’t account for the readership increases generated by Google and Facebook or for new media outlets created since the tech platforms became dominant.
Google also criticized the figure, saying most news queries don’t show ads and that the estimate ignored the value Google brings. “These back of the envelope calculations are inaccurate as a number of experts are pointing out,” the company said in a statement. “Every month Google News and Google Search drives over 10 billion clicks to publishers’ websites, which drive subscriptions and significant ad revenue. We’ve worked very hard to be a collaborative and supportive technology and advertising partner to news publishers worldwide.”
What could the government do?
A bipartisan bill recently introduced in the House and Senate would give the news industry some room to fight back. The “Journalism Competition and Preservation Act” would create a four-year window for publishers to band together to negotiate en masse with technology platforms without the threat of antitrust action. Book publishers tried mass negotiation with Apple some years ago, only to be met with a price-fixing lawsuit from the U.S. Justice Department. That’s why news publishers are asking for a special exemption in this case.
Congress also has the ability to pass laws putting limits on companies’ data collection or strengthening privacy protections for users. Privacy is a rare issue that concerns both sides of the aisle. Separately, the Justice Department and Federal Trade Commission could bring any number of penalties against tech companies, such as fines, requirements that they drop exclusive contracts or demands that they spin off particular business segments.
