Microsoft’s president says Google and Facebook should pay for news content

Photo via Needpix.com

The Overton Window has opened a bit wider for the idea of requiring Google and Facebook to pay for news content. At Axios, Sara Fischer reports that Microsoft president Brad Smith has endorsed the Australian government’s move to do just that — and thinks such a system ought to be considered in the U.S. as well.

What’s taking place in Australia is complicated, but essentially it requires Google and Facebook to bargain with the news business and come up with a compensation system. Both companies have said they would stop offering some of their services if Australian authorities don’t back off.

In the U.S., the News Media Alliance, a lobbying group for news publishers, has been pushing for several years for an antitrust exemption that would allow them the right to bargain collectively with the tech giants — which is exactly what is going to happen in Australia. With the sheen wearing off Big Tech’s once-sterling image, the likelihood of Congress passing such an exemption has increased. A lawsuit brought by a group of West Virginia newspapers that I wrote about for GBH News last week may serve as a further goad.

In a blog post, Microsoft’s Smith cites a News Media Alliance study showing that Google makes an estimated $4.7 billion a year “from crawling and scraping news publishers’ content.” That study came under fire at the time of its release a couple of years ago. But regardless of the actual figure, Google — and Facebook — are surely making a lot of money from other people’s content without paying for any of it.

Smith makes no bones about his own business imperatives, saying that Microsoft is prepared to play by Australia’s rules through its Bing search engine, writing:

Microsoft’s Bing search service has less than 5% market share in Australia, substantially smaller than the 15-20% market share that we have across PC and mobile searches in the United States and the 10-15% share we have in Canada and the United Kingdom. But, with a realistic prospect of gaining usage share, we are confident we can build the service Australians want and need. And, unlike Google, if we can grow, we are prepared to sign up for the new law’s obligations, including sharing revenue as proposed with news organizations. The key would be to create a more competitive market, something the government can facilitate. But, as we made clear, we are comfortable running a high-quality search service at lower economic margins than Google and with more economic returns for the press.

A final thought. If Congress isn’t prepared to act, might it be possible to require Google and Facebook to compensate news publishers at the state level? Jack Nicas reports in today’s New York Times that a proposal has been made in North Dakota to forbid Apple and Google from collecting app-store fees from North Dakota-based businesses.

The legislation strikes me as more than a little half-baked. Yet the principle — that states can impose their own regulations on Big Tech — is one worth pondering.

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14 thoughts on “Microsoft’s president says Google and Facebook should pay for news content

  1. Steve Ross

    It is a big deal. In the Obama administration, the five major book publishers were sucessfully sued by federal government for openly joining to negotiate with Amazon and Apple… even though Amazon clearly had far more power.

    Four of the five book publishers caved. Hachette didn’t and lost its case. That’s probably the controlling precedent without federal legislation.

  2. Marcus J Breen

    As an Australian-born policy person, I welcome the Australian Government’s action. (Curiously, the present Australian Federal Government – although the majority is from the Liberal Party – is a very conservative one!). It is an excellent initiative – the French also have one on the books. The large tech companies have exploited the “free” internet for years, making this pay-to-play system a good idea. One curiosity is that Rupert Murdoch also supports this idea, because his Australian newspapers are bleeding revenue (his real estate advertising and Fox TV cross subsidizes the print side of his print new businesses) while the online services make “bank” off news and information content News Corporation pays its employees to generate. Talk about irony…

    1. Steve Ross

      My magazine, Broadband Communities, reported on Australia gov’t as it (foolishly) killed the national broadband network. It is odd, isn’t it, that newspapers in the USA have never fought hard for payment from Google and Facebook. One does get the idea that most of our newspaper owners are foolish to the max.

      1. MagellanNH

        I may have this wrong, but as I understand it, Google fully respects directives by website owners to not index their content. So I don’t see how publishers could make a legal case that Google is somehow improperly using their content. Further, I’m not even sure that it would be illegal for google to index a site’s content without its permission. Facts generally aren’t protected by copyright and I don’t think we’d want a world where websites could enforce gag-orders to prevent people from noting that site x published article y about subject z. As I understand it, this is basically what Google search does.

        This analogy may be off, but what publishers are asking for seems roughly equivalent to if in the 1970s, sports teams tried to get a cut of the revenue newspapers earned from printing sports results and statistics. The teams would argue that the newspapers were profiting off their hard work and not paying them anything in return. Newspapers would rightly respond that they’re just reporting publicly available facts.

        Finally, if we agreed with the publisher’s logic, wouldn’t google need to pay out a percent of its search profit to every website it indexes? If content owner profit sharing is the new model, why should publishing sites get special treatment compared to all the other content google indexes?

  3. Steve Ross

    In the USA, all the publishers generally say is they want exemption from antitrust so they can negotiate together as a group, with the huge search companies on a more equal footing.

    Google “finds” stuff on its own to respond to searches, but many publishers (mine included) add Google coding at the bottom of each page to make Google’s job easier.

    If we wanted to, we could erect a firewall. Many publishers do. If I share an nyt or Globe story in Facebook, folks wanting to read the story would not be able to, unless they subscribed.

    There’s also an odd twist. Until 15 years ago, laws tended to be written vaguely. Courts often relied on legislative history to devine congressional intent.

    The Supreme Court started to read laws rigorously, so congress started making them longer and more detailed… and that is not a wise path in this field because technology changes too fast for old laws to stay relevant. In the current environment, therefore, it seems more sensible to even up the sides as much as possible, and let negotiations begin.

    1. MagellanNH

      The anti-trust case against Google seems pretty robust to me, Still, the remedy to Google’s market power shouldn’t be a handout to content producers that gives them a special anti-trust exemption and allows them to deprive search customers of publicly available information.

      Really, I don’t like any precedent that says sites get to prevent someone from mentioning that a given article appears on their site. A world where websites have control over who’s allowed to mention or link to their content would be harmful to consumers and make a mess of the Internet. I get that publishers are facing tough times, but imo, that way madness lies. I would think journalists of all people would understand that restricting the distribution of publicly available information is a bad thing.

      This sort of reminds me of the fights broadcasters had with cable companies back in the 70sand 80s over retransmission rights. That also seemed to me like a case of double dipping (by the broadcasters). Sure enough, once broadcasters were able to flex their lobbying muscle enough to change the law, it was consumers that paid the price. Now my $25 basic cable bill has $15 tacked onto it to cover retransmission costs. This, when I already paid once when my government handed over billions of dollars of free spectrum to these same broadcasters.

      1. Steve Ross

        My problem is that although news events cannot be copyrighted, it takes some effort to report on events! Someone has to pay somebody! What you are saying is that local news organizations, most rather small, should have to negotiate individually with giants like Google and Facebook, and give away the content they created because, well, the public needs that stuff. The few large chains are just too stupid to compete, of course, so they are milking their properties dry.

        My own magazine allows anyone to read content. But if someone wants in-depth help using our financial models, we get paid. If someone wants to attend our conferences, we get paid. If someone wants us to do detailed targeted market research for them, we get paid.

        That way, we can pay our staff. They can buy food, care for their kids, and so forth. And our freely published research has helped justify $10 billion in new federal funding for broadband since March 2018 alone. Good for society. Good for our advertisers. Since 2014 I’ve spent several months a year doing just data generation on broadband inequality (see https://senseaboutscienceusa.org/how-data-journalism-helped-power-a-rural-broadband-revolution/ which is a story written about us 18 months ago). How would I pay my expenses if I were doing this free for a newspaper and Google was capturing all the revenue? You seem to think government would do all this … after all, government spends a lot of money on our findings. But fact is, government WON’T do it. Google won’t do it. The legions of Facebook users and tweeters who don’t even find time to vote and who all have opinions, won’t do it.

        Some news organizations do stoop to clickbait, or to running ads that look like editorial. Some let advertisers dictate content. We (and thousands of B2B publishers like us) don’t have to do any of those things because we invested in all the other stuff. Advertising revenue in a normal year is less than half of all revenue for us.

        Of course I can fault many media outlets for trying to coast, for not investing in themselves. I’m lucky in Boston that the Globe has indeed invested in itself. The staff for its B2B medical magazine, STAT, has about 30 journalists on it — more than the NY Daily News and NY Post combined. But few cities can claim that. If local media can’t get paid, local news will simply disappear, and we’ll all be the worse for it.

    2. Dan Kennedy

      @Steve Ross: I’m fascinated with the idea that Stat is B2B. I’d never thought of it that way, although of course I understood it appealed mainly to health-care professionals.

      @MagellanNH: What you describe is the age-old dilemma. Yes, all you have to do is insert a bit of code and you’re invisible to Google. The advertising revenue you’d lose out on has dropped to pennies because of the way Google has leveraged its ad monopoly, but publishers still don’t dare do it. All the publishers are asking for is the right to bargain collectively without getting hit with an antitrust complaint. If they tried it without legal authority, they’d run afoul of collusion laws.

  4. MagellanNH

    >> What you are saying is that local news organizations, most rather small, should have to negotiate individually with giants like Google and Facebook, and give away the content they created because, well, the public needs that stuff.

    I’m definitely not saying that. Content producers should most certainly be free to find ways to get paid for what they produce. The innovative revenue model you’ve developed sounds like a great way to do that. Also, I’m not saying readers have any sort of inalienable right to “free stuff” just because they “need” it.

    My point is much more limited. It’s just about Google search organizing information for the benefit of its users about news articles that are publicly available on the Internet. I think it’d set a terrible precedent to force Google to pay anyone for doing this. This reminds me of the fights in the early days of the Internet when some argued that websites should have control over whether and how other sites can link to their content. What publishers are asking for with their Google search demands seems eerily similar to this terrible idea. Again, the key is that the information Google is assembling is just a collection of non-copyrightable facts. Changing centuries old rules governing the dissemination of public facts seems like a really bad idea.

    On the content marketing side (eg ads on publisher websites), folks complaining about Google’s market power and looking for government action may have a point. I haven’t followed all the arguments, but lax oversight of Google’s acquisitions seems to have allowed it to concentrate a lot of market power on the content marketing side of their business. I could easily be convinced that content producers are getting a raw deal as a result.

    (btw – the article you linked was very interesting and certainly is a great example of data journalism having a big impact and creating a lot of value for society. Kudos are certainly in order for the great work your team did on that issue.)

  5. Steve Ross

    I remember the early days well — taught one of the first new media courses — at Columbia University. To be sure, it is important for society to know something has happened. But without local reporting, we’d never know.

    The rich and powerful already exert a right to be forgotten… an enshrined right in Europe, and available to the well-off here. Some 30 years ago, for instance, the Boston Globe nominated one of its stories for a Pulitzer — how an aide to Boston’s Mayor Kevin White made a deal with the banks. If Blacks could get mortgages in Jewish neighborhoods, the city would allow banks to refuse Blacks mortgages for homes in Catholic neighborhoods. The aide was Barney Frank!!! The dirty deed has been scrubbed so well that the Globe itself has forgotten it.

    Thanks for noting what my own magazine does. The reason we’re trusted, BTW, is that while we think the rural and poor being denied good broadband is of course a bad thing, it opens the door to small deployers of networks — 97% of my readers. As a B2B magazine, we cannot give our readers bad advice and slanted data. That could bankrupt them. Thus, congressional staffers trust our data more than they trust goodie-two-shoes foundations and self-serving industry lobbyists.

    That used to be common in journalism. My first full time journalism job was editing an environmental newsletter at McGraw-Hill. We were on the must-read lists publicized by Sierra Club and by the National Association of Manufacturers! And we didn’t need Google. We could not even imagine it… in 1970.

  6. MagellanNH

    >> The rich and powerful already exert a right to be forgotten… an enshrined right in Europe, and available to the well-off here.

    Yeah, that’s a whole other mess I don’t love that I’m sort of on Google’s side with this search issue.

    While I’m not particularly worried about what Google knows about me, out of principal I rarely use Google search and instead have my browser defaulted to duckduckgo, with Bing as a backup. I know this is only symbolic, but I do think we’d all be better off if there were three of four major search providers rather than one. I admit that Google’s search product is marginally better, but It’s still surprising to me that Google has been so successful in hanging on to so much market share.

  7. Steve Ross

    I used duckduckgo, but it won’t save my passwords. I use a password manager for sensitive passwords, but with four regular internet access machines, this is a serious drawback. It would be far more widely used if it were somewhat sophisticated about these issues.

    BTW, in the browser biz, even Microsoft uses Chrome code. And most third-party search engines use Google. Not wise for privacy. Enables easier hacking, too.

    Then there are the local news sites that raise a popup if I come across that rare story I might want to read on their site. The popup demands that I disable my ad blocker… and when I do, I often get a popup ad for some local store 1000 miles away, and a pitch for subscription.

    I’ve worked on several micropayment projects that could could get a nice alternative revenue source going for very small upfront investments. The big chains are in the process of committing suicide and small papers cannot afford it.

    … but I still see no harm in allowing publishers to combine to negotiate with ginormous Google, Facebook, etc.

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