Explained: The War Between Google and Digital News Publishers

Search engine giant Google has blocked Canadian news on its platform in Canada. It will remove all the links from Canadian publishers, as a protest against the government's new law that requires payments to local news publishers.

As a result, the people of Canada can only get the news by directly visiting the official websites of the news outlets. However, this is not the only country where the Alphabet-owned Google has run into trouble with publishers. It is facing lawsuits in the US, the UK, the European Union, Germany, France and Belgium.

What is the issue all about?

The issue is majorly about revenue sharing issue. Gannett, the largest U.S. newspaper chain and publisher of USA Today, sued Google for trying to corner the market for online advertising by monopolizing ad technology. The company which has over 200 daily newspapers said that the search engine giant's control over tools for buying and selling online ads forces publishers to sell more cheap ad space to the Alphabet Inc unit.

"Digital advertising is the lifeblood of the online economy," Gannett Chief Executive Mike Reed said in an opinion published in USA Today. "Without free and fair competition for digital ad space, publishers cannot invest in their newsrooms."

"Today, online digital advertising is a $200 billion business - a nine-fold increase since 2009," the suit filed by Ganeett said. "Yet, despite the opportunity for publishers to produce more news content and earn more revenue, news publications' advertising revenue has declined by nearly 70% over the same timeframe."

This monopoly has led to the shutting down of 20 per cent of newspapers as the circulation has also decreased by 40 per cent. This resulted in job losses.

How It Is Responsible?

Media organizations primarily generate the majority of their income from advertisements. In the past, they would make deals directly with advertisers, with a limited number of available slots. With the shift to online platforms, publishers began using advanced software to auction ad space electronically. The internet's limitless space led to a significant increase in the number of ad slots sold daily. Currently, the global digital advertising market is valued at approximately $626.9 billion.

Unfortunately, Google and its parent company Alphabet hold a monopoly over the advertising technology tools utilized by publishers and advertisers for buying and selling online ad space.

Online display advertising space works like electronic financial markets where ads space is bought and sold in real-time. The search engine giant holds a dominant position in this arena as the largest global seller of ad space. Not only does it operate the leading ad trading platform, but it also serves as the primary intermediary connecting ad buyers and sellers for trading purposes.

Dina Srinivasan, author of research paper titled 'Why Google Dominates Advertising Markets', says, "Google's exchange shares superior trading information and speed with the Google-owned intermediaries, it steers buy and sell orders to its exchange and websites (Search & YouTube), and abuses its access to inside information."

In an article in The New York Times, she said, "​​These problems took root more than a decade ago when Google made a bid for DoubleClick, the popular service that helps websites sell ad space. The service became part of Google's ad exchange division, which it later called AdX."

In the end, websites suffered the consequences as the absence of competition among exchanges led to their ad space being sold at prices up to 50% lower than their potential value.

The other major reason why many publishers are upset with Google is showing snippets on search results. They complain that once a reader gets a gist of a story, he will not come to their websites to read or see their content.

What's Happening in India?

In 2022, the News Broadcasters & Digital Association filed a complaint against Google alleging the tech giant of abusing its dominant position to dictate terms to the publishers.

"Competition Commission of India (CCI) found merit in the complaint filed by News Broadcasters & Digital Association (NBDA) against Alphabet Inc, Google LLC, Google India Pvt Ltd, Google Ireland Ltd and Google Asia Pacific Pte Ltd, which stated that Google was abusing its dominant position in violation of the Competition Act, 2002," News Broadcasters & Digital Association (NBDA) said in a statement.

"Accordingly, CCI in its order dated 6.10.2022, clubbed the matter with the ongoing investigations in similar complaints filed by other affected bodies i.e. INS & DNPA."

It is alleged that due to the tech giant's overwhelming control in the industry, publishers have been compelled to incorporate content on their platforms. They have no choice but to engage in trading through the company's exchanges and utilize its purchasing tool, Google Ads/DV 360, in order to receive bids from advertisers. Also, the Google has been accused of encouraging members to disable header bidding while also forcing them to use their Accelerated Mobile Pages (AMP) or building mirror-like 'light-weight' webpages.

Not complying would have adversely affected their rankings in mobile search results. Moreover, it limited the paywall options unless publishers reconstructed their websites according to AMP standards. It is important to highlight that when readers do not click on the snippets and visit the websites, it restricts the website's potential to generate revenue.

Following these allegations, the CCI, last year, ordered an investigation against the tech giant.