To the extent that news organizations have been able to overcome the collapse of advertising caused by the rise of giant tech platforms, it’s through two imperfect methods.
- For-profits, especially larger newspapers, charge for digital subscriptions and try to maintain a baseline level of print advertising, which has maintained at least some of its value.
- Nonprofits, many of them digital-only, pursue large gifts and grants while attempting to induce their audience to pay for voluntary memberships, often for goodies like premium newsletters.
At the same time, though, news publishers have continued to look longingly at what might have been. When journalism started moving online 30 years ago, the assumption was that news outlets would continue to control much of that advertising.
Those hopes were cut short. And in large measure, that’s because Google — according to publishers — established a monopoly over digital advertising that news organizations couldn’t crack. Now we’re getting a glimpse of a possible alternative universe, because last week a federal district-court judge agreed, at least in part.
I’ve read several accounts of Judge Leonie Brinkema’s 115-page ruling on an antitrust suit brought by the U.S. Justice Department and eight states (but not Massachusetts). It’s confusing, but I thought this account by David McCabe in The New York Times (gift link) was clearer than some, so I’m relying on it here. I’ll begin with this:
The government argued in its case that Google had a monopoly over three parts of the online advertising market: the tools used by online publishers, like news sites, to host open ad space; the tools advertisers use to buy that ad space; and the software that facilitates those transactions.
In other words, the suit claimed that Google controlled both ends of the market as well as the middleman software that makes it happen. Judge Brinkema agreed with the first two propositions but disagreed with the third, saying, in McCabe’s words, that “the government had failed to prove that it constituted a real and defined market.”
Brinkema put it this way: “In addition to depriving rivals of the ability to compete, this exclusionary conduct substantially harmed Google’s publisher customers, the competitive process, and, ultimately, consumers of information on the open web.”
Lee-Anne Mulholland, a Google vice president, said in response, “We won half of this case and we will appeal the other half.” I’m pretty sure that losing two out of three is two-thirds, but whatever.
Brinkema will now consider the government’s demand that Google’s ad business be broken up. But given that the company has already said it will appeal, it could be a long time — like, on the order of years — before anything comes of this. Same with an earlier ruling in a different courtroom that Google’s search constitutes an illegal monopoly, which is also the subject of hearings this week.
The News/Media Alliance, a lobbying group for the news business, praised Brinkema’s ruling, saying:
The News/Media Alliance has spent years advocating on behalf of news media publishers against Google’s unlawfully anticompetitive actions. We are strongly supportive of a similar lawsuit in Texas that will follow, as well as the Gannett lawsuit currently being litigated on the same issues. Much of this was prompted in the House Report that documented Google’s abuse in the ad tech ecosystem, the scope of which is wide-reaching.
As the organization observes, Google’s ad tech has been the subject of several suits by the newspaper business. One of them names Facebook as a co-defendant, claiming that the Zuckerborg chose to collude with Google rather than compete directly. Gannett’s suit, on the other hand, only names Google.
The News/Media Alliance also continues to push for passage of the Journalism Competition and Preservation Act, a pet project of Democratic Sen. Amy Klobuchar of Minnesota and Republican Sen. John Kennedy of Louisiana.
The proposal, which never gained much traction and is surely all but dead with Donald Trump back in the White House, would force Google and Facebook to pay for the journalism they repurpose. The legislation is problematic for many reasons, not least that Facebook has made it clear it would rather remove news from its various platforms, as it has done in Canada, than pay for it.
Punishing Google for clearly defined legal violations is a much cleaner solution. Let’s hope Judge Brinkema’s ruling survives the appeals process — not to mention whatever idea starts rattling around Trump’s head to reward Google as a favor for CEO Sundar Pichai’s $1 million kiss. Perhaps this can be the start of making advertising great again.
